The Chamber of Commerce and local leadership have been silent on the xAI data center's tradeoffs to neighboring communities and natural resources
This story was originally published by MLK50: Justice Through Journalism. Subscribe to their newsletter here.
Over the last month, a supercomputer has been quietly set up near President’s Island, a gritty river port neighboring Boxtown, a historically Black community in Southwest Memphis.
The people who live in Boxtown found out about the gigafactory — a facility to house and power the supercomputer — with the rest of the world when the Memphis Chamber of Commerce made a “transformative” announcement” on June 5. Called xAI, it’s a project of Elon Musk, the CEO of Tesla and SpaceX.
xAI is the latest industry that’s come to the area with little government oversight. The chamber and Memphis, Gas, Light, and Water Division leadership signed a non-disclosure agreement, citing privacy of economic development.
Because MGLW is a public-owned utility, advocates believe the public should have had a say. Instead, Southwest Memphis residents — and MLGW customers throughout the region — were left in the dark and without a voice in the sustainability of their natural resources.
What is xAI doing in Memphis?xAI, a startup led by Elon Musk, CEO of Tesla and SpaceX, is building a powerful data center and supercomputer in a Memphis warehouse to power artificial intelligence products, such as Grok. Grok is an emerging chat AI currently being developed and tested on the social platform X. Musk is working on an accelerated timeline to catch up with other companies developing similar technologies. |
xAI has drawn 30,000 gallons from the Memphis Sand Aquifer, the region’s drinking water supply, every day since beginning its initial operations, according to MLGW.
Of the utility’s 10 wellfields, the one in Southwest Memphis is the closest to the arsenic-contaminated groundwater near a closed coal-fired plant on the industrial island.
Environmental and justice advocates worry that another heavy water user would spread the toxin deeper into the groundwater. In addition to aquifer vulnerability, advocates and customers worry about the resiliency of the electrical grid after rolling blackouts and boil water advisories over the last few years.
“We can’t continue to perpetuate and allow corporations to act in this exact same way that they’ve done for nearly 100 years, where they continue to exploit our communities.
Even as xAI is on track to use enough energy to power a small city, MLGW representatives have said in city council and utility board meetings that its system has the capacity to take on the demand, safely and reliably.
Still, many MLGW customers aren’t feeling confident, and they have a hard time seeing the benefits, because they haven’t been included in conversations. For KeShaun Pearson, who grew up in Southwest Memphis and is the president of Memphis Community Against Pollution, the approach to bringing xAI to Memphis repeats problematic economic development decisions of the past. He points to the proposed Byhalia pipeline and Sterilization Services of Tennessee, where sickening emissions poisoned the air unchecked for decades.
“This is, unfortunately, the same playbook,” said Pearson. “We can’t continue to perpetuate and allow corporations to act in this exact same way that they’ve done for nearly 100 years, where they continue to exploit our communities. We don’t bear any of the benefits. We only bear the burden.”
Enough to power 80,000 households
Before xAI arrived in Memphis, many MLGW customers were already anxious about the possibility of their utility staggering power outages to conserve energy.
In the last three years, the city has experienced unprecedented weather events, such as arctic blasts and devastating supercells, that have left people to endure difficult circumstances in extremely high and low temperatures.
For LaTricea Adams, a Memphian who serves on the White House Environmental Justice Advisory Council, it doesn’t even take a storm to affect her family’s home. In Whitehaven, her mother loses power weekly, she said. She questions whether the utility can manage the commitments they made and if they considered who might be most adversely affected if they can’t.
“We continue to be left depleted, especially in already vulnerable communities,” said Adams, who is also the CEO and president of Young, Gifted, and Green.
Recently, MLGW customers learned that xAI’s demand, once fully operational, will be in the range of 150 megawatts a day, enough energy to power 80,000 households.
In an interview with MLK50: Justice Through Journalism, MLGW President and CEO Doug McGowen said the utility can accommodate xAI’s demand, even during periods of extreme weather, because the industrial park already has up to 50 megawatts of electric energy available for commercial use. Additionally, an agreement is underway between xAI and the Tennessee Valley Authority to reduce heavy loads during peak energy demands.
“On rare occasions, there may be the opportunity for us to take action [to reduce heavy loads]. More important for people to know is that we are asking the company to be the first one to take action, and that is to reduce their electric demand so that everybody else can maintain their electric power,” he said.
“We continue to be left depleted, especially in already vulnerable communities”
However, concerns persist, not just for residents but the business community. On July 9, tech journalists reported that partnership discussions between the computer technology company Oracle and xAI broke down in part due to Oracle’s” concerns that the startup’s preferred location lacked access to an adequate power supply.”
MLGW has since announced plans to increase the capacity of a nearby substation by 50 megawatts at a cost of $760,000. The utility — which helps fund its budget through the sale of electricity, water, and gas — imposed a 12% rate hike this winter for infrastructure improvements despite many of its customers experiencing energy burden.
MLGW told MLK50 that the substation expansion falls within its existing budget. The anticipated $7.5 million monthly revenue from xAI’s utility bill is expected to more than offset the expenditure and support further grid reliability and modernization efforts, its media team said.
Meanwhile, to supplement electricity, xAI has brought its own gas-powered turbines on site, which have been running since June. These turbines have the potential to emit high levels of carbon and particulate matter, but no air permits are on file for xAI at the Shelby County Health Department or with the Tennessee Department of Environment and Conservation.
Turbines that burn distillate fuel oil at the TVA’s power plant already pollute Southwest Memphis. In 2023, they emitted 2 million tons of carbon dioxide, 236 tons of nitrogen oxide, and 13 tons of sulfur oxide, according to a new report from the Southern Environmental Law Center. All the while, Boxtown experiences some of the highest asthma rates in the city.
Another company drawing from the aquifer
In the era of climate change, mainly caused by fossil fuels, people are uneasy not just about having enough power during harsh weather but also about having enough fresh water. Some of that is because of drier conditions but also because of using too much water.
Over-extraction has long been top of mind for Sarah Houston, executive director of Protect Our Aquifer. The watchdog group has been fighting for stronger regulations for the aquifer and infrastructure improvements as the industry expands across the region.
“When you have the TVA and our public utility working within this space of economic development, without putting the needs of our current customers access to clean drinking water, and reliable energy ahead of those decisions, it’s a really dangerous situation they’re [chamber and MLGW leadership] putting our community in,” she said.
xAI is operating in a city without a facility that can process recycled wastewater, a scientifically-backed solution for water conservation.
Discussions of such a “greywater” facility are underway. While MLGW has invited xAI to collaborate on a municipal facility, the company has expressed interest in developing its own. But without a facility right now, xAI is using 30,000 gallons a day from the aquifer. It is projected to jump to 1 million gallons a day when xAI is at full speed in a few months.
The addition of another large company drawing from the aquifer comes with contamination concerns, said Houston.
Under the coal ash pits at TVA’s plant, a portion now closed in 2018, are elevated levels of arsenic. Extensive water pumping poses understudied risks for arsenic migration within the aquifer, potentially drawing the toxic metal deeper into the groundwater, Houston said.
Three miles away from the contamination is the Davis Wellfield, which pumps and treats water for Southwest Memphis communities. Known gaps exist in the protective clay layers of the aquifer near the wellfield, which means pollutants can seep into the water supply. Additionally, the water at this wellfield is considered young, coming from the surface over the last 65 years, and young water is more vulnerable to pollutants.
MLK50 reached out to TVA for comment about their involvement in xAI planning, and they did not respond at the time of publication.
No commitments, no accountability
Environmental justice advocates — including Pearson, Adams, and Houston — want to see a clear plan for xAI, both for its environmental impact and economic benefits.
They call xAI an experiment that could easily pack up, leaving Memphis with damaged natural resources, more polluted communities, and without a return on its investment.
xAI is not seeking tax incentives, with the largest local investment so far coming from MLGW’s six-figure substation expansion that supports the company’s power demand.
Both MLGW and the chamber have celebrated large “capital investments” that xAI will make in Memphis. In addition to revenue from xAI’s utility bill, they point to jobs as a win.
The chamber, the mayor’s office, and the Economic Development Growth Engine of Shelby County would not confirm job counts or other specific economic benefits with MLK50, despite repeated requests for clarity. Some clarity on specific benefits lies within xAI’s job postings.
Seven positions, mostly related to security and troubleshooting, are listed out of Memphis. Jobs in the design and research of xAI have been predominantly out of the Bay Area.
MLK50 asked chamber CEO and President Ted Townsend about community distrust and their desire to know exactly what xAI would bring.
“The fact that [xAI] calls Memphis home is what we are excited about, and we hope that everyone else is as well and that those concerns are offset by the promises and opportunities that this represents,” he said.
The facility where xAI operates, located at 3231 Paul Lowery Road, was once occupied by Electrolux, an appliance manufacturer who shut down its Memphis operation in 2022. Electrolux sold the plant to a commercial real estate firm whose name is still on the deed. It is unclear if xAI is leasing from the firm or purchasing the facility.
“The fact that [xAI] calls Memphis home is what we are excited about, and we hope that everyone else is as well and that those concerns are offset by the promises and opportunities that this represents.”
Memphis joins a growing list of cities, where infrastructure plans for supercomputers unfold in communities of color. Environmental justice advocates say that without explicit commitments, there is a lack of accountability and missed opportunities to meet community needs in exchange for the heavy use of their energy and water.
Adams said city leaders didn’t push for community benefits agreements, instead “coming in and telling the community what is the benefit.” But she said the chance to change course remains.
“It’s not necessarily over,” she said. “There was a complete disregard of environmental justice … and all the community thinks that we should be doing, was started out wrong. There’s still somewhat of a better path forward.”
