EV-to-AI: Redwood Materials repurposes electric vehicle batteries to power data centers

Redwood Materials has launched Redwood Energy, a new business division that repurposes used electric vehicle batteries to power AI data centers through renewable-powered microgrids. The company unveiled its first 64 megawatt-hour microgrid in Nevada, which uses solar panels and recycled EV batteries to supply over 99% of the electricity needed for Crusoe’s adjacent 2,000-GPU AI facility—demonstrating a potentially faster and cheaper alternative to traditional grid-connected power plants.

What you should know: Rather than immediately recycling EV batteries, Redwood Materials now tests them for reuse in energy storage systems before they reach end-of-life.

• Many batteries retain more than half their capacity when removed from vehicles, making them valuable for secondary applications before recycling.
• “We can extract a lot more value from that material by using it as an energy storage project before recycling it,” said JB Straubel, Redwood’s founder and CEO.
• The company estimates more than 100,000 EVs will come off US roads this year, providing a growing supply of reusable batteries.

The big picture: Data centers are driving unprecedented energy demand, with consumption potentially doubling by 2030 due to AI’s massive power requirements.

• Microgrids offer a solution that doesn’t burden consumer ratepayers with the cost of new grid-connected power plants built specifically for AI data centers.
• The approach addresses growing concerns about climate emissions and excessive energy demand in data center development booms, particularly in northern Nevada’s Tahoe Reno Industrial Center.

How it works: Redwood’s modular storage systems can operate on or off the larger electricity grid, storing energy from wind and solar installations.

• Each battery undergoes testing to determine reusability before integration into the microgrid systems.
• When batteries eventually reach end-of-life in the microgrids, they’re swapped out and moved into Redwood’s traditional recycling process.
• The Nevada facility can draw from the standard power grid during extended periods of low sunlight, though such conditions are rare in the desert.

Market potential: Research suggests solar-powered microgrids could significantly reduce carbon emissions from AI data centers while remaining cost-competitive.

• A study found that powering 30 gigawatts of new AI data centers with solar microgrids and just 10% natural gas backup would eliminate 400 million tons of carbon dioxide emissions compared to running entirely on natural gas.
• Redwood says it already has enough reusable batteries to build a gigawatt-hour’s worth of microgrids, capable of powering over a million homes for an hour.

Who else is involved: Crusoe, a cryptocurrency miner turned AI data center developer, operates the facility powered by Redwood’s microgrid.

• Crusoe recently announced a joint venture with investment firm Engine No. 1 to provide “powered data center real estate solutions” by constructing 4.5 gigawatts of new natural-gas plants.
• The company is developing a $500 billion AI data center for OpenAI and others in Abilene, Texas, expecting to install 100,000 GPUs across its first two facilities by year-end.

What they’re saying: Industry experts see the project as validation for renewable-powered data center solutions.

• “Having a data center running off solar and storage is more or less what we were advocating for in our paper,” said Zeke Hausfather, climate lead at Stripe and coauthor of research on solar-powered microgrids for AI data centers.
• Cully Cavness, Crusoe’s cofounder and operating chief, confirmed the facility is already “processing AI queries and producing conclusions for its customers.”

Looking ahead: Straubel expects Redwood Energy to become a major business line that could eventually surpass the company’s core recycling operation.

• The company is designing microgrids 10 times larger than the Nevada facility unveiled this week.
• “We’re confident this is the lowest-cost solution out there,” Straubel said, noting conversations with data center companies across Texas, Virginia, and the Midwest.