A year ago, Redwood Materials did not have an energy storage business. Now, it is the fastest-growing unit within the battery recycling and materials startup, spurred by an AI data center construction boom.
This growth is evident at Redwood’s R&D lab in San Francisco, which has expanded four-fold into a 55,000-square-foot facility, employing nearly 100 people. While small compared to Redwood’s total workforce of 1,200 and its vast campus at its Carson City headquarters and another facility near Reno, its recent expansion is directly linked to its energy storage sector that launched in June 2025.
The San Francisco facility, opened in April 2025, is where engineers develop the hardware, software, and power electronics for energy storage systems powering data centers, AI computing, and other large-scale applications.
The company announced Thursday that the expansion will support a wave of energy storage deployments for data centers. A recent $425 million Series E funding boost, involving new investor Google, alongside existing backer Nvidia, will help scale the business and support Redwood’s venture into energy storage.
“AI data centers have been a pressing area of focus,” Claire McConnell, vice president of business development, told TechCrunch, noting that there are other applications for its systems, such as supporting solar and wind renewable projects.
Data centers have long existed, but AI advancements have accelerated construction and demand for reliable electricity.
“What data center developers are experiencing is unprecedented,” McConnell said. “They’re being told it will take over five years to connect to the grid while facing increased demand to build more data centers and compete in the AI race.”
Redwood Materials, founded in 2017 by former Tesla CTO JB Straubel, aims to create a circular battery supply chain. Initially focused on recycling battery production scrap and consumer electronics, it processed and sold these materials to customers like Panasonic. The company also entered the battery materials sector, now producing cathodes for battery cells.
Last summer, Redwood launched Redwood Energy to harness thousands of EV batteries from its recycling business to supply power. Redwood Energy’s first customer is Crusoe, a startup that Straubel invested in back in 2021. Redwood set up an energy storage system using used EV batteries, generating 12 MW of power with 63 MWh capacity, powering a modular data center built by Crusoe, notable for its large-scale data center campus in Abilene, Texas, the initial site of the Stargate project.
McConnell mentioned potential customers include hyperscalers—massive cloud data center operators consuming hundreds of megawatts of power—whose needs would surpass the capacity of the Crusoe project.
“We’re working on projects scaling to hundreds of megawatt hours and have others in the pipeline in the multiple gigawatt hours range,” she said.