RAYMONDVILLE, Texas - John Tunison, chief financial officer for Soluna Holdings, Inc., made a pitch for a tax abatement for his company at Willacy County Commissioners Court on Feb. 27.
He was joined by two attorneys working on the company’s 166-megawatt data center project, Tom Curtis and Chris Boswell of Harlingen-based Curtis & Boswell, LLP.
The working title for the project is called Project Kati, named for Kati Kariko, a Hungarian scientist who was instrumental in the development of mRNA-based protein therapies. The data center will be built on the site of the Las Majadas Wind Farm in the southeast corner of Willacy County.
No vote was taken on the tax abatement request because a quorum of commissioners was not present.
“At Soluna, we put data centers on the site of renewable power projects. What we're really all about is we help renewable power projects that have challenges of being curtailed, meaning they're wasting energy,” Tunison told commissioners court.
“The wind might be blowing, but they can't put it into the grid because the grid is either congested or doesn't need the power at that time. We can come in and connect behind the meter and take all of that power.”
Tunison explained the benefit of this.
“We improve the economics for the wind operators. We improve the economics for the landowners who have leases signed with these wind operators, and we solve a broader problem that… there's not enough compute facilities.”
Tunison explained why Soluna prefers building data centers in rural areas. “Sticking compute facilities in the middle of urban areas just further strains the grid and congests it.” He said building a wind-powered data center in a rural area was a “win-win-win solution, so to speak.”
Tunison also spoke about his company’s commitment to the local community.
A lot of our core strategic pillars have to do with growth and development and support. By the nature of the projects that we do in rural communities and the communities that we operate in, they do tend not to be in the big cities. And we're we're actually pretty happy to be doing that,” Tunison said.
“We drive economic growth. We support and develop additional infrastructure. We help diversify the industry base within communities that we go into and we partner with the communities on special projects and youth programs, school programs, and other initiatives. It could be golf course communities, anything that the local area needs. We're proud to be supportive with that.”
So what is Project Kati, Tunison asked, rhetorically. He then answered the question.
“It is to be located at the Las Majadas (Wind Farm) project. The size of the data centers are designed to optimize the ability to take all of the wasted energy and also have an appropriate amount of grid energy… a low cost electricity. But also maximize the size of the facility in order to get the most compute power, which just helps all of the economics for all the landowners, the wind operator, for ourselves or our customers.”
Tunison said Soluna is looking to create about 18 jobs within a two-year time frame. “On the first year, we'll have 12 full-time jobs, and then it ramps up to 18, as we get into next year.”
Tunison said Soluna will be using 120,000 megawatt hours of wasted energy.
“We would look to commission this project in phases, throughout 2025 and 2026. There will be additional tax revenues. Just by the nature of this, we're going to drive more consumption of that renewable power on site, which will generate more tax revenue,” he said.
“Plus, as you'll see in our proposal, there's an additional $2.5 million longer term of property tax, and I don't have it on this slide, but another close to a million dollars for school tax generated here in Willacy County.”
In addition to Project Kati 1, there's a Project Kati 2, Tunison said.
“So the total megawatts that we expect to build is 166 and we'll do that in two phases. So, what I'm here to talk about is just phase one, which is 83 megawatts, which is bitcoin facilities. Those facilities will generate a capital investment of about $40 million. That is site, prep, foundations, buildings, electrical infrastructure, everything that you need to fully operate the data centers. It does not include an additional up to $45 million of investment. It will be the actual compute machines, the Bitcoin miners that would come in on top of that. So in total, we're looking at upwards of $80 million of investment.”
Tunison said he would not go into great detail about Project Kati 2 at this stage. However, he did say that that facility is expected to be an artificial intelligence data center.
“Those data centers are considerably more complicated, more expensive, and we're talking about a capital investment of $1 billion-plus to put that data center in. This involves, as you might imagine, a completely different envelope, different heating, cooling, backup power sources and a lot of other infrastructure and development to support the high reliability, constant temperature, humidity, all the other requirements you might imagine for the clean, cutting edge technology that goes into those.”
Tunison said the construction process will typically last between 12 and 18 months.
“That generates a substantial number of construction work for existing contractors in the county and others, drawing specialist labor into the county and, additionally, that will drive some economics into the local area as well.”
Tunison said Soluna will also be working with broadband companies to facilitate improvements and additional extension of fiber optic cable. He said this is critical for a data center. “So, the data center will drive secondary and tertiary growth as well, Tunison explained.
Tunison added: “What I think is really an important point is this can represent a very significant diversification of the local economy and bringing these high-skilled, high technology cutting edge jobs. And with the amount of renewable power already here and being built, I think Willacy County is a prime location for expansion of this data center footprint. And you could be looking at turning into a hub for this kind of activity.
“You can't just do this anywhere in the country. There are certain areas that are most ideally suited to it, and Willacy County is one of those.”
Editor's Note: At the Willacy County Commissioners Court meeting, Soluna Holdings CFO John Tunison spoke about his company's first data center project in Texas. It is being developed in Briscoe County, to the southeast of Amarillo, and it is being called Project Dorothy, after famed African-American mathematician Dorothy Vaughan. Tunison said Project Kati, in Willacy County, will be similar to Project Dorothy. Here is a video Soluna posted on YouTube about Project Dorothy:
