A year ago, Redwood Materials did not have an energy storage business. It’s now the fastest-growing unit in battery recycling and materials startup — a reflection of the boom in building AI data centers.
Evidence of that growth can be found in its San Francisco research and development lab, which has quadrupled to a 55,000-square-foot facility and now employs nearly 100 people, according to the company. 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 is directly linked to its growing energy storage, which launched in June 2025.
The San Francisco plant, which opened in April 2025, is where engineers integrate hardware, software and power electronics for energy storage systems that power data centers, AI computing and other large-scale industrial applications.
The company said in a blog post Thursday that the expansion will fuel a wave of data center-related energy storage adoption. The company’s recent $425 million Series E raise will provide the capital needed to expand the business. Google, a new investor, as well as existing backer Nvidia, joined the round to support Redwood’s energy storage business.
“Data center AI has definitely been a pressing area of interest,” 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 projects like solar and wind power.
Data centers have been around for decades, but advances in artificial intelligence have fueled a construction frenzy and the need for reliable electricity.
“What data center developers are seeing is something they’ve never seen before,” McConnell said. “When they’re trying to get on the grid, they’re being told it’s going to take five years or more to get there, and at the same time you’re seeing a huge 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 originally focused on recycling scrap from battery and consumer electronics manufacturing, which was processed and then sold to customers such as Panasonic. The company also expanded into the battery materials business and today manufactures cathodes for battery cells.
The company opened thousands of Redwood Energy last summer to use EV batteries it collected through its battery recycling business and provide power 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 electric car 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, the company best known for its sprawling data center 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 that consume hundreds of megawatts of power — which would greatly exceed the capacity of her Crusoe project.
“We’re working on ones in the hundreds of megawatt-hours, and we’re planning ones that are several gigawatt-hours,” she said.