Water And Electric For Elon Musk’s xAI Supercomputer In Memphis Projected To Cost Millions

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The Tennessee Conservative [By Adelia Kirchner] –

Maintaining xAI’s new building in Memphis, which the company calls “the world’s largest supercomputer” and the “largest capital investment by a new-to-market company in Memphis history,” is projected to cost millions.

The new supercomputer facility inside the old Electrolux factory in Southwest Memphis, could use up to 150 megawatts of power at peak times and will consume over 1 million gallons of water a day in order to cool computers and chill recirculating water.

CEO of Memphis Light, Gas & Water (MLGW), Doug McGowen, told city council members this week that MLGW will be increasing the capacity of a nearby electric substation to 50 megawatts by August 1st of this year in order to accommodate xAI’s needs.

This increase in capacity costs $760,000.

“We did all of our work to protect the rest of the customers, to make sure that everybody has the power they need, and clean water,” said McGowen.

He explained that xAI will also be constructing another electric substation by 2025 that will have 150 megawatts of capacity.

The plan is for xAI to be reimbursed for construction costs through a monthly “margin allowance” worth about $24 million.

This new substation still has to be approved by the Tennessee Valley Authority.

McGowen also noted that xAI paid for its own water tap and will be paying commercial water rates. 

“They will be paying exactly the bill that everybody, every other company pays,” he told Action News 5.

According to MLGW, xAI’s estimated electric bill will be $7.5 million per month and the annual cost of electricity for the Memphis facility will be around $90 million. 

The estimated water bill for the facility will be $67,000 a month and over $800,000 annually.

McGowen hopes that MLGW will be able to build a graywater plant to possibly serve xAI alongside many other industries in Memphis.

This would recycle wastewater for cooling purposes instead of tapping into Memphis’ drinking water supply.

City Council members stated that they were both excited about the potential of xAI’s endeavor as well as cautious about making sure things are done in the best interest of constituents and local ratepayers.

“This needs to be a good deal for Memphis so we are not looking back and being regretful,” said District 3 Memphis City Council Member Pearl Eva Walker.

In June, an anonymous source told the Daily Memphian that xAi and Elon Musk  would not be applying to receive any tax incentives and McGowen has since confirmed this fact, meaning that the project could significantly impact local property tax revenue.

Additionally, the Economic Development Growth Engine (EDGE) told Action 5 News that it did not offer any payment in lieu of taxes (PILOT) incentive to xAI.

About the Author: Adelia Kirchner is a Tennessee resident and reporter for the Tennessee Conservative. Currently the host of Subtle Rampage Podcast, she has also worked for the South Dakota State Legislature and interned for Senator Bill Hagerty’s Office in Nashville, Tennessee. You can reach Adelia at adelia@tennesseeconservativenews.com.

One thought on “Water And Electric For Elon Musk’s xAI Supercomputer In Memphis Projected To Cost Millions

  • July 10, 2024 at 5:00 pm

    How many jobs? SOme states are banning these because of the exact problems they’re causing – huge users of electric and water and very few jobs. At least they didn’t ask for money or tax breaks.

    Is Bill Lee going to give them money? I wouldn’t doubt it. But maybe he’s spent all the extra money on sports stadiums. He can really waste a lot of money.


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