Redwood Materials launches energy storage business and its first target is AI data centers

Nestled between two towering structures in the Nevada desert, a collection of 805 retired electric vehicle (EV) batteries lies under plain white tarps, marking the site of North America's largest microgrid. This microgrid is currently supplying power to a 2,000 GPU modular data center operated by Crusoe, a company specializing in AI infrastructure. During a recent event at its facility in Sparks, Nevada, Redwood Materials announced the launch of its energy storage business, which aims to harness the potential of these collected EV batteries to provide sustainable power to various enterprises, starting with AI data centers. The newly established subsidiary, Redwood Energy, is collaborating with Crusoe to utilize energy generated from a nearby solar array. This innovative setup produces 12 megawatts of power and boasts a capacity of 63 megawatt-hours. Redwood Materials, co-founded by former Tesla CTO JB Straubel, reports that it successfully recovers over 70% of discarded battery packs in North America. Currently, the company has stockpiled over 1 gigawatt-hour of used batteries that are not yet ready for recycling, with an additional 4 gigawatt-hours expected soon. By 2028, Redwood aims to deploy 20 gigawatt-hours of grid-scale storage, positioning itself to become the leading repurposer of retired EV battery packs in the industry. Notably, the entire event showcasing this venture was powered by the microgrid, highlighting Redwood's commitment to sustainability. "We wanted to go all in," Straubel remarked with enthusiasm. This initiative is not merely a demonstration; it's a profitable operation, with plans for further deployments to additional clients within the year. Straubel expressed optimism, stating, "I believe this could outpace our core recycling business." Founded in 2017, Redwood Materials has raised $2 billion in private funding and has quickly expanded its footprint beyond its Carson City headquarters. The company initially focused on recycling battery production scraps and consumer electronics but has since ventured into cathode production as well. With revenue of $200 million anticipated in 2024, much of it derived from battery materials, Redwood has secured partnerships with major companies like Toyota, Panasonic, and GM. The new Redwood Energy initiative is a strategic move that allows the company to capitalize on the growing demand for energy storage without solely relying on off-grid systems. The repurposed EV batteries can be powered by renewable sources or connected to the grid, with the Crusoe project being solar-powered. Despite many companies previously promising to create grid-scale storage solutions using used EV batteries, Redwood is among the first to turn this concept into reality at a significant scale. Jessica Dunn, a battery expert at the Union of Concerned Scientists, noted that Redwood's entry into this market underscores the economic viability of utilizing waste materials. As the company prepares for a future influx of retired EV batteries, it recognizes the importance of entering the repurposing market now to prevent losing out on potential revenue. With operations at its 175-acre Sparks facility and plans for a 600-acre site in South Carolina, Redwood is positioning itself for substantial growth in battery recycling and production. By the end of this year, Redwood expects to produce 100 gigawatt-hours of critical battery materials, with projections to reach 500 gigawatt-hours by the decade's close, reinforcing its role as a key player in the sustainable energy landscape.