An AI data center boom is fueling Redwood's energy storage business | TechCrunch

TechCrunch

by Kirsten Korosec

February 19, 2026

AI-Generated Deep Dive Summary

Redwood Materials is experiencing rapid growth in its energy storage business, driven by the booming demand for reliable power solutions to support AI-driven data centers. Just a year ago, the company had no such division, but today, this sector has become its fastest-growing unit. Located in San Francisco, Redwood's R&D lab has expanded fourfold to 55,000 square feet, employing nearly 100 engineers and researchers focused on integrating hardware, software, and power electronics for energy storage systems used in data centers, AI computing, and industrial applications. The company’s expansion is directly tied to its new energy storage initiative launched last June. This initiative leverages recycled EV batteries to provide power to hyperscale data center operators, which require massive amounts of electricity to support AI advancements. Redwood’s first customer was Crusoe Energy Systems, a startup known for its large-scale data centers, including the Stargate project in Abilene, Texas. The partnership utilized 12 MW of power and 63 MWh of capacity to supply energy to Crusoe’s modular data center. With significant backing from investors like Google and Nvidia, Redwood is scaling up its operations to meet the growing demand for energy storage solutions. The company’s Series E funding round raised $425 million, enabling it to address hyperscaler customers who require hundreds of megawatts of power—far exceeding the capacity of its initial project with Crusoe. This growth underscores the urgent need for reliable energy sources as data centers race to meet the demands of AI innovation and renewable energy integration. Redwood’s success highlights a critical shift in the tech industry, where advancements in AI are fueling unprecedented demand for energy storage solutions. As hyperscale operators and other industrial players seek sustainable and scalable power systems, Redwood is positioned to play a pivotal role in shaping the future of energy infrastructure supporting cutting-edge technologies like artificial intelligence.

Verticals

techstartups

Originally published on TechCrunch on 2/19/2026