The timing of Redwood Energy’s launch couldn’t be more critical. The rapid rise of AI and electrification across industries is driving unprecedented demand for electricity. Data centers, in particular, are straining traditional grid infrastructure, with projections suggesting they could consume 12% of U.S. power by 2028. Redwood’s solution leverages the untapped potential of retired EV batteries to create flexible, scalable energy storage systems that can operate independently or connect to the grid.
Unlike new battery systems, which require costly raw materials and manufacturing, Redwood’s approach uses existing battery packs that still hold significant charge. Engineers at Redwood conduct diagnostics to assess each battery’s viability for reuse. Those deemed suitable are integrated into modular storage units, offering a cost-effective alternative to traditional energy storage. This strategy not only reduces waste but also lowers the environmental footprint of energy infrastructure, aligning with broader goals of sustainability.
Powering AI with Recycled Energy
Redwood Energy’s first major project showcases the potential of this approach. In partnership with Crusoe, an AI infrastructure provider, Redwood has deployed North America’s largest microgrid powered by second-life EV batteries and solar energy. Located in Sparks, Nevada, this system uses 792 battery packs spread across two acres to deliver 12 megawatts of power and 63 megawatt-hours of storage. The setup powers a 2,000-GPU data center, demonstrating how recycled batteries can meet the intense energy demands of AI computing.
The project’s scale is impressive, but its speed is equally noteworthy. Built in just four months, the microgrid highlights the agility of Redwood’s modular systems. Unlike traditional grid expansion, which can take years, these solutions can be deployed rapidly, offering a lifeline to industries facing energy shortages. The batteries, some still wrapped in their original plastic and resting on cinder blocks, prove that functionality doesn’t require polished aesthetics—only smart engineering.
A Growing Market Opportunity
The second-life EV battery market is poised for significant expansion, with forecasts projecting a compound annual growth rate of 44.5% from 2025 to 2033. As more EVs hit the roads—an estimated 100,000 will retire in the U.S. this year alone—the supply of usable batteries will only increase. Redwood estimates that millions of EVs currently in use represent hundreds of gigawatt-hours of storage potential. This abundance positions the company to scale its operations and capture a growing share of the energy storage market.
Redwood’s focus on commercial applications, such as data centers and industrial facilities, sets it apart from consumer-oriented solutions like Tesla’s Powerwall. By targeting high-demand sectors, Redwood Energy is carving out a niche where cost savings and sustainability intersect. The company’s logistics and diagnostic systems, which recover over 70% of North America’s discarded battery packs, provide a robust foundation for scaling this model.
Challenges and Future Prospects
While the promise of second-life batteries is clear, challenges remain. Ensuring consistent battery performance requires sophisticated diagnostics and engineering to account for varying levels of degradation. Additionally, as the EV market grows, competition in the recycling and repurposing space may intensify. However, Redwood’s early mover advantage and its dominance in North American battery recycling—processing 90% of the region’s lithium-ion batteries—give it a strong head start.
Looking ahead, Redwood Energy’s model could redefine how we view battery lifecycles. By treating retired EV batteries as valuable assets rather than waste, the company is building a circular economy that maximizes resource efficiency. The success of its Nevada microgrid suggests a future where clean energy solutions are both practical and profitable, potentially outpacing the revenue of Redwood’s core recycling business.
A Step Toward a Sustainable Grid
Redwood Energy’s launch marks a significant step in addressing the dual challenges of EV battery disposal and energy scarcity. By repurposing batteries that would otherwise be recycled prematurely, the company is unlocking value while reducing environmental impact. As AI and electrification continue to strain global energy systems, innovations like Redwood’s modular storage units offer a blueprint for a more resilient and sustainable grid.
The Sparks project is just the beginning. With millions of EVs on the road and a growing need for affordable energy storage, Redwood Materials is well-positioned to lead the charge in transforming old batteries into new power solutions. For industries racing to keep up with energy demands, this approach offers a practical path forward—one that’s as resourceful as it is forward-thinking.
