A year ago, Redwood Materials didn’t have an energy storage business. Now, it’s the fastest-growing unit within the battery and materials recycling startup — a reflection of the AI data center boom.
Evidence of that growth, the company says, can be found in its San Francisco R&D lab, which has quadrupled in size 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 and its sprawling campus in Carson City, its Nevada headquarters and another facility near Reno. But its value and recent expansion is directly linked to growing energy storage that began in June 2025.
The San Francisco facility, which opened in April 2025, is where engineers integrate the hardware, software and power electronics for energy storage systems that power data centers, artificial intelligence computing and other large-scale industrial applications.
The company he said in a blog post On Thursday, the expansion will support a wave of data center-related energy storage deployments. 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 support Redwood’s energy storage venture.
“AI data centers have definitely been a pressing area of focus,” Claire McConnell, vice president of business development, told TechCrunch, 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 sparked a building frenzy and the need for reliable electricity.
“What data center developers are seeing is something they haven’t experienced before,” McConnell said. “When they’re trying to get on the grid, they’re being told it’s going to take more than five years to get there, and at the same time, you’re seeing this massive demand to build more data centers and compete in the AI race.”
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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 from the production of batteries and consumer electronics, which it processed and then sold to customers such as Panasonic. The company also expanded into the battery materials business and today produces cathodes for battery cells.
The company opened Redwood Energy last summer to use the thousands of EV batteries it has collected as part of its battery recycling business to provide energy to companies. Redwood Energy’s first customer is Crusoe, a startup in which Straubel invested in 2021. Redwood has created an energy storage system that uses old EV batteries that are not yet ready for recycling. The system, which generates 12 MW of power and has a capacity of 63 MWh, 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 original site of the Stargate project.
McConnell said customers in the pipeline include hyperscalers — companies that operate massive cloud data centers and consume hundreds of megawatts of power — that would far exceed the capacity of his Crusoe project.
“We’re working on those hundreds of megawatt hours and we have multiple gigawatt hours in the pipeline,” he said.
