Mayor, MLGW push xAI to complete water recycling facility

MEMPHIS, Tenn. -- The mayor of Memphis and the head of the city's public utility say they will put pressure on xAI to finish building a promised wastewater recycling facility that is now apparently on hold.

The $80 million facility was supposed to use recycled water from a nearby treatment plant to cool the servers in one of xAI's massive Memphis data centers, rather than drawing from the area's drinking water aquifer.

"Promises to this community are not optional. A wastewater facility is about protecting our water and our future. I will continue pressing xAI to deliver," Mayor Paul Young said in a social media post Friday.

Elon Musk, head of the artificial intelligence company that has built or is building two data centers in Memphis and a third nearby in DeSoto County, said Thursday on X that the company has decided to complete its Colossus 2 data center first.

The company, however, is still committed to finishing the wastewater recycling project.

In a statement released on X on Thursday, xAI Memphis said:

"xAI is committed to building a state-of-the-art water recycling plant in Memphis. This plant will protect billions of gallons of water each year. The team is currently prioritizing other, more immediate projects at the site, but our plans to build the water plant have not changed."

Doug McGowen, president and CEO of Memphis Light, Gas & Water, said Friday that he would continue to advocate for the project.

McGowen's full statement is below:

"I am disappointed to have learned through the media that this project is on hold. I understand that any large project can encounter hurdles. It is imperative for our community that the obstacles are overcome and the project restarted. xAI is building this plant because we asked them to, as an alternative to installing wells or purchasing water indefinitely from MLGW. The price tag shouldn't have surprised anyone. In our very first conversation, we shared that there was an estimate of probable cost of $200M for the facility. The xAI team was optimistic it could be accomplished for $80M.

"I am pleased to hear of their recent recommitment to the facility and proud that the City, MLGW and TVA have fulfilled every commitment and delivered on every action necessary for the successful initial operation and expansion of xAI, at no cost to our rate payers or local taxpayers. Further, I am proud that Memphis was the architect for datacenter ratepayer protection legislation. Specifically, Memphis insisted that the costs for all infrastructure needed to support the data center were born by the data center owners, not ratepayers. That model is being codified into law across the nation.

"I will continue to advocate for this project as I have when it was first conceived in 2018."

The announcement of the first xAI data center in Memphis was in 2024. The company completed its first Colossus supercomputer in southwest Memphis later that year, and the water recycling plant was announced last year.