A year ago, Redwood Materials had no energy storage business. The company is currently the fastest growing sector of battery recycling and materials startups, reflecting the AI data center construction boom.
The company says evidence of that growth can be seen at its research and development lab in San Francisco. The institute has quadrupled to a 55,000-square-foot facility and now employs nearly 100 people. These are small numbers compared to Redwood’s total workforce of 1,200 people and its expansive campus located at its headquarters in Carson City, Nevada, and another facility near Reno. However, its value and recent expansion is directly tied to its fast-growing energy storage fleet, which was launched in June 2025.
At the San Francisco facility, which opened in April 2025, engineers are integrating 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 supports a wave of energy storage deployments related to data centers. The company’s recent Series E funding of $425 million will provide the capital it needs to expand its business. New investor Google and existing backer Nvidia participated in the round, backing Redwood’s energy storage venture.
“AI data centers are definitely an urgent area of focus,” Claire McConnell, vice president of business development, told TechCrunch in a recent interview, adding that the company’s systems have other use cases, such as supporting renewable projects like solar and wind power.
Data centers have been around for decades, but advances in AI are accelerating the construction boom and increasing the need for reliable power.
“What data center developers are seeing is unlike anything they’ve ever seen before,” McConnell said. “When they’re trying to connect to the grid, we’re told it’s going to take more than five years to get there. At the same time, we’re also seeing a huge demand to build more data centers and join 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. The company initially focused on recycling scrap from battery manufacturing and consumer electronics, which it processed and sold to customers such as Panasonic. The company has also expanded into the battery materials business and currently manufactures positive electrodes for battery cells.
Last summer, the company opened Redwood Energy to power businesses with thousands of EV batteries collected as part of its battery recycling program. Redwood Energy’s first customer is Crusoe, a startup that Straubel invested in in 2021. Redwood installed an energy storage system that uses old EV batteries that are not yet ready for recycling. The system generates 12 MW of electricity, has a capacity of 63 MWh, and powers a modular data center built by Crusoe, a company best known for its large data center campus in Abilene, Texas, the Stargate project’s first site.
McConnell said customers in the pipeline also include hyperscalers (companies that run large cloud computing data centers and consume hundreds of megawatts of power), which far exceeds the capabilities of the project with Crusoe.
“We are working on hundreds of megawatt-hours and have several gigawatt-hours in the pipeline,” she said.
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