Memphis Light, Gas and Water provided Sept. 1 an update on the data center power pipeline.
The update came during a contentious Memphis City Council Planning and Zoning Committee session. Council members called on MLGW President and CEO Doug McGowen to provide some details on the expected pipeline for data centers. Council is continuing to weigh new resolutions and a potential temporary moratorium on data centers
.“(I) Won’t comment on the moratorium as right thing to do,” McGowen said.
McGowen provided context on MLGW’s service application process and the corresponding studies tied to power demand. When a company applies for power demand, MLGW conducts an impact study. The utility company has several service study applications in the queue, nearly
a year out, McGowen said.
To date, MLGW is providing power for 16 data centers, McGowen said.
In the case of data centers, McGowen said there are only two that would be coming online in the near future worth a combined 159 megawatts. One is the second 150-megawatt substation for SpaceXAI’s Colossus data center at 3231 Paul R. Lowry Road. He said that substation will be completed by fall.
The other 9 megawatts are associated with 5C Group plans for a data center at the former Fred’s headquarters at 4300 Getwell Road. Fred's closed in 2019; Canada-based 5C is a subsidiary of Hypertec Cloud. The company builds artificial intelligence infrastructure.
Both of those expansions were previously approved and are coming online before the end of the year, McGowen said.
McGowen said there are plans for an additional 350 megawatts in early 2027 with 50 megawatts at the 5C data center and 300 megawatts in the Pidgeon Industrial Park, where Colossus is located. The latter he said, would require Tennessee Valley Authority (TVA) approval.
Any demand over 100 megawatts requires TVA board approval.
"Both of those are not going to get any traction until after the first of the year and into the first quarter of 2027," he said. "In the next six months there is no data center that will pop up anywhere."
MLGW to propose water rate for data centers, following TVA vote
McGowen said MLGW is looking to bring a data center water rate to City Council with its next budget proposal.
McGowen said currently, Colossus is not among the top 20 water users with MLGW. However, he expects SpaceXAI's data center to be No. 5 or No. 7, by the end of the year. It would be the only data center on the list, he said.
He also highlighted the recently passed TVA data center rates, which require data center developers to pay a higher rate as well as each data center over 5 megawatts. Companies are required to pay $1.5 million per megawatt. That new rate plan will take effect on Oct. 1.
McGowen also discussed curtailment orders and the agreement for companies to reduce power when the MLGW grid is under strain (i.e. severe storm and power outages). This helps ensure residents and other commercial customers do not need to reduce power.
SpaceXAI is involved in the power interruption program, McGowen said, and has reduced its capacity to 5 megawatts during these curtailment periods.
Multiple power sources
When asked about the number of turbines used by SpaceXAI, McGowen said he was unsure of “the exact number of turbines.” The company operates in Shelby County. In July 2025, the Shelby County Health Department approved an operations permit for 15 gas turbines at Colossus.
SpaceXAI uses microgrids, including gas turbines, solar panels and battery storage, to sustain power. Those off-grid connections can be used to help power SpaceXAI's data centers without MLGW or TVA power connections.
Future greywater plant to reduce strain
McGowen said the company is using less than a million gallons a day and has a peak demand of 1.82 million gallons via its MLGW utility agreement. That demand, he said, will be shifted once the (greywater) Colossus Water Recycling Plant is built.
The $80 million greywater plant broke ground in October 2025; however, construction has been delayed since April. In June, city leadership said construction would resume in 2027.
Also, in a post to X, June 23, Elon Musk said he believes SpaceX could resume construction earlier. "Actually, I think we can probably resume working on the wastewater treatment plant in Q4," Musk said.
McGowen said construction on that wastewater treatment plant could be completed by 2028.
The greywater plant is supposed to reduce strain on the Memphis Aquifer by 9%. SpaceXAI paused construction in April to focus on building its Colossus 2 data center, located at 5420 Tulane Road.
Currently, TVA, the City of Memphis and PMC Biogenix are MLGW's three largest water users, McGowen said.
Neil Strebig is a journalist with The Commercial Appeal. He can be reached at neil.strebig@commercialappeal.com, 901-426-0679
This article originally appeared on Memphis Commercial Appeal: MLGW says SpaceXAI to be 5th largest water user with new rates to come
