Redwood Materials energy storage business powers AI data centers
Retired EV batteries are getting a second life, and Redwood Materials is leading the charge. The company, founded by Tesla co-founder JB Straubel, has officially launched its energy storage division—Redwood Energy—with a powerful mission: to use repurposed electric vehicle batteries to fuel the next generation of AI infrastructure. Announced at its Sparks, Nevada facility, this move directly answers growing questions about how AI data centers can be powered sustainably. With the focus keyword “Redwood Materials energy storage”, this breakthrough project is already gaining attention thanks to its collaboration with Crusoe, a company building modular data centers run entirely on renewable energy.
Image Credits:Kirsten Korosec
This isn’t just a sustainability play—it’s a business model designed for scale. Redwood Materials has been quietly collecting thousands of battery packs across North America. Rather than sending them straight to recycling, the company is giving them a productive interim use: powering data centers that require massive computing power. The 805 EV battery packs now running a 2,000-GPU data center in the Nevada desert represent the largest microgrid of its kind. It’s a prime example of how used batteries can create value before final disposal, and a glimpse into the future of AI and energy.
Why Redwood Materials energy storage is ideal for AI data centers
Artificial intelligence training and deployment require enormous computational resources—and, by extension, energy. Traditional energy grids often struggle to meet these high-density demands sustainably. That’s where Redwood Materials energy storage enters the picture. The new energy division’s pilot project, in partnership with Crusoe, brings together solar power and battery repurposing to create a closed-loop power system. The batteries store energy from nearby solar panels and release it as needed to support AI workloads running in Crusoe’s modular data center. This solution is not just low-emission but also resilient, reducing reliance on fossil fuels and centralized power grids.
Redwood’s solution delivers 12 megawatts of power and stores 63 megawatt-hours, showcasing the potential scale for this kind of grid-independent operation. AI data centers, which often face scrutiny over their energy usage, benefit significantly from this approach. It’s an attractive alternative for companies looking to align with environmental, social, and governance (ESG) goals without compromising performance. For Redwood, this project is only the beginning. It is already preparing to deploy even larger installations as it receives more battery packs into its inventory.
Inside Redwood’s growing battery stockpile and storage potential
The real muscle behind Redwood Materials energy storage is its unmatched access to used batteries. As the top battery recycler in North America, Redwood processes more than 20 GWh of lithium-ion batteries annually—equivalent to 250,000 electric vehicles. Yet, instead of recycling every battery right away, the company is identifying those with enough usable life left to be repurposed. Currently, it holds more than 1 GWh of batteries ready for reuse, with another 4 GWh expected to arrive soon. This reservoir of battery packs provides a unique competitive edge in the energy storage sector.
This supply chain dominance positions Redwood to meet the energy demands of industries beyond AI. Its ability to scale grid-level storage using second-life batteries sets it apart from competitors relying on new battery cells. More importantly, it helps delay the need for resource-intensive recycling, extending battery lifecycles while reducing pressure on mining operations. By 2028, Redwood plans to roll out 20 GWh of grid-scale energy storage—enough to serve various sectors, including AI, manufacturing, logistics, and smart grids. That would make it the largest operator of its kind in North America.
The future of Redwood Materials energy storage and sustainable AI
The launch of Redwood Materials energy storage isn’t just a product reveal—it’s a signal of how energy and AI are converging. With Crusoe as its first partner, Redwood has found a strategic use case in data center infrastructure, one that’s growing exponentially as demand for generative AI tools and machine learning models surges. But the company’s ambitions go beyond one client or one sector. Redwood Energy is positioning itself as a foundational layer in the clean tech economy, offering sustainable storage solutions that can be deployed wherever peak energy demand exists.
As pressure mounts on big tech companies to reduce their carbon footprint, partnerships like the one between Redwood and Crusoe offer a viable blueprint. These microgrids could be replicated at hyperscale campuses, edge computing locations, or even at remote industrial sites. By transforming waste into utility, Redwood is not only solving a major disposal challenge but also empowering the AI revolution to grow responsibly. For JB Straubel, this is a natural continuation of his legacy at Tesla—bringing circular economy principles to clean energy storage at scale.
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