Redwood Materials has swiftly transformed its operations, launching an energy storage division that has rapidly become its most dynamic sector, spurred by the burgeoning demand from AI data centers.
The company's impressive growth is evidenced by the significant expansion of its San Francisco R&D lab, which has quadrupled in size to 55,000 square feet and now employs nearly 100 individuals. While these figures are modest compared to Redwood's overall workforce of 1,200, the energy storage unit, initiated in June 2025, is pivotal to its future.
At the San Francisco facility, engineers are engaged in integrating hardware, software, and power electronics essential for energy storage systems designed for data centers, AI computing, and other extensive industrial applications.
In a recent blog update, Redwood announced that this expansion aims to support a significant increase in energy storage deployments linked to data centers. Their recent $425 million Series E funding round, which welcomed Google as a new investor alongside existing supporter Nvidia, will provide the necessary capital to scale operations.
Claire McConnell, the company's vice president of business development, highlighted the urgent focus on AI data centers, while also noting the potential for their systems to assist renewable energy projects such as solar and wind.
Although data centers have existed for years, the rapid advancements in AI have triggered a construction boom, creating an urgent need for reliable energy sources. McConnell pointed out that developers are facing unprecedented challenges when connecting to the power grid, often facing delays of five years or more, even as the demand for new data centers escalates.
Founded in 2017 by former Tesla CTO JB Straubel, Redwood Materials initially concentrated on recycling battery production waste and consumer electronics, later branching into battery materials production. The company now manufactures cathodes for battery cells.
Last summer, Redwood launched Redwood Energy to utilize the thousands of electric vehicle batteries collected through its recycling efforts. The first client for this new venture is Crusoe, a startup that Straubel invested in back in 2021. Redwood has established an energy storage system that harnesses used EV batteries not yet ready for recycling, generating 12 MW of power with a capacity of 63 MWh to supply a modular data center constructed by Crusoe in Texas.
Looking ahead, McConnell shared that they are in discussions with hyperscale companies that operate substantial cloud computing centers, which would require energy solutions far exceeding the capacity of the current project with Crusoe. "We're working on projects in the hundreds of megawatt hours, with some in the pipeline that could reach multiple gigawatt hours," she stated.
