Elon Musk has given up on solar power (on Earth)

Has Elon Musk given up on Tesla’s Master Plans, the electrified economy and solar energy as we know it? From the SpaceX IPO filing released this week, it certainly seems that way.

A summary for those not caught up in the Musk-verse: Tesla has released four Master Plans over the years, and although the details changed, the common thread was the electrification of the economy. Musk said it best in his first edition: “The overarching goal of Tesla motors… is to help accelerate the transition from a mine-and-burn hydrocarbon economy to a solar-electric economy.”

But recently one of Musk’s companies, xAI, has embraced the mine-and-burn hydrocarbon economy by using dozens of unregulated natural gas turbines to power its data centers with plans to purchase an additional $2.8 billion, effectively cementing the fossil fuel’s role in the company’s AI business.

It’s a strange turn for a businessman who built his empire on clean energy — and who has no qualms about directing 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, grid-scale battery storage systems that the company will use to manage peak loads. But so far, xAI has not purchased a materially significant number of solar panels from Tesla.

Solar isn’t missing from the SpaceX filing, it’s just all focused on space, which the company is touting as the future of data center power. Terrestrial solar gets a few mentions – not as a power source for xAI data centers, but instead to show how much better SpaceX thinks solar will be in space.

It’s no secret that Musk and other Silicon Valley executives have become obsessed with solar energy from space. SpaceX says space-based solar panels can generate “more than five times as much energy” as solar panels on Earth thanks to 24/7 lighting. As AI data centers have met opposition here on Earth, CEOs like Musk have started thinking about large server racks in space, powered by the 24/7 sunshine. Hammer, meet nail.

Even if SpaceX manages to drive down the cost of putting a data center in orbit, the economics are challenging at best. Power prices for Starlink satellites are many times what a terrestrial data center typically spends, and protecting chips from the rigors of space won’t be easy or cheap. It’s also not clear whether AI training can be spread across multiple satellites, leaving a significant portion of AI work Earth-bound. It’s not just one problem SpaceX needs to solve, but many.

It’s likely that Musk views xAI’s current data centers as a stopgap, that once SpaceX is able to put gigawatts of servers into orbit — in his mind, probably only a few years from now — he’ll scrap everything on the ground here, including natural gas turbines, and stop thinking about NIMBYs. The risk, of course, is that he is wrong.

It’s not just NIMBYs that Musk is concerned about, however. He is clearly concerned that the computing needs of AI will soon exceed what we can provide here on Earth. Throughout the SEC filing are references to “annual AI compute growth at terawatt scale,” which requires power. That’s a staggering figure when you consider that all data centers in the world today consume approximately 40 gigawatts.

This is Musk’s “first principles” thinking in action. At one point he assumed that the world would need an additional terawatt of computing power every year, and he worked 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 that the power shortage could be much greater than what research estimates suggest,” the company argues.

Possible? Sure, I think. But think about what humanity uses today approximately 35,000 terawatt hours of energy per year, or about 4 terawatts on a continuous basis. Energy demand has been increasing recently, and for AI it is likely to be in a phase of exponential growth, which could continue or level off. We can’t know at this point, but if there’s one thing Musk is good at, it’s spotting a trend at the inflection point and extrapolating wildly.

This is where Musk’s problems come back down to earth. I’m no rocket scientist, but I suspect that transporting solar panels on a flatbed truck requires less energy than putting them into orbit. In addition, space-ready solar panels will have to be produced on an unprecedented scale. No insurmountable problems, but perhaps also a distraction. For example, we have barely discovered the potential of solar energy here on Earth.

The perfect does not have to be the enemy of the good. There is plenty of room to improve things here on Earth, even as we chase our dreams in the stars.

Just three years ago, Musk and his colleagues at Tesla released “Master Plan Part 3,” which thoughtfully outlined a “plan to eliminate fossil fuels.” A good starting point can be the xAI data centers.