Redwood Materials has quickly transformed its newly launched energy storage division into its fastest-growing business unit — driven largely by surging demand from AI-powered data centers.
Just a year ago, the company had no dedicated energy storage arm. Today, the division is expanding rapidly, supported by a fourfold expansion of its San Francisco R&D lab into a 55,000-square-foot facility employing nearly 100 engineers. While small compared to Redwood’s total workforce of 1,200 employees, the site plays a central role in building integrated energy systems for data centers and industrial clients.
AI Data Centers Drive Power Demand
The rise of artificial intelligence has triggered a massive expansion of data center construction. Developers are racing to secure reliable electricity as AI workloads require unprecedented computing power.
According to Redwood executives, many data center operators are being told it could take five years or more to connect new facilities to the traditional power grid. That delay has opened the door for alternative energy storage and distributed power solutions.
Redwood’s energy systems integrate hardware, software, and power electronics to deliver scalable storage capable of supporting large AI computing operations.
Backed by Major Tech Investors
The company’s recent $425 million Series E funding round is helping accelerate this push. New investor Google joined existing backer Nvidia in supporting Redwood’s energy storage expansion.
The funding is intended to scale deployments as demand from AI infrastructure projects grows.
From Battery Recycling to Grid-Scale Storage
Founded in 2017 by former Tesla CTO JB Straubel, Redwood Materials initially focused on recycling battery production scrap and consumer electronics to create a circular battery supply chain.
The company later expanded into cathode production and battery materials manufacturing. In mid-2025, it launched Redwood Energy, leveraging thousands of used EV batteries collected through its recycling operations to create second-life energy storage systems.
Rather than immediately recycling aging EV batteries, Redwood repurposes those still viable into large-scale storage units.
Powering the Next Generation of Data Centers
Redwood Energy’s first major customer is Crusoe, a firm known for building large-scale modular data centers. Redwood deployed a system capable of generating 12 megawatts of power with 63 megawatt-hours of storage capacity to support Crusoe’s modular facility.
Crusoe is also involved in developing a large data center campus in Abilene, Texas — the initial site of the Stargate project, a high-profile AI infrastructure initiative.
Looking ahead, Redwood says it is working with hyperscalers that operate massive cloud computing data centers consuming hundreds of megawatts of electricity. Future projects under development reportedly range from hundreds of megawatt-hours to multiple gigawatt-hours in capacity.
Energy Infrastructure for the AI Era
As AI adoption accelerates, power availability has emerged as a major bottleneck. Redwood’s strategy of repurposing EV batteries into scalable storage solutions positions it at the intersection of clean energy, battery recycling, and AI infrastructure.
With backing from major technology players and a growing pipeline of large-scale projects, Redwood Materials is quickly evolving from a battery recycling startup into a key energy partner for the AI-driven economy.
