05-04-2026SUBSCRIBER EXCLUSIVE

Data centers are breaking the electric grid. Meet the $6 billion startup and its visionary CEO solving the problem

Redwood Materials founder JB Straubel transformed what batteries could do at Tesla. Now he’s doing it again, changing the way data centers—and the entire energy grid—are powered.

JB Straubel [Photo: Redwood Materials]

In the rolling hills near Reno, Nevada, in a field filled with solar panels, something unexpected is nestled into the landscape: a data center that isn’t blowing up its neighbors’ electric bills. In fact, the modular data center, built by Crusoe, essentially doesn’t rely on the electric grid at all.

It runs on solar power and an unlikely source: hundreds of second-life EV batteries. At a time when data centers are driving up electricity demand—and facing intense political pushback over potential impacts on energy bills and the environment—the batteries offer a flexible way to add power without leaning harder on the grid. 

 The astonishing setup is the handiwork of $6 billion startup Redwood Materials and its founder and CEO, JB Straubel, who’d seen a new opportunity in the flood of used EV batteries.

His new vision for the electric grid was sparked by the sheer volume of electric vehicle batteries that still hold significant financial and functional value. This made a new and more lucrative business case feasible: Instead of manufacturing new batteries—an expensive process dependent on global supply chains—the team could use the energy left in secondhand EV batteries to make cheap, quickly deployed, cost-effective energy storage at a large enough scale that they could be used by electric utilities or in microgrids like the one in Nevada.

“I have kind of an aversion to waste, personally. It pains the engineer in me to watch that happen, even though we certainly could recycle these packs, and we do every day,” Straubel continues. “That was the impetus for thinking that there must be a better way. There’s got to be some way we can take advantage of that and be one of the first to really scale it up.” 

The insight—presciently—came just as the energy storage market was poised to boom. In the U.S., a record 18.9 gigawatts of energy storage capacity were added last year, enough instantaneous power for roughly 15 million to 20 million homes. California recently set a record when 43% of the total power in the state was being supplied by batteries. And between now and early 2027, the U.S. Energy Information Administration expects battery storage to surge again by more than 50%, driven both by the need to store renewable energy and by surging demand for electricity due to the massive build-out of new data centers. 

As some data centers plan to rely on new gas plants that could collectively emit more pollution than some countries, Redwood’s low-cost batteries make renewable energy more viable. For data center developers, they offer a way to avoid long waits with utility companies—and to comply with the White House’s demand to bring their own power to new projects. For utilities, they’re a lower-cost method to store renewable energy. At factories, they can store grid power when it’s cheapest for later use.  

Redwood, flush with the batteries Straubel saw were coming, is on pace to deploy hundreds of megawatt hours of its systems, equivalent to the capacity of some power plants; next year, it aims to deploy gigawatt hours of storage. In a moment defined by grid bottlenecks and soaring demand, Redwood is rethinking how energy infrastructure can be built—and reused. 

For Straubel, the former CTO at Tesla, it’s just the latest unconventional bet in a career built on them. And it might just save the electric grid before it’s too late.  

Early adoption finds success

Redwood’s strategy reflects Straubel’s history of pursuing ideas in energy and transportation that initially seemed early, but later became essential. As a student at Stanford University in the 1990s, where he designed his own major in energy systems engineering, he started building electric cars. 

Before his work at Tesla, he spent the early 2000s pitching investors on the idea of an electric sports car that used lithium-ion batteries to increase range. Most investors passed. Elon Musk, though, recognized the potential and brought Straubel into the company soon after he led the Series A investment in 2004. (A settlement from a lawsuit about Tesla’s early days allows five people, including Musk and Straubel, to call themselves “cofounders.”)

As Tesla grew, Straubel was the internal champion for building the Supercharger network and the company’s own battery factories, not just the cars themselves. He later saw the opportunity to build energy storage for renewables using lithium-ion batteries, another idea that faced skepticism from the energy industry but soon became widely accepted.

Cal Lankton, Redwood’s chief commercial officer, worked on charging infrastructure and energy sales at........

© Fast Company