As the “AI Revolution” accelerates, we find ourselves hitting a very physical wall: energy storage. The rapid electrification of nearly every sector, coupled with the exponential power demands of AI, means we need green energy faster than ever. Yet, our current infrastructure is stuck in a bottleneck. Traditional grids can’t keep up. And as of yet, green, renewable energy sources, such as solar and wind power, are simply too intermittent to fully unseat fossil fuels without a way to “bottle” that power for later use.
To achieve true decarbonisation, we need to bridge the gap between when energy is generated and when it is consumed. We need a solution that makes our grids more resilient and allows us to store summer’s sun for winter’s chill. Without massive-scale storage, the green transition stalls.
A circular solution for reusing EV batteries
Electric vehicles can play an important role in reducing emissions. Their batteries, which contain significant quantities of precious and rare materials, are regularly discarded as toxic e-waste after their lifecycle. At the current pace of EV sales globally, experts predict there will be about 20,500 kilotons of end-of-life batteries by 2040. That’s roughly 55 times the weight of the Empire State Building.
However, as Jessika Richter, a researcher of environmental policy at Lund University in Sweden, told the Guardian, “There is a lot of [battery] capacity left at the end of first use in electric vehicles.” When an EV battery is retired from a car, it often retains over 50 percent of its usable capacity. While no longer fit for the road, these batteries are perfect for stationary energy storage.
This is where the circular solution comes in: repurposing these batteries to power the grid before they are eventually recycled. It maximises the value of every mineral extracted from the Earth and provides low-cost storage at scale.
Redwood Materials’ “full-stack” platform is designed to manage this transition. Already handling nearly 90 percent of lithium-ion recycling in North America, the company processes over 20 GWh of batteries annually; that’s the equivalent of 250,000 electric vehicles.
At RESET, we love a circular solution. But could this really work?
How Redwood Materials closes the loop
Redwood Materials’ process begins with a nationwide logistics network that recovers retired EV battery packs. Each pack that Redwood receives undergoes in-house diagnostics to determine whether it should be recycled immediately or if it could be given a second life.
Qualified packs, regardless of their original manufacturer or chemical composition, are then integrated into modular storage systems that are deployed to support sophisticated applications. One recent use case was powering Crusoe AI infrastructure. Then, once a battery finally reaches the end of its functional life, it flows back into Redwood’s recycling system. From there, 95 percent of its critical minerals are recovered before being turned into new batteries.
A bridge rather than a destination
Redwood’s model represents an important two-pronged evolution toward the green transition. On the one hand, we badly need energy storage solutions to have even the slimmest chance of reducing our dependence on fossil fuels. On the other, EV battery recycling is improving, but still poor. In the US, where Redwood is based, recycling programs are largely voluntary, and battery recycling rates remain below 15 percent.
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While solutions such as those proposed by Redwood Materials offer a sophisticated way of targeting both issues, there’s a broader issue of information. EV owners need to know how to access EV battery collection facilities to avoid the growing issue of “orphan batteries”. Once a battery is taken out of a vehicle, it is no longer covered by warranty, and its ownership is unclear. It risks ending up in a scrapyard, garage or service centre with no clear route to responsible recovery.
In addition, most battery collection infrastructure in the US is located far from recycling or repurposing facilities, which increases the risk of dangerous fires and increases transportation costs. In fact, a recent study by RWTH Aachen University claimed that the recycling of electric vehicle batteries in Europe is currently not profitable at all, with 70 percent of total recycling costs borne by transportation. As EVs are still relatively new, many owners will have never had one before, let alone know what to do with a 1,000lb battery when it dies. Education is key.
Data centres are a spanner in the works
Likewise, as AI demand grows exponentially, the volume of retired batteries may still struggle to keep pace with the sheer hunger of the global power grid. Second-hand batteries won’t solve the problem of data centres’ enormous hunger, and could only, potentially, form part of the solution. However, a principle that strategies such as Redwood employ shows that the energy transition must prioritise better management rather than more extraction.
More recycled battery materials such as cobalt, lithium, manganese and nickel will come from EV stock and planned battery gigafactories across Europe. As the existing recycling capacity across Europe is 10 times below what it needs to be by 2030, this represents an enormous opportunity for the world to source materials locally and sustainably. The success of Redwood and other competitors will depend largely on public policy prioritising public education, incentives for EV battery recycling and a close eye on our energy usage. In the USA, at least for now, this feels far-fetched, to put it mildly.
However, the enormous potential remains clear. So, the clock is ticking for policymakers and industry leaders to transform this looming environmental time bomb into a sustainable, sovereign supply chain.
