Has Elon Musk given up on Tesla’s Master Plans, the electrified economy, solar energy as we know it? From SpaceX’s IPO filing released this week, it certainly seems that way.
A recap for those not into the Musk-verse: Tesla is out four Regulatory Plans Over the years, and while the details vary, the through line has been the electrification of the economy. Musk put it best in his first release: “The primary purpose of Tesla Motors…is to help accelerate the transition from a hydrocarbon mining and burning economy to a solar electricity economy.”
But recently, one of Musk’s companies, xAI, has embraced the economics of mining and burning hydrocarbons, using dozens of uncontrolled natural gas turbines to power its data centers with plans to buy more $2.8 billion, essentially boosting the fossil fuel’s role in the company’s AI operations.
It’s a strange turn for a businessman who built his empire on clean energy — and who doesn’t hesitate to direct his companies to buy from each other. SpaceX has spent $131 million on 1,279 Cybertrucks, and xAI has spent $697 million over the past two years on Tesla Megapacks, which are grid-scale battery storage systems the company will use to manage peak loads. But so far, xAI has not actually bought a significant number of solar panels from Tesla.
Solar power isn’t missing from SpaceX’s filing, it’s just focused on space, which the company touts as the future of data center power. Ground-based solar is garnering some mentions — not as a power source for xAI data centers, but to show how much better SpaceX thinks space solar will be.
It’s no secret that Musk and other Silicon Valley executives have become obsessed with space-based solar power. SpaceX says space-based solar arrays can produce “more than five times the energy” of ground-based ones thanks to 24/7 lighting. As AI data centers have faced opposition here on Earth, CEOs like Musk have started thinking about big rack servers in space powered by that 24/7 sunshine. Hammer, meet nail.
Even if SpaceX is able to lower the cost of boosting a data center into orbit, the economics are challenging at best. Power prices for Starlink satellites are many times what a ground-based data center typically spends, and protecting the chips from the extremes of space won’t be easy or cheap. It’s also unclear whether AI training can be distributed across multiple satellites, leaving a significant chunk of AI work on Earth. It’s not just one problem that SpaceX needs to solve, but many.
It’s likely that Musk sees xAI’s current data centers as stopgaps, that once SpaceX can get gigawatts worth of servers into orbit—probably just a few years away, in his mind—he’ll take down everything here on the ground, including gas turbines, and no longer have to think about NIMBYs. The danger, of course, is that he is wrong.
Musk isn’t just worried about NIMBYs, though. He clearly worries that the computational demands from AI will quickly outstrip what we can provide here on Earth. Sprinkled throughout the SEC filing are references to “terawatt-scale annual AI computing deployment,” which will require power to match. That’s an amazing number when you consider that all the world’s data centers use about 40 gigawatts today.
This is Musk’s “first principles” thinking in action. At one point, he assumed the world would need an extra terawatt worth of calculation each year and worked back from there. “We believe that third-party estimates of data center demand are limited by the practical supply constraints that exist in a terrestrial context, and the power shortage may be much greater than survey estimates suggest,” the company argues.
Possible; Sure, I guess. But consider that humanity today uses about 35,000 terawatt hours of energy per year, or about 4 terawatts on a continuous basis. Energy demand has been increasing lately and for AI, it is probably in an exponential growth phase, which could either continue or level off. We have no way of knowing at this point, but if there’s one thing Musk is good at, it’s spotting a trend at its tipping point and wildly extrapolating.
This is where Musk’s problems come back down to Earth. I’m no rocket scientist, but I suspect that sending solar panels in a flatbed truck uses less energy than sending them into orbit. Additionally, space-ready solar panels would need to be manufactured on an unprecedented scale. Not insurmountable problems, but maybe a distraction. We’ve barely scratched the surface of solar energy potential here on Earth, for example.
Perfect doesn’t have to be the enemy of good. There is plenty of room for improvement here on Earth, even as we chase our dreams in the stars.
Just three years ago, Musk and his colleagues at Tesla released their “Master Plan Part 3,” which carefully outlined a “plan to phase out fossil fuels.” A good starting point might be xAI’s data centers.
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