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GM is sending new and old EV batteries to recycler Redwood Materials, which then repurposes the packs for stationary energy storage storage, the two companies announced today.

Second-life batteries from GM have already made their way through Redwood’s process and into a 12 megawatt microgrid at the company’s Sparks, Nevada, headquarters. Electricity from that installation then flows to a nearby 2,000 GPU data center owned by Crusoe.

The microgrid is part of Redwood’s new energy storage division that launched publicly in June and focuses on repurposing EV batteries for grid-scale energy storage. Through testing, the company found that many of the cells which arrived at its facilities still had a good amount of life left in them. 

Rather than recycle the embedded materials, the company kept the packs intact, then connected them to create a large energy storage system that can store excess electricity, often generated by solar and wind, for later use. The batteries for the Crusoe project are fed by solar panels.

“I think this has the potential to grow faster than the core recycling business,” Redwood co-founder and CEO JB Straubel said at the time. Redwood already recovers around 70% of all used or discarded batteries in the U.S. The company plans to deploy 20 gigawatt-hours of energy storage by 2028.

Redwood isn’t the only company following that playbook, though its ability to integrate a variety of packs — from different manufacturers and chemistries — could give it an edge over competitors.

Both GM and Redwood have an existing agreement, but the new collaboration marks an expansion.

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One notable detail: GM’s willingness to supply Redwood with new batteries, not just old ones, gives it a hedge against uneven growth in EV sales. New sales dipped 6.3% in the second quarter of this year, according to Cox Automotive, though they’re expected to surge before tax credits are phased out September 30.

Energy storage, on the other hand, has been growing consistently in recent years. New installations in the first quarter of this year hit a new record, up 57% year-over-year.