Amid the rapid expansion of AI data centres, Redwood Materials has quickly built a new growth engine. Just 1 year ago, the company did not operate an energy storage unit. Today, it is the fastest-growing division within the battery recycling and materials startup, driven by rising demand from AI-powered data centres.
The scale of that growth is visible at its R&D lab in San Francisco, which has expanded 4-fold into a 55,000-square-foot facility and now employs nearly 100 people. While this is small compared to Redwood’s total workforce of 1,200 employees and its large campuses in Carson City, Nevada and near Reno, the new unit reflects momentum since the energy storage business launched in June 2025. The San Francisco site, opened in April 2025, integrates hardware, software and power electronics for systems that support AI computing, data centres and industrial applications.
In a recent blog post, Redwood said the expansion will help meet a wave of energy storage deployments linked to data centres. Its $425 million Series E funding round will support scaling efforts. New investor Google and existing backer Nvidia participated in the round to back the energy storage venture. “AI data centres have definitely been a pressing area of focus,” said Claire McConnell, vice president of business development. She noted other uses, including renewable energy projects. Highlighting grid challenges, she added, “What data centre developers are seeing is something that they hadn’t experienced before. When they’re trying to connect to the grid, they are being told it is going to take five-plus years to get that and at the same time, you’re seeing this massive demand to build more data centres and compete in the AI race.”
Founded in 2017 by former Tesla CTO JB Straubel, Redwood initially focused on battery recycling and later expanded into materials production, including cathodes. Last summer, it launched Redwood Energy to repurpose thousands of EV batteries collected through recycling. Its first customer is Crusoe. Redwood deployed a system generating 12 MW of power with 63 MWh capacity to supply a modular data centre. McConnell said future projects include hyperscalers requiring hundreds of megawatts. “We’re working on ones in the hundreds of megawatt hours and we have ones in the pipeline that are multiple gigawatt hours,” she said.
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