Google Backs Redwood Materials as Energy Storage Scales for AI Data Centers

Why Google Invested in Redwood Materials’ Energy Storage Expansion

Google has joined the latest Series E financing of Redwood Materials, signaling rising interest in energy storage that can support AI data centers. The investment increased the Series E round to $425 million. Other participants include existing investors and new strategic backers. The company did not disclose its valuation publicly. However, a source familiar with the round said the post-money valuation exceeded $6 billion. This marked an increase of more than $1 billion from the prior valuation.

The attraction for Google appears tied to energy storage. This business sits alongside Redwood Materials’ established recycling and cathode production operations. As electricity demand rises, energy storage is becoming essential infrastructure. That demand is driven by AI workloads, data centers, manufacturing, and electrification. Redwood’s expansion aligns directly with these pressures.

Redwood Materials Energy Storage Strategy for AI Data Centers

Redwood Materials was founded in 2017 to create a circular supply chain for batteries. The company initially focused on recycling battery production scrap and consumer electronics. It extracts materials such as nickel and lithium. These processed materials are sold to customers, including battery manufacturers.

Over time, Redwood expanded beyond recycling. The company added cathode production several years ago. Last summer, it launched an energy storage business. This unit repurposes electric vehicle batteries that are not yet ready for recycling. These batteries are converted into micro-grids. The micro-grids can supply power to AI data centers and large industrial sites.

This newer venture reflects a shift toward grid-scale solutions. It also connects directly to the needs of data center operators seeking reliable power sources.

Scaling Inventory and Grid-Scale Storage Capacity

Redwood Materials said it recovers more than 70% of used or discarded battery packs in North America. Many of these packs are suitable for second-life energy storage. In June, the company reported more than 1 gigawatt-hour of battery inventory. It also expected to receive another 4 gigawatt-hours in the coming months.

Looking ahead, the company expects to deploy 20 gigawatt-hours of grid-scale storage by 2028. This scale positions Redwood to support data centers facing surging electricity demand. It also underscores why energy storage has become central to the company’s growth strategy.

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Investor Momentum and Capital Raised to Date

The latest funding pushed Redwood Materials’ total private capital raised to $2.3 billion. Earlier in the Series E, the company raised $350 million in a round led by a venture firm. Strategic investors also participated. Additional investors joined later, increasing the round size.

This momentum reflects confidence in Redwood’s integrated approach. Recycling, cathode production, and energy storage now form a connected business model. Each segment supports the others as demand for batteries and power infrastructure grows.

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Energy Storage as Essential Infrastructure

Redwood stated that energy storage is no longer optional. It is becoming essential infrastructure as electricity demand surges. AI data centers represent a major driver of that demand. Industrial electrification and manufacturing add further pressure.

By repurposing existing EV batteries, Redwood Energy addresses both supply and sustainability. It extends battery life while supporting power-hungry facilities. This approach explains why major technology companies are backing the expansion.

As AI data centers continue to scale, how will energy storage models shape the next phase of industrial power infrastructure?

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