Tesla co-founder JB Straubel is using old EV batteries to power AI data centers

As the demand for energy surges alongside the expansion of artificial intelligence, a former Tesla co-founder is introducing an innovative approach to power solutions. JB Straubel, who played a pivotal role in Tesla's inception and served as its chief technology officer until 2019, established Redwood Materials in 2017. This company is focused on recycling batteries and creating a closed-loop supply chain for electric vehicles (EVs). In recent developments, Redwood Materials has discovered that many of the EV batteries they receive still possess significant usable capacity. Instead of recycling these batteries, the company has decided to repurpose them for microgrid projects that offer cost-effective energy storage solutions for both new and existing data centers. "We’re essentially finding ways to extract additional value from these batteries," Straubel shared with CNBC. For its inaugural microgrid initiative, Redwood has teamed up with Crusoe, a company recognized for constructing a substantial AI data center in Abilene, Texas. This project is part of Stargate, a $500 billion AI infrastructure venture supported by major players including OpenAI, Oracle, and SoftBank. Redwood claims that their system is the largest of its kind in North America, producing 12 megawatts of power through a solar array and featuring a capacity of 63 megawatt-hours utilizing the repurposed EV batteries. Cully Cavness, co-founder and COO of Crusoe, remarked, "The energy sector has long sought the ideal solution for continuous renewable power. Until now, the high costs associated with batteries have posed a significant barrier, but that has changed." The global market for data centers is witnessing unprecedented growth, fueled by the AI boom. Goldman Sachs predicts a staggering 165% increase in data center power demand by 2030, highlighting the importance of innovative solutions in this sector. Redwood and Crusoe view data centers as key beneficiaries of this technology, enabling hyperscalers to deploy quickly while ensuring power redundancy at a reasonable cost. Cavness emphasized, "This is a cost-effective, rapidly deployable solution that integrates 24/7 renewable power with AI data center computing." Redwood currently has over a gigawatt-hour of reusable batteries in its inventory—equivalent to the energy consumption of 12,500 televisions—and is in the process of designing projects exceeding 100 megawatts, potentially scaling up to ten times the size of their pilot microgrid with Crusoe. "The scalability of this concept is virtually limitless," Straubel noted, adding that they are already engaged in engineering projects of considerable magnitude. In addition to its recycling efforts, Redwood is entering a competitive energy storage market alongside established companies like Tesla, which has successfully developed its energy business through products such as the Megapack grid-scale storage solution. Experts indicate that there is ample opportunity for new entrants as future energy storage demands are expected to be enormous. As Pete Tillotson, a senior research analyst with Benchmark Mineral Intelligence, pointed out, "The anticipated demand for energy storage is immense, which is why it's not surprising to see companies traditionally outside this sphere looking to make their mark." As Redwood continues to expand its recycling operations, the potential to utilize second-life batteries for the growing energy needs of the AI era is becoming increasingly apparent.