Climate · Energy and Infrastructure
SpaceX Seeks Tax Breaks for a $24 Billion Data Center and Gas Power Plant in Starbase, Texas, Where the Company Runs the Town
The plan would put a self powered supercomputing campus and a 35 turbine natural gas plant on 444 acres at the tip of South Texas. Two of the three officials who will vote on the city’s tax break work for the company asking for it, and the decisions come weeks before a new governor takes office promising to slow data center growth.
The company is asking its own hometown to cut its taxes.
SpaceX has asked local governments in far South Texas for property tax relief on what it describes as a gas fired power plant and super compute facility, a project with an estimated initial cost of 24 billion dollars. The site is a 444 acre tract inside Starbase, the small city that grew up around the company’s launch complex near the Port of Brownsville. The proposal ties together several of the most contested questions in American energy at the moment: how much electricity artificial intelligence will consume, whether the companies building it should supply their own power from fossil fuels, who should receive public subsidies, and who decides when a company effectively controls the government that regulates it. It also arrives at a delicate political moment, because Texas voters elected a governor who campaigned on restricting data centers, and she takes office in January. For continuing coverage of the energy and infrastructure choices shaping the climate, visit the Sustainable Action Now climate reporting.
What SpaceX Wants to Build
A public notice issued by Starbase on November 6 describes a gas fired power plant and super compute facility that SpaceX would build, own and operate, with about 24 billion dollars in capital investment for the initial phases and the possibility of expansion later. An air permit registration reviewed by regional news outlets describes a plant of 35 natural gas turbines with a combined capacity of roughly 750 megawatts, reported in some accounts as 748 megawatts, and a separate SpaceX affiliate has proposed an eight mile natural gas pipeline to the site. The turbines are described as mobile or temporary units. According to Cameron County’s agenda materials, the plant would provide behind the meter power generation to limit the burden of new load on the Electric Reliability Council of Texas grid, which means the data center would draw from its own plant and not from the public grid. SpaceX plans closed loop cooling, and the Texas Commission on Environmental Quality lists the project’s air permitting as pending. SpaceX has not been quoted at length in the coverage reviewed here, and several outlets say they sought comment.
The project is part of a larger push into artificial intelligence infrastructure. SpaceX has merged with the AI company xAI, and some reports describe a much larger multi state buildout, with a figure of 74 billion dollars across Texas and Arizona cited in one summary of coverage. That larger number could not be confirmed from the sources reviewed here and should be treated with caution. What is documented is that the company has described plans to buy 2.8 billion dollars worth of gas turbines over the next three years and has built gas generation at a data center site near Memphis.
The company is asking the city it effectively controls to approve a tax break for the company.
A Company Town Votes on Its Own Tax Break
Starbase has about 500 residents and was incorporated in 2021 after a petition from SpaceX employees. Its three member city commission will hold a public meeting at 7 p.m. on December 9 to consider a property tax abatement under Chapter 312 of the Texas Tax Code and a related economic development agreement under Chapter 380. Mayor Robert Peden is SpaceX’s vice president of Texas test and launch and has worked at the company since 2013, and Commissioner Jordan Buss, elected in 2025, is the company’s senior director of environmental, health and safety. The third commissioner, Lois Wallace, does not work for SpaceX. The city’s notice does not state the value or duration of the break, and the site lies within an enterprise zone designated by Cameron County, which makes it eligible. Critics argue that the structure amounts to the company granting itself a subsidy, while the arrangement is legal under Texas law and SpaceX has not been reported to dispute that.
The county is considering a separate break. SpaceX’s earlier 10 year abatement from Cameron County, which dates to 2014, has expired, and commissioners are expected to approve a public notice at their November 17 meeting for a new 10 year abatement tied to the data center and gas plant. A public hearing and vote are scheduled for December 29. The county has relied in the past on investment and employment figures supplied by the company, which has reported more than 3 billion dollars invested in Starbase infrastructure and more than 3,400 employees and contractors as of 2024.
How the Land Left Brownsville
The tract was once part of Brownsville. In August, the Brownsville City Commission voted to remove the 444.45 acres from city limits in exchange for a commitment from SpaceX of up to 220 million dollars for regional water and wastewater infrastructure. According to reports, a company attorney told commissioners they would have to accept the deal that day or the company would look elsewhere. Starbase annexed the land in September, and grading has reportedly begun. On November 4, Brownsville commissioners unanimously approved a 90 day moratorium on new data center permits after residents criticized the de-annexation, but the city has said the moratorium does not extend to the SpaceX property because it is no longer inside Brownsville.
What backers point to
Billions of dollars of investment and a self supplied power plant that avoids loading the state grid.
Up to 220 million dollars for regional water and wastewater projects.
Closed loop cooling and a legal, publicly noticed approval process.
What critics point to
Two of three Starbase commissioners work for the applicant.
Thirty five turbines raise air quality and water supply concerns.
The land was moved out of reach of Brownsville’s moratorium.
Air, Water and Community Opposition
Environmental and community groups have organized against the plan. Members of the South Texas Environmental Justice Network protested outside the Cameron County courthouse and urged officials to oppose data centers in the Rio Grande Valley, citing air pollution, water use and energy bills. Group co-founder Bekah Hinojosa called for a full 180 day data center moratorium and described the project as frankly terrifying, and local attorney Jacqueline Morales said the de-annexation ignored months of community warnings. Water is a particular worry in a semi arid region with a severe water supply problem. One account cites a SpaceX projection that Starbase operations will eventually need about 2 million gallons a day, although that figure refers to Starbase operations broadly, not only the data center. Gas turbines emit nitrogen oxides and other pollutants, and the scale of a 35 turbine plant is why the pending state air permit is likely to draw attention, though the permit analysis has not yet been made public.
Why the December Dates Matter
Governor elect Gina Hinojosa, a Democrat who takes office in January 2027, campaigned on ending tax giveaways to AI data centers and pausing new approvals until the Legislature passes protective laws. Republican Governor Greg Abbott has paused some data center approvals by state agencies, which could slow the project, and several bills have been proposed in the Legislature, including one by Senator Judith Zaffirini to bar local governments from granting data center tax abatements and one by Senator Joan Huffman to repeal sales tax exemptions for data centers. The local votes on December 9 and December 29 would come before any of those measures could take effect.
The Bigger Picture for Texas Energy
The Starbase proposal is part of a trend. Data centers across Texas are increasingly building their own gas fired generation, in part because connecting to the grid can take years and because turbine makers have been selling out their capacity. The International Energy Agency projects that global data center electricity use will roughly double by 2030, and gas turbine manufacturer GE Vernova has said it is essentially sold out of production capacity through 2030. Self supplied power eases pressure on the shared grid, which advocates say protects other customers, but it also locks in fossil fuel emissions at a time when many states are trying to cut them, and it can bypass the public review that comes with grid interconnection. Whether Texas leaders treat these projects as economic engines or as costs to be regulated is one of the central questions of the coming legislative session.
- 2014Cameron County grants SpaceX a first 10 year property tax abatement.
- August 2026Brownsville de-annexes 444 acres in exchange for up to 220 million dollars in water investment.
- September 2026Starbase annexes the land.
- November 4, 2026Brownsville adopts a 90 day moratorium on new data center permits that excludes the SpaceX tract.
- November 6, 2026Starbase issues the public notice for the tax breaks.
- November 17, 2026Cameron County commissioners expected to approve a public notice for a new abatement.
- December 9, 2026Starbase holds its public meeting on the abatement and development agreement.
- December 29, 2026County hearing and vote on the abatement.
- January 2027Governor Hinojosa takes office.
Residents who want to weigh in have a defined window. Both hearings are public, and the details of the tax breaks, including their value and duration, are expected to be spelled out in the materials released before the votes. Whatever the outcome, the case shows how local decisions in a small border county can set the course for some of the largest energy projects in the country.
