AI data center boom is fueling Redwood’s energy storage business

A year ago, Redwood Materials did not have an energy storage business. It is now the fastest-growing unit in battery recycling and materials startups – a reflection of the boom in building AI data centres.

The company says evidence of this growth can be found at its R&D lab in San Francisco, which has expanded fourfold to a 55,000-square-foot facility and now employs nearly 100 people. Those are small numbers compared to Redwood’s total workforce of 1,200 people and its sprawling campus at its headquarters in Carson City, Nevada, and another facility near Reno. But its value and recent expansion are directly linked to its booming energy storage launch in June 2025.

The San Francisco facility, which opened in April 2025, is where engineers integrate hardware, software and power electronics for energy storage systems that power data centers, artificial intelligence computing and other large-scale industrial applications.

The expansion will support a wave of data center-related energy storage deployments, the company said in a blog post on Thursday. The company’s recent $425 million Series E raise will provide the capital needed to scale the business. Google, a new investor, as well as existing backer Nvidia, joined the round to back the Redwood commercial energy storage project.

“AI data centers have definitely been a pressing area of ​​focus,” Claire McConnell, vice president of business development, told TechCrunch in a recent interview, adding that there are other use cases for its systems including supporting renewable energy projects like solar and wind.

Data centers have been around for decades, but advances in artificial intelligence have led to a wave of construction and a need for reliable electricity.

“What data center developers are seeing is something they’ve never experienced before,” McConnell said. “When they try to connect to the network, they’re told it’s going to take more than five years to get it, and at the same time, you see this huge demand to build more data centers and compete in the AI ​​race.”

Redwood Materials was founded in 2017 by former Tesla CTO JB Straubel to create a circular supply chain for batteries. It initially focused on recycling scrap generated from battery and consumer electronics production, which was processed and then sold to customers such as Panasonic. The company has also expanded into battery materials and today produces cathodes for battery cells.

The company opened Redwood Energy last summer to leverage the thousands of electric vehicle batteries it collected as part of its battery recycling business to provide power to businesses. Redwood Energy’s first client is Crusoe, a startup that Straubel invested in in 2021. Redwood has set up an energy storage system that uses old electric vehicle batteries that aren’t yet ready for recycling. The system, which generates 12 megawatts of power and has 63 megawatts of capacity, sends power to a modular data center built by Crusoe, a company best known for its large-scale data center campus in Abilene, Texas — the initial site of the Stargate project.

McConnell said customers in the pipeline include hyperscalers — companies that run massive cloud computing data centers and consume hundreds of megawatts of power — which would far exceed the capacity of its project with Crusoe.

“We are working on hundreds of megawatt-hour units, and we have several gigawatt-hour units in the pipeline,” she said.