In March I visited a strange place in the high desert east of Reno, Nevada.
This is where JB Straubel's startup redwood materials are turning huge storage units of old batteries into valuable materials that power electric vehicles and other new devices.
The strangest part: Redwood's headquarters was surrounded by large new data center projects. On the contrary, a huge Google complex rose from scrubs and brushes. And the surrounding hills were flattened like pancakes, waiting more for these beasts.
Data center demand is exploding due to generation AI. The GPUs and other gear needed to train and run AI models are so energy-hungry that it means there is a great demand for running these facilities.
Redwood took a hint from his big neighbor. On Thursday, the startup announced a new business called Redwood Energy to help power the AI boom by reusing used batteries in energy storage systems.
Nevada's Redwood Materials campus features a new energy storage system on the left, a solar array in the center, and a Google data center on the far right. Redwood material
From EV batteries to the power of the AI era
Redwood materials have created a name that extracts valuable metals and minerals from terminal batteries and brings this back to the EV supply chain. That latest move aims to capture the huge second life value that these batteries can offer before they are recycled.
Every year, Redwood processes more than 20 g of lithium-ion batteries, making up 90% of the approximately 250,000 eV or lithium-ion batteries recycled in North America. The company says that most of these battery packs hold between 50% and 80% of their original capacity. It is no longer suitable for vehicles, but is feasible for stationary energy storage, especially in a time of data center energy needs.
The recent explosion of AI data centers around Redwood's Nevada campus has led to the paintings being drawn. These facilities require more power than traditional cloud infrastructures, and existing grids struggle to keep up. Enter Redwood Energy.
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Reinventing energy storage
Redwood Materials Energy Storage System for Nevada's modular data centers as seen from above. Redwood material
Redwood Energy aims to convert lightly used EV batteries into energy storage systems that can serve data centers, industrial customers and grids. The first development was already live. With 12MW of power and 63MWH of storage, the battery system is powered by AI infrastructure company Crusoe's 2,000-GPU data center. According to Redwood, this is the world's largest second-living battery deployment and the largest off-grid data center in North America.
Redwood says the system will avoid fossil fuels, reduce carbon emissions and avoid permit delays on traditional infrastructure. It is also lower than the installation of new lithium ions, from Redwood's vertical integration process to collection and diagnosis to integration and final recycling.
Full Circle Energy Platform
Redwood materials workers surrounded by battery packs, part of the company's new energy storage system. Redwood material
The backbone of Redwood's solutions is an established and competent logistics and diagnostics system. Recovers more than 70% of battery packs from across North America. The in-house software evaluates each battery to determine whether it is suitable for reuse.
Redwood integrates qualified packs into their energy storage systems, regardless of the original manufacturer. Once they finally reach the end of the life, Redwood will return the battery to a recycling operation and retrieve the new battery's metals and minerals.
“We are excited about this new line of business,” said Chris Evdaimon, investment manager at Baillie Gifford, a leading supporter of redwood materials. “This is a representation of Hori that they have built around the collection and qualifications of end-of-life EVs and storage batteries.”
“In terms of infrastructure requirements and the ability to become off-grid, the simplicity and efficiency of the design of energy storage systems is an ideal solution for the ever-growing energy requirements of the data center,” he added.
Evdaimon praised “there are great timing, important scaling opportunities, and potentially cash generation businesses from the start.”
For more information about the new CAM, also known as Black Gold, click here.
Market scaling
Battery pack support is provided at a modular data center located on Redwood Materials Campus in Nevada. Redwood material
The opportunity is immeasurable. This year, more than 100,000 EVs will reach the end of life in the US alone. Over 5 million EVs on US roads represent 350 GWH of potential energy storage capacity, with the number increasing by 150 GWH per year, Redwood estimates.
Redwood Energy is hoping to roll out 20 GWH of Second Life Battery Storage by 2028. That energy can power AI supercomputers, stabilize the grid, store urban renewable energy, and reduce costs and emissions compared to traditional energy sources.
In the world's race to electrify and feed AI Beast, Redwood offers environmental sustainability and economic scalability for both potential parties. As grid demand spikes and geopolitical risks complicate the global supply chain, Redwood's US-made infinitely recyclable solutions could prove to be the basis of AI's new energy economy.
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