At the end of last year, the artificial intelligence infrastructure startup Crusoe was primarily focused on building data centers using fossil gas generation, with carbon capture and sequestration. In Abilene, Texas, for example, where the company is building a massive data center for OpenAI, backup power will be provided via a 300-megawatt gas plant.
But while the company’s biggest headlines in recent months continue to focus on gas, Crusoe has been quietly building an AI data center outside Reno where it will test a more nascent form of backup power: second life electric vehicle batteries.
Today the company unveiled a first-of-a-kind, off-grid modular data center for AI workloads, powered by a brand-new energy storage offering from the battery recycling company Redwood Materials.
Dubbed Redwood Energy, this new business line will repurpose EV battery packs and deploy them in a microgrid to firm up cheap renewable energy. That model, according to Redwood, is cheaper than anything currently on the market to power data centers, has lower emissions, and is significantly faster to deploy.
The data center, which is already online, is a one-MW proof-of-concept located on Redwood’s campus in Nevada. It features Crusoe’s modular data centers — branded “Crusoe Spark” — that the company manufactures in Colorado, Oklahoma, and Louisiana. Each individual unit is around the size of a shipping container, and includes power, cooling, and GPU racks.
The Nevada demonstration plant uses two Crusoe Spark units with NVIDIA A100s and B200s, and is powered by a 20-acre solar array. It’s backed up by 63 megawatt-hours of second life battery packs, covering another 10 or so acres.
According to Crusoe, it represents the largest solar-powered, off-grid data center in the world — and the world’s largest installation of second life batteries.
A new path for Redwood
The battery recycling industry has so far struggled to truly scale, in part because there just aren’t enough used batteries to go around.
Redwood, for one, says it receives around 20 gigawatt-hours of battery material annually. The company, founded by Tesla co-founder JB Straubel, has spent the last several years focused on supplying battery materials back into the EV manufacturing supply chain. It’s a closed-loop model that has allowed the company to capture value at both ends of the battery supply chain: by both charging companies to recycle their batteries, and selling battery materials back to manufacturers.
In 2023, Redwood received a conditional commitment for a $2 billion loan from the Department of Energy’s Loan Programs Office, to help fund the buildout of a gigafactory-scale battery materials campus in Nevada.
Redwood backed away from that loan in late 2024, opting to instead fund the project with private financing, citing growing financial strength after the company raised $2 billion and generated around $200 million in revenue. (Redwood told Axios earlier this year that it is eyeing up to 50% revenue growth this year.)
EV packs are Redwood’s fastest-growing input, the company said, and with the right diagnosis and repair, they can be repurposed, extending their life before they’re ultimately recycled.
The expansion into second life batteries for energy storage is a significant shift from the company’s current business model; the Reno project with Crusoe is Redwood’s first public announcement of its move into energy storage, and Redwood Energy’s first completed project, period.
But it comes as the AI and energy sectors are desperate for primary and backup power for data centers, particularly power that can come online fast and can scale quickly.
The company declined to share specifics regarding the types of battery packs deployed at that site, but confirmed the project includes a mix of batteries, connected and managed as a single system.
And while the company also declined to share specific cost data, they added that the cost of the Redwood Energy system is “substantially below” the end-to-end cost of new lithium-ion storage systems, including batteries, software, power electronics, and infrastructure. On top of that, Redwood’s solution offers developers a way to avoid import duties — a key cost in the current tariff landscape.
But cost of deployment aside, battery experts have generally expressed skepticism about the viability of second life batteries, at least at scale. That’s largely because it’s both expensive and challenging to evaluate old cells and be exact when measuring how well they will perform.
Redwood, for its part, is selling its systems as fixed-capacity storage, and “actively monitors pack health,” swapping out degraded packs as needed to ensure uptime, the company said. And while the time that each second life battery lasts may vary, the converters that link them last 15 years or more, making the overall system easy to maintain over time.
The company, which has been very quietly working on its energy offering behind the scenes, has over a GWh in its deployment pipeline, and expects another five GWh to be added in the coming year. It’s already designing projects that will use more than 100 MW of their storage solution — more than ten times the size of the Crusoe demonstration.
That said, Redwood’s solution is best suited for new build data centers, due to the physical space the deployments require. For those new builds, the company believes its model is particularly compelling as grid interconnection delays increase.
Editor’s note: This story was updated on July 29 to correct the first Redwood Energy microgrid’s capacity; it is 63 megawatt-hours, not 62.


