A year ago, Redwood Materials had no energy storage business. It is now the fastest-growing unit within the battery and materials recycling sector, reflecting the boom in AI data center construction.
Proof of this growth, according to the company, can be found at its R&D laboratory in San Francisco, which has quadrupled to 55,000 square feet and now employs nearly 100 people. Those are small numbers compared to Redwood’s total workforce of 1,200 and its sprawling campus located at its headquarters in Carson City, Nev., and another facility near Reno. But its value and recent expansion are directly linked to its burgeoning energy storage, launching in June 2025.
The San Francisco facility, 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 On Thursday, the expansion will support a wave of data center-related energy storage deployments. Company news $425 million, Series E the fundraising will provide the capital needed to grow the business. New investor Google, along with existing backer Nvidia, joined the round to back Redwood’s energy storage business.
“AI data centers are definitely an area of pressing focus,” Claire McConnell, vice president of business development, told TechCrunch in a recent interview, who added that there are other use cases for its systems, including supporting renewable projects like solar and wind.
Data centers have been around for decades, but advances in AI have sparked a building frenzy and a need for reliable electricity.
“What data center developers are seeing is something they’ve never experienced before,” McConnell said. “When they try to connect to the network, they are told it will take more than five years to get there and at the same time, we see a 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. The company initially focused on recycling waste from the production of batteries and consumer electronics, which were processed and then sold to customers such as Panasonic. The company has also expanded into the battery materials sector and today produces cathodes for battery cells.
The company opened Redwood Energy last summer to harness the thousands of electric vehicle batteries it collected through its battery recycling business to provide electricity to businesses. Redwood Energy’s first customer is Crusoe, a startup that Straubel invested in in 2021. Redwood has established an energy storage system that uses old electric vehicle batteries that are not yet ready to be recycled. 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 current customers include hyperscalers — companies that operate huge cloud computing data centers and consume hundreds of megawatts of power — which would far exceed the capacity of his project with Crusoe.
“We’re working on projects that are several hundred megawatt hours, and we have projects underway that are several gigawatt hours,” she said.