Redwood Materials Launches Energy Storage for AI Data Centers

A Novel Energy Storage Solution Emerges from Retired EV Batteries

Located discreetly between substantial structures in the Nevada desert landscape, a unique installation comprises 805 decommissioned electric vehicle (EV) batteries. These batteries, carefully arranged and covered with white tarps, represent a significant advancement in energy technology – and remain largely unnoticed by casual observers.

North America’s Largest Microgrid

Unbeknownst to many, this unassuming collection constitutes the largest microgrid in North America. It provides power to a 2,000 GPU modular data center operated by Crusoe, an AI infrastructure firm. This project marks a new venture for JB Straubel, the co-founder and CEO of Redwood Materials.

Redwood Materials unveiled its new energy storage business on Thursday at its Sparks, Nevada, facility. This initiative will utilize the thousands of EV batteries the company has amassed through its battery-recycling operations to supply power to various businesses. Their initial focus is on AI data centers.

Introducing Redwood Energy

The newly established business, named Redwood Energy, is collaborating with Crusoe, a startup in which Straubel invested in 2021. The used EVs, not yet suitable for recycling, are employed to store energy generated by a neighboring solar array.

This system boasts a power generation capacity of 12 MW and a storage capacity of 63 MWh, delivering electricity to a modular data center constructed by Crusoe. Crusoe is well-known for its extensive data center campus in Abilene, Texas – the original location of the Stargate project.

The Scale of Battery Collection

The sheer volume of batteries Redwood collects is remarkable – and presents a valuable opportunity. Redwood currently recovers over 70% of all used or discarded battery packs within North America.

Currently, the company processes more than 20 GWh of batteries annually, equivalent to the energy capacity of approximately 250,000 electric vehicles. They have already stockpiled over 1 gigawatt-hour of batteries that are not yet ready for recycling.

In the coming months, Redwood anticipates receiving an additional 4 gigawatt-hours of batteries. By 2028, the company aims to deploy 20 gigawatt-hours of grid-scale storage, positioning itself as the leading repurposer of used EV battery packs.

A Fully Powered Launch Event

Straubel’s dedication to this project was evident throughout the launch event. To emphasize Redwood’s commitment – and Straubel’s personal investment – all aspects of the event, including the music, projections, and a laser light show featuring Pac-Man ghosts navigating the battery rows, were powered by the microgrid.

“We wanted to fully commit to this,” Straubel stated with a smile. Beyond the event’s spectacle, the microgrid setup with Crusoe is a fully functional, revenue-generating operation completed in just four months, and demonstrably profitable.

Straubel anticipates further deployments with additional customers throughout the year. He believes this venture has the potential to expand even more rapidly than Redwood’s core recycling business.

Redwood Materials’ Rapid Expansion

Redwood Materials has experienced significant growth in recent years. Founded in 2017 by Straubel, the former Tesla CTO and current board member, the company has secured $2 billion in private funding. Its mission is to establish a circular supply chain for battery materials.

Initially, the company focused on recycling scrap from battery cell production and consumer electronics like cell phones and laptops. Redwood extracts valuable materials like cobalt, nickel, and lithium from these discarded items and supplies them to companies like Panasonic.

Over time, Redwood expanded its operations beyond recycling to include cathode production. In 2024, the company generated $200 million in revenue, largely from the sale of battery materials, including cathodes.

Expanding Footprint and Partnerships

Redwood’s physical presence has also grown considerably, extending beyond its headquarters in Carson City, Nevada. The company has established agreements with Toyota, Panasonic, and GM.

Construction has begun on a new factory in South Carolina, and a recent acquisition has expanded Redwood’s operations into Europe.

Redwood Energy: A Versatile Solution

Redwood Energy represents the next phase of development – and doesn’t necessitate off-grid operation. The repurposed EV batteries can be powered by renewable sources like wind and solar, or connected to the existing power grid.

In the Crusoe project, the system is powered entirely by solar energy. CTO Colin Campbell emphasized that this is a sound economic decision that also happens to be carbon-free.

Addressing a Long-Standing Challenge

This business model tackles a persistent challenge within the energy storage sector. For over a decade, companies have promised grid-scale storage solutions using used EV batteries, but these have been limited in scope.

Redwood, with its foundation in battery materials and recycling, is poised to deliver gigawatts of much-needed energy storage in the coming years.

Jessica Dunn, a battery expert at the Union of Concerned Scientists, commented to TechCrunch that this demonstrates the economic viability of the waste hierarchy. The fact that a major recycler like Redwood recognizes the profit potential in repurposing EV batteries indicates the future direction of the end-of-life battery market.

A Strategic Business Move

Repurposing batteries is not only a business opportunity for Redwood but may also be a strategic necessity. The company was founded to manage the anticipated influx of used EV batteries. However, this wave has been slower to materialize than initially predicted.

“If Redwood didn’t enter the repurposing market, they would miss out on the value of repurposed batteries and have to wait five, ten, or fifteen years for them to retire,” Dunn explained. This would allow other companies to dominate the grid-scale storage market, cutting Redwood out of potential revenue.

Straubel acknowledged this, stating that Redwood Materials may have started a bit prematurely. He noted that the company began collecting consumer batteries and production scrap before the widespread adoption of EVs.

The Evolving Recycling Landscape

The current state of the recycling market highlights this challenge. Dunn explained that the market currently consists primarily of manufacturing scrap, consumer electronics, and EV batteries that have failed under warranty.

This has enabled Redwood to process over 20 gigawatt-hours annually, but it is still significantly less than the 350 gigawatt-hours currently in EVs and the projected 150 gigawatt-hours expected to be added each year.

Future Expansion and Production Goals

Redwood currently operates a recycling facility on its 175-acre campus in Sparks, Nevada, and is developing a 600-acre facility in Charleston, South Carolina. The South Carolina facility will remanufacture cathode and anode copper foil, both containing critical minerals that the U.S. aims to keep within its borders.

The company anticipates a production capacity of 100 gigawatt-hours annually of cathode active material and anode foil by the end of this year, with plans to increase production to 500 gigawatt-hours by the end of the decade.