SpaceX and Tesla’s Texas Terafab Will Run on Natural Gas, Not Solar Panels

A vast stretch of rural Texas is set to become the site of one of the most ambitious semiconductor projects ever announced — and the power behind it won’t come from the sun.

TechCrunch reported this week that SpaceX and Tesla are planning a massive chip manufacturing facility in Grimes County, Texas, known as Terafab. The facility, still in its early development phase, will likely cover around 3,000 acres, with SpaceX already controlling more than 13,000 acres in the surrounding area. The scale of the thing is genuinely hard to picture.

And here’s the detail that’s caught the industry’s attention: rather than powering the factory with Tesla solar panels — something many observers had assumed given Elon Musk’s ownership of both companies — SpaceX is planning to build its own natural gas power plants on-site, backed by large battery storage arrays.

What SpaceX Actually Said

Riley Trettel, speaking on behalf of SpaceX’s plans, was direct about the energy strategy. Trettel said the company is “bringing our own power” and will build “natural gas fired power plants” alongside “very large battery arrays” to support the facility.

The reasoning appears to be straightforward: semiconductor manufacturing is extraordinarily power-hungry, and SpaceX doesn’t want to depend on Texas’s ERCOT grid — the same grid that famously failed during the 2021 winter storm, leaving millions without power for days. Building your own generation capacity sidesteps that risk entirely.

So rather than plugging into the local grid, SpaceX is essentially designing a self-contained industrial energy system from scratch.

The Scale of Terafab

The numbers here are eye-watering. Reporting from Bloomberg and TechCrunch puts the cost of the first phase alone at around £13 billion (reported as $16.8 billion in US coverage). That initial phase looks set to create around 3,000 jobs in what is currently a largely rural county northwest of Houston.

But the first phase may only be the beginning. Some reports suggest the facility could eventually span up to 100 million square feet across multiple phases — a footprint that would make it one of the largest manufacturing complexes on Earth. Those later phases, and their associated costs and timelines, remain unconfirmed.

The project represents a broader pattern in how Musk’s companies operate. SpaceX already builds its own rockets, its own engines, and its own launch infrastructure. Starlink has its own satellite constellation and ground terminals. Tesla builds its own batteries and, increasingly, its own chips. Terafab appears to extend that logic into semiconductor manufacturing itself — with power generation now added to the list of things the company would rather do itself than buy in.

The Natural Gas Question

The choice of natural gas over renewables is likely to draw scrutiny. Texas has abundant wind and solar resources, and Tesla’s own energy division manufactures both solar panels and the Megapack battery storage systems that now sit on grid-scale projects around the world. The decision not to use Tesla solar as the primary supply source is, at minimum, an unusual one given the companies involved.

However, the practical argument for gas isn’t hard to follow. A semiconductor fab running 24 hours a day needs consistent, controllable power — not generation that depends on weather conditions. Battery storage helps bridge gaps, but at the scale Terafab is reportedly planning, on-demand gas generation offers a reliability that solar alone can’t currently match.

Whether the project will incorporate any renewable generation in later phases isn’t clear from current reporting. The first-phase plans, as described, centre on gas and storage.

What Happens Next

Terafab is still in its early stages. The first phase hasn’t broken ground yet, and the full scope of the project — including how many phases will ultimately be built, what chips the facility will produce, and when it might come online — remains to be confirmed. Bloomberg and TechCrunch’s reporting reflects what’s been announced and planned, not what’s been built.

The semiconductor angle matters globally. The United States has been pushing hard to bring chip manufacturing back onshore after years of dependence on Asian suppliers, above all Taiwan Semiconductor Manufacturing Company. A domestically built, privately funded fab of this scale — if it reaches completion — would represent a meaningful shift in that picture.

For now, Grimes County, Texas is watching a very large land purchase turn into something much bigger.

What This Means for Kent Residents

There’s no direct link between a Texas chip factory and daily life in Kent, but the broader story matters for UK consumers. If Terafab eventually produces semiconductors at scale, it could contribute to easing global chip supply constraints that have pushed up the cost of everything from new cars to household appliances over the past few years. The energy choices made here — gas versus renewables at industrial scale — also feed into a live debate happening in the UK right now about how to power energy-intensive manufacturing reliably, a question that affects British industry and energy bills alike.