SpaceX plans natural gas plants and battery arrays to power TeraFab chip campus in Grimes County, Texas

SpaceX plans to power its TeraFab semiconductor campus in Grimes County, Texas, entirely from on-site generation and battery storage, with no grid connection expected^[1]. The disclosure comes from a fully executed tax-abatement agreement with Grimes County, which states the facility is "expected to be powered by electricity generated by on-site power plant(s) and [is] not expected to use electricity from the grid."^[1]

What the agreement says

The county agreement specifies that the site will include semiconductor manufacturing facilities, natural gas-fired power plants, and AI facilities used in conjunction with the manufacturing process^[1]. It also directly references the construction of a battery storage facility to supplement on-site power^[1]. Neither the generation capacity of the planned gas plants nor the size of the battery arrays has been disclosed.

SpaceX energy and data center head Riley Trettel confirmed the approach at a public meeting in Grimes County, saying the company would be "bringing our own power" with natural gas-fired generation and "very large battery arrays in order to store energy."

The project

TeraFab is a $16.8 billion semiconductor and advanced-computing campus being developed as a joint venture between SpaceX and Tesla in Grimes County, northwest of Houston. Elon Musk confirmed the project in March 2026, describing it as a facility that will produce chips for space data centers, advanced vehicles, and humanoid robots. Intel joined the project in April 2026 to support chip development at scale. The first phase is expected to create approximately 3,000 jobs and has received a $30 million Texas Enterprise Fund grant.

The battery role at TeraFab follows a pattern already established at SpaceX's Colossus AI data centers in Greater Memphis, where the company spent $329 million on Tesla Megapacks in the first half of 2026. At Colossus, batteries handle peak-shaving and absorb the sharp power swings that GPU-dense AI workloads impose on on-site generators. TeraFab's chip fabrication loads are similarly continuous and intolerant of interruption.

The grid context

The decision to go off-grid is notable given the regulatory pressure now bearing on Texas data center developers. On 3 August 2026, Governor Greg Abbott directed the Public Utility Commission of Texas and ERCOT to conduct a comprehensive audit of all data center projects in the interconnection queue before approving any new grid connections. ERCOT's queue at the time of the directive contained approximately 474 GW of connection requests - more than five times the state's record peak electricity demand - with data centers accounting for roughly 90 percent of those requests.

By building its own generation, SpaceX sidesteps that queue entirely. The trade-off is a direct exposure to the permitting and community-relations risks that have already complicated the Colossus build-out in Memphis, where the NAACP filed a federal lawsuit alleging that gas turbines at the site were operating without required pollution controls or permits.

The key questions for TeraFab are whether SpaceX will seek air-quality permits for its gas plants before construction begins, what capacity those plants will carry, and whether the Grimes County agreement's water provisions - which require commercially reasonable efforts to manage wastewater - will satisfy local regulators as the campus scales toward full production.