Some Weird Things Are Happening And The Grid May Never Be The Same

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Redwood Materials was founded by former Tesla CTO JB Straubel to solve the need for sustainable battery recycling. In 2024, the company decided to evaluate new business opportunities. It hired Nancy Sun, a power electronics and hardware systems expert who previously founded and sold an autonomous trucking startup, to explore whether the company could or should expand from materials processing into product development.

Within about six months, Sun told Latitude Media recently that energy storage had emerged as a natural product direction, leveraging existing battery inflows, testing and materials expertise, and operational footprint. Last summer it pivoted into grid storage and announced a pilot program to power four data centers near Reno, Nevada, operated by Crusoe. Redwood installed a 20 MW solar system and 12 MWh of repurposed batteries.

In February of this year, a severe blizzard struck the area, dumping up to 100 inches of snow in the nearby Sierra Nevada mountains. Several skiers were killed by avalanches after the storm was over. But for Sun and her team, it was a perfect test case for how their system would perform in extreme weather. It came through with flying colors, which led Crusoe to agree to the installation of similar systems at 20 more data centers.

Transforming Energy Storage

Redwood believes that by 2030, end-of-life batteries could supply more than 50 percent of the entire energy storage market. Instead of grinding up used batteries to reclaim the critical materials inside, put them to work storing electricity. There have been many experiments done that re-purpose used EV batteries which no longer can supply enough power to meet the need for rapid acceleration in an EV but still have up to 80 percent of their original energy storage capacity available.

Redwood’s progression from a recycler to a BESS developer went from idea to deployment in about six months, according to Maeve Allsup of Latitude Media. It developed proprietary “pack manager” technology, which lets it communicate with and control batteries of different voltages, protocols, and states of health. But that’s not where Sun and her team started the development process, in part because they didn’t realize they would need to build that software up front.

They started with the battery pack, wiring into real second-life packs that came in for processing, and experimenting with how to have them push and pull power to and from the grid. It wasn’t until they built a small pilot at one of Redwood’s facilities that they realized existing hardware and software didn’t meet their specific needs. To use second-life batteries, they needed to build their own power electronics, their own controls, and their own software.

The pack manager is essentially a universal adapter for EV batteries, performing power conversion into a unified direct current stream that can pair with any standard inverter. Meanwhile, the site controller aggregates many packs into one coherent storage system, balances state of charge across packs, and intentionally “unbalances” some based on their health.

Older packs are cycled more gently, while fresher packs get worked harder, Sun explained. The battery algorithms team is continually updating models to track the health of each pack from receipt through its repurposed life — then eventually to recycling once they are unable to perform any useful duties.

Keeping Costs Low

The emphasis is on keeping costs low. Traditional energy storage systems are high density and require heavy-duty cooling. To avoid this, Redwood’s team opted for an open-air, low-density system mounted on above-ground cable trays.

Spreading packs out in the open air helps avoid the need for active refrigeration, and stripping away moving parts like fans and filters minimizes potential reliability failures. Keeping the wiring above ground and limiting the size of each modular component minimizes the need for large equipment. As Sun explained, the result is a storage system that is faster to build, easier to inspect after storms, and cheaper to keep running over time.

Today, Sun and her team are scaling production and designing for the “huge pipeline of projects” they have planned, as data center developers and utilities alike look for faster, lower cost routes to power. Some of those planned deployments are more than 10 times the size of the pilot program in Nevada.

The company has more than one GWh of batteries ready to go and expects to add another five GWh this year. Ultimately, the bottleneck to scale isn’t battery supply — Redwood takes in more than 20 GWh of batteries each year. It is the safety qualification process required to put batteries out in the field. Sun explained that the core architecture, racking, pack manager, and software can handle multiple chemistries and form factors, but getting them past hurdles like the rigorous UL 9540A fire safety testing Redwood recently passed in-house is another matter.

Sun said Redwood is working to build what she calls a “qualification flywheel,” where the processes, test infrastructure, and in‑house safety capabilities make it faster to bring new EV packs into the system. Once that happens, the limiting factor becomes how many batteries the world can send them, not how quickly Redwood can put them back on the grid.

A Utility-Owned VPP In Minnesota

Typically, virtual power plants involve privately owned energy storage — whether residential batteries or batteries in electric vehicles — to be accessed by utility companies when demand for electricity is high. The Minnesota PUC this week approved a plan by Xcel Energy that would create a VPP owned by the utility company. The plan would install energy storage nodes of 1 to 3 MWh capacity at vacuous nodes on the existing grid  where demand is highest.

The approval from the PUC gives Xcel Energy permission to spend $430 million to deploy up to 200 MWh of batteries on the distribution system. According to the PUC staff’s preliminary notes summarizing the hearing, seen by Latitude Media, this deployment will aim to “optimize coincident distribution system benefits with bulk system benefits.”

The program is supported by those who argue utility ownership will encourage the industry to value distributed energy resources for their grid benefits. Detractors argue the approach will actually be slower and more expensive than programs that take advantage of customer-owned assets. Industry planning and operations teams question whether demand-side solutions offer “real” capacity. They also say demand-side resources cut back on what utilities do best — build more power plants and earn a rate of return on their infrastructure.

Building new generation is slow and expensive, especially in times of load growth and long interconnection queues. In theory, the utility-owned VPP would solve several problems, and Xcel argues it has the expertise to use this approach to save its customers money. If the company pays a factory to house a utility-owned and -operated battery near a transformer that is nearly overloaded, it can defer an expensive system upgrade and avoid a long equipment backlog.

While that may simplify deployment, it has disappointed VPP supporters like Kevin Cray, the VP of government and regulatory affairs at the Coalition for Community Solar Access. “What we’re seeing is … the utility effectively extending its monopoly and crowding out the industry from really participating in the process,” he said. “This feels like they’re putting all their eggs in one basket … as opposed to diversifying their potential suppliers to get the best pricing, get the best projects, and really drive the best customer experience.”

An Ideological Victory for VPP

The situation is complicated by the fact that clean energy advocates have for years been trying to convince utilities to rely more heavily on DERs. Cray himself acknowledged that the program is an ideological victory, insofar as a utility is directly acknowledging that DERs have real resource adequacy value on the distribution grid.

Jigar Shah, who was the director of the Department of Energy’s Loan Programs Office in the Biden administration, wrote on LinkedIn that the approval is “affirming the value of VPPs as a core part of near-term capacity and grid infrastructure. Minnesota commissioners view DERs and batteries as a vital capacity and infrastructure resource to be deployed in an accelerated timeline. Just like substations or voltage equipment, these battery assets will aim to make the grid work better for everyone — solar, behind the meter resources, and the system as a whole.”

Such progress in grid storage techniques is good news for clean energy advocates, even if there are some who are unhappy with the plan in Minnesota. Every new idea is another opportunity to learn and move the transition to renewables forward. Let’s celebrate our victories where we find them.