Tennessee Valley Authority has entered into a service agreement with Elon Musk's SpaceXAI to help power the company's Mid-South data centers, including higher rates.
On Aug. 20, the TVA Board of Directors approved a load request greater than 100 megawatts for MZX Tech LLC, an affiliate of SpaceXAI. The specifics of the deal were not disclosed during the board meeting, nor was the specific utility total associated with the service agreement.
MZX Tech owns the 186.13 acres along Tulane Road, including SpaceXAI's Colossus 2 site at 5420 Tulane Road. The company also owns a nearby power plant at 2875 Stanton Road (the former Duke Energy site) and the surrounding 104 acres in Southaven, Mississippi.
data centers new rate, offset burden for other customers
Dan Pratt, TVA Senior Vice President of customer relations and economic development said MZX Tech LLC will be a direct TVA customer and willabide by the new rate for data centers, which the board also passed during its Aug. 20 meeting.
The new rate will usher in a 10% increase for data centers using more than 5 megawatts. Before, data centers were paying the standard commercial/industrial rate.
"The partnership between SpaceXAI, TVA and Memphis Light, Gas and Water remains very strong," Pratt said.
Pratt added that SpaceXAI will build the infrastructure necessary, such as transmission lines and transformers, to service the load. The service agreement also signifies a notable change for SpaceXAI, as it has operated via off-grid connection using a combination of microgrids.
The company's Southaven power plant uses gas turbines to power its Colossus 2 data center. The company also utilizes solar and battery storage (via Tesla Megapacks) to help power its Shelby County data centers.
TVA's decision also comes after the Memphis City Council has begun taking steps towards a moratorium that would temporarily ban new data center construction.
Following the board meeting, TVA interim President and CEO Mike Skaggs was asked by The Commercial Appeal why the board voted, with minimal discussion, to approve the new service agreement. The day before the TVA meeting, Memphis City Council moved towards reducing data center construction and expansion through a potential moratorium.
Skaggs said TVA and SpaceXAI had already begun discussions on the service agreement before the moratorium talks had begun; the organization felt it "had to honor those agreements."
More gigawatts on the way
In August, The Commercial Appeal reported that MLGW is providing less than 160 megawatts to SpaceXAI between its two Shelby County campuses (Tulane Road and Paul R. Lowry Road).
In July, during a quarterly earnings call, Musk said the company is looking to hit 2 gigawatts of compute capacity by the end of the year, with plans to hit 20 gigawatts of capacity (energy and compute) by 2027 between its SpaceXAI data centers.
Currently, the active SpaceXAI data centers are Colossus and Colossus 2 in Memphis. The company has plans for additional data centers in both Shelby County in Tennessee and DeSoto County in North Mississippi.
SpaceXAI rep speaks on jobs created, investments
During the public comment period of the TVA board meeting, SpaceXAI energy and data center development lead Riley Trettel said the company has invested over $60 billion in its data center expansion, while providing 6,000 construction jobs and 700 permanent jobs.
Trettel also said the company has plans to build a 3.3-gigawatt battery storage project.
While battery storage is an effective microgrid and helps create redundancy, battery storage options do not create power; the units only help with load management. The units are not primary electricity generators, such as a transformers, gas turbines or solar panels.
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: TVA board approves new service agreement with SpaceXAI
