Elon Musk confirms xAI wastewater treatment plant in Memphis on hold

Jason Haley of Southaven, MS, gave public comment against the Southaven turbines permit for xAI that MDEQ Permit Board approved later in the meeting.

• Elon Musk's xAI has paused plans for a greywater recycling facility in Memphis.

• The company is prioritizing the completion of its Colossus 2 data center.

• The proposed recycling plant was intended to reduce strain on the Memphis Aquifer.

• xAI has a growing presence in the Memphis area with multiple data center campuses.

Since Elon Musk's artificial intelligence company, xAI, arrived in Memphis, the company has been linked with the construction of a greywater recycling facility to ease the burden on the Memphis Aquifer.

However, for the time being, those plans are on hold.

On April 9, Musk posted on the social media platform X that xAI is focusing on completing construction at Colossus 2 before prioritizing the water recycling plant.

Musk's post came in response to xAI's statement regarding the Colossus Water Recycling Plant, in which the company said it is "committed to building a state-of-the-art water recycling plant in Memphis."

In January, the Tennessee Department of Environment and Conservation (TDEC) approved an operations permit for xAI affiliate, CTC Property LLC, for the recycled wastewater treatment facility. The plant is located at 3644 Paul R. Lowry Road, next to xAI's Colossus data center (its first data center in the Memphis area). The TNDEC permit expires in January 2031.

Since January 2026, seven construction permits have been filed with the Memphis and Shelby County Division of Planning and Development for the Colossus Water Recycling Plant, including two 1.5 million-gallon tanks and a canopy structure. The total estimated cost of construction for those seven permits filed is more than $17 million, according to the permit applications.

The Colossus Water Recycling Plant has been touted as an $80 million project, and one that has been mutually supported by the Greater Memphis Chamber and the City of Memphis dating back to 2024. Progress on the facility picked up speed in February 2025 when CTC Property LLC entered into a land purchase agreement the City of Memphis for 13 acres north of the Colossus data center at 3231 Paul R. Lowry Road. In March 2025, the Memphis City Council approved the land acquisition. Those 13 acres were a parcel originally part of a 186-acre city-owned tract associated with the T.E. Maxson Wastewater Treatment plant.

The Greater Memphis Chamber did not return a request for comment April 9.

In October, elected officials and xAI staff celebrated a ceremonial groundbreaking for the wastewater treatment plant.

The wastewater treatment plant has been a talking point with xAI since it arrived in Memphis, and if completed, the facility would reduce strain on the Memphis Aquifer by 9%. The approved project would repurpose 20% of the wastewater discharge from nearby T.E. Maxson. (The other 80% would continue as discharged back into the Mississippi River.)

The Colossus Water Recycling Plant would redistribute 13 million gallons of water between xAI and the Tennessee Valley Authority (TVA) for cooling purposes. The project was previously expected to include redistribution with Nucor Steel; however, the steel company is no longer involved with the project.

According to the TDEC permit, "operation of this reuse system will be regulated by a contract with the City of Memphis," and the City of Memphis will oversee the purchase of the affluent from T.E. Maxson.

The Commercial Appeal acquired a copy of the March 2025 land purchase agreement. According to the agreement approved by the City Council, the city has a small buyback clause if "substantial construction" has not been completed within one year. The city would then have the right of first refusal if xAI were to sell the 13 acres.

What is Colossus 2 and why is it a priority?

Colossus 2 is the name for xAI's second data center in the Memphis area. The Colossus 2 site is located at 5420 Tulane Road in Memphis' Whitehaven neighborhood.

In February 2025, CTC Property LLC purchased 186.13 acres for $79.9 million, according to the Shelby County Register of Deeds. That land ownership was later transferred to another xAI affiliate, MZX Tech LLC in July 2025.

Plans for the Colossus 2 data center were confirmed in March 2025 and Musk has referred to the data center as the "first gigawatt AI training supercluster."

On March 3, xAI staff filed a new construction permit with the Memphis and Shelby County Division of Planning and Development for a 312,356-square-foot building at 5414 Tulane Road. The building has an estimated construction cost of $659.3 million, according to the permit.

The Colossus 2 data centers are part of a growing xAI footprint in Memphis and Southaven. About 200 yards away from the 1 million-square-foot Colossus 2 data center is xAI's third data center, Macrohardrr at 2400 Stateline Road. The company's affiliate, MZX Tech LLC, purchased the site in December 2025. In addition, MZX Tech LLC also owns the former Duke Energy site at 2875 Stanton Road in Southaven.

In total, xAI has three data center campuses and a power plant (former Duke Energy site) between Memphis' Boxtown and Whitehaven neighborhoods, and its growing North Mississippi property acquisitions.

Neil Strebig is a journalist with The Commercial Appeal. He can be reached at [email protected], 901-426-0679