What Happened

Redwood Materials, through its Redwood Energy division, is now building behind-the-meter battery energy systems for AI data centers. CEO JB Straubel announced the expansion, citing yearslong grid connection delays as the core problem. Redwood uses second-life EV batteries combined with solar panels and on-site generation. The company has already deployed a 10 MWh system at Rivian's Illinois factory and a system at Crusoe's data center.

Who Is Affected

AI data center operators facing slow grid connections are the primary target customers. Redwood's shift also affects energy storage competitors, power electronics suppliers, and energy management software vendors. Rivian and Crusoe serve as early proof points—Rivian as both a battery source and installation site, Crusoe as a data center client.

Market Impact

• Redwood moves from pure recycling to energy systems, creating a new revenue stream and a competitive threat to traditional storage providers.
• Data centers seeking faster power may opt for behind-the-meter systems, bypassing grid expansion projects.
• Suppliers of inverters, software, and grid interconnection services could find a new channel through Redwood Energy's supply chain.

What to Watch

Whether Redwood scales beyond data centers to manufacturing or commercial facilities, and how utilities respond to behind-the-meter systems that avoid grid interconnection. Straubel's focus on speed suggests rapid growth, but no funding round or revenue targets have been disclosed yet.

Related coverage

• Crusoe raises $3.9B Series F at $30.9B valuation for AI data centers
• GM and LG's Ultium Cells expanding Tennessee plant to produce LMR EV batteries at scale
• Moment Energy Opens EV Battery Repurposing Megafactory in Surrey, BC After $40M Series B
• BMW Opens Gen6 Battery Plant in Bavaria