Why Elon Musk and his xAI data center in Memphis loom over TVA Trump terminations

Why Elon Musk and his xAI data center in Memphis loom over TVA Trump terminations

Daniel Dassow
Neil Strebig

Knoxville News Sentinel

April 11, 2025, 5:03 a.m. ET

• Elon Musk is connected to the Tennessee Valley Authority because the federal utility agreed to supply power to his Memphis AI facilities.
• As Musk's company xAI ramps up power and water use, Memphis residents have become more vocal in opposition to the project.
• After President Trump fired two TVA board members, the governing body has lost the ability to approve new projects, which could include xAI expansions.

Before President Donald Trump fired two Tennessee Valley Authority board members without saying why and before he appointed billionaire Elon Musk to oversee massive federal spending cuts, Musk had a vested interest in TVA.

The Tesla and SpaceX CEO's artificial intelligence company, xAI, announced plans last June to build its Colossus supercomputer in Memphis to train and operate the AI model Grok, available on Musk's social media platform X.

Environmental group leaders and elected officials said TVA helped Musk bring his AI company to the utility's service region, but could move too slowly as a public agency for the billionaire's taste and growing electricity needs.

Members of the TVA Board of Directors are nominated by the president and confirmed by the Senate. The board approved xAI's initial request for 150 megawatts of electricity, enough to power as many as 100,000 homes, in November. TVA provides electricity to 10 million people in seven states.

But as the full energy and water demands for the xAI site have come to light, the project has received a significant uptick in public criticism and pushback from elected officials, environmental groups, Memphis residents and social media users.

Since June, the company has expanded its operations at a former Electrolux appliances facility from 100,000 to 200,000 graphic processing units, or GPUs. In December, xAI announced plans to reach an operating capacity of 1 million GPUs.

If it hits the 1 million GPU mark, xAI will require at least 1 gigawatt of power to operate its facilities. That's about one-third of all power supplied by Memphis Light, Gas and Water, the local utility that buys electricity from TVA to sell to xAI.

After Trump fired TVA Chair Joe Ritch and board member Michelle Moore, the board was left without the minimum number of members needed to approve new investments or programs. Just before the board lost its quorum, members selected Don Moul as the federal utility's next president and CEO, effective April 9.

The board planned to review a proposal for a separate electricity rate class for power-hungry data centers at its quarterly meeting in May, though the possible policy change is on pause because the Trump administration stripped the board of its quorum, said TVA spokesperson Scott Brooks.

"At this point, we aren't aware of any plans to change the scheduled May 7 listening session nor May 8 board meeting," Brooks told Knox News in an email.

TVA has said it no longer actively recruits data centers to its service region, partly because they do not create many jobs relative to the power they require.

White House officials have not responded to requests for comment about why the Trump administration fired Ritch and Moore. With Musk's help, Trump officials have fired tens of thousands of workers from the federal government.

Why Elon Musk's AI facilities face pushback in Memphis

The xAI facility in the former Electrolux plant on Paul R. Lowry Road was built in two 150-megawatt phases and uses an estimated 1.3 million gallons of water daily. The plant also uses its own stationary gas turbines to meet peak energy demands outside of the power TVA can provide through the Memphis utility.

CTC Property, an affiliate of xAI, filed an operations permit with the Shelby County Health Department in November to permanently use 15 natural gas turbines at the site. The turbines will run 24/7, according to the application.

CTC Property purchased 186 acres along Tulane Road in South Memphis in February for $79.9 million, according to the Shelby County Register of Deeds. In March, Memphis Light, Gas and Water confirmed xAI has requested a study for an additional 260 megawatts of power at the Tulane Road site.

Any demand of more than 100 megawatts requires TVA approval. TVA approved a power agreement to meet the power demands of xAI's first 150-megawatt expansion.

Criticism in Memphis has ramped up since January, largely focused around three concerns: potential air and water pollution, sky-high utility demands and a perceived lack of transparency.

The Southern Environmental Law Center submitted a letter to the Shelby County Health Department on April 9 asserting xAI is violating the Clean Air Act with the use of 35 natural gas turbines at its Paul R. Lowry Road facility in South Memphis.

Amanda Garcia of the Southern Environmental Law Center said separately from the letter that the organization is concerned about the lack of a quorum on the TVA board and the detrimental effects that might have on restricting data centers such as xAI.

"When the board approved xAI's massive request for power last November, board members expressed concern that families might be unfairly footing the bill for new power plants to fuel data centers that pour profits in the pockets of the wealthiest companies in the world," Garcia said.

Garcia acknowledged the board has alluded to addressing the issue, but remains concerned about how TVA leaders will hold data centers accountable and reduce costs for families in TVA's service region.

"This is particularly concerning in Memphis, where nearly half of families have high energy burdens and sometimes have to choose between keeping the lights on and other needs like food and medicine," she said.

Musk's influence in the Trump administration could be a "complicating factor" for TVA, said Stephen Smith, executive director of the Southern Alliance for Clean Energy. The group anticipates the next budget proposed by the Trump administration might reference divesting parts or all of TVA from the federal government, though the utility isn't funded by tax dollars.

"We are very concerned that there is an intentional effort afoot to destabilize the leadership of TVA," Smith told Knox News. "Given the approach to the federal government that Trump and DOGE and Musk have taken, I would say that this is the most precarious situation that the TVA as a structure has been in since at least the 1950s."

As Musk needs more power infrastructure to fuel his competition with other AI developers, TVA may not be able to deliver fast enough, especially if the board is unable to approve new items.

"Elon and his team have been very complimentary of TVA initially, but I think where they're going to get frustrated with TVA very quickly is the fact that TVA is not going to approve those substations as fast as they want," Smith said.

U.S. Sens. Marsha Blackburn and Bill Hagerty of Tennessee said the TVA board terminations created an opportunity for the White House to select nominees who are supportive of nuclear power. The Trump administration has not nominated new members to the board.

Daniel Dassow is a growth and development reporter at Knox News focused on technology and energy. Email: daniel.dassow@knoxnews.com. Signal: @danieldassow.24.

Neil Strebig is a journalist with The Commercial Appeal. He can be reached at neil.strebig@commercialappeal.com, 901-426-0679 or via X/Twitter: @neilStrebig