As a sky rocket for energy demand amid the rise of AI, Teslaco-founders are betting on a new solution to give old electric car batteries a second life.
JB Straubel, who helped launch Tesla and served as high-tech chief until 2019, founded Redwood Materials in 2017, recycled batteries and created a closed-loop supply chain for EVs. However, when Redwood began receiving more EV batteries, the startups realized that most still had usable capacity. Rather than recycle these batteries, Redwood is now reusing them in microgrid projects that can provide cheap energy storage for new and existing data centers.
“We basically just found a way to narrow down a little more value from these batteries,” Straubel told CNBC.
For the first microgrid, Redwood partnered with Crusoe, best known for its large AI data center being built in Abilene, Texas. A $500 billion AI infrastructure project backed by Openai, as part of Stargate; OracleSoftbank, etc. Redwood says its system is the largest variety in North America. It generates 12 megawatts of power through a solar array and has a capacity of 63 megawatts of hour using a recycled EV battery.
“In the energy industry, the Holy Grail was 24/7 renewable electricity, but to this day the battery costs were way too high,” says Cully Cavness, co-founder, COO and president of Crusoe.
The global data center market has experienced a surge in growth due to the AI boom. According to Goldman Sachs, AI is estimated to increase its data center electricity demand by 165% by 2030. Redwood and Crusoe said they viewed data centers as the key beneficiaries of the technology and would help HyperScalers deploy speed and power redundancy at affordable costs.
“This is as one integrated package as cost-effective, fast deployment, 24/7 scalable, 24/7 renewable power and AI data center computing,” Cavness said.
According to Redwood, the stock has a gigawatt-hour reusable battery, equivalent to 12,500 TVs, and is designing a megawatt project that is up to 10 times more megawatt projects than a pilot microgrid using CrusoE.
“There’s really no limit to the scalability of this,” Straubel told CNBC. “We can use the same type of architecture and scale this by over 100 times. We’re already working on engineering projects of that type of size.”
In addition to its recycling business, Redwood is currently competing in the growing energy storage market. Teslasuccessfully made the energy business with Megapack grid-scale storage. But experts say there is plenty of room for new entrants to meet demand.
“The future demand for energy storage is particularly large, so it’s not surprising that players who were traditionally not in this space are trying to get in.” “I think this second life piece will be used for more concentrated, slightly smaller projects. There could be clients who are slightly limiting costs.”
Watch the video to see how Redwood Materials has grown its recycling operations and learn more about plans to use Second Life batteries to meet the burgeoning energy needs of the AI era.
