Why investors are going gaga over solid-state transformers
Source: TechCrunch
Aging Grid and Transformer Challenges
It’s no secret that the electrical grid is aging, but one part stands out from the rest. Transformers haven’t changed much since Thomas Edison made his first light bulb.
Now, a string of startups are working to modernize the transformer, replacing it with modern power electronics that promise to give grid operators more control over how and where electricity flows.
“It becomes a very powerful device, equivalent to your internet router,” Subhashish Bhattacharya, co‑founder and CTO of DG Matrix, told TechCrunch.
Recent Funding Rounds
- DG Matrix raised a $60 million Series A.
- Heron Power raised $140 million Series B.
- In November, Amperesand raised $80 million to chase after the burgeoning data‑center market.
Existing transformers are reliable and efficient, but that’s about it. They’re relatively crude instruments, made largely of copper and iron. They react passively to changes on the grid and can tackle only one task per device.
“An old‑school steel, copper, and oil transformer doesn’t have any monitoring, doesn’t have any control,” Drew Baglino, founder and CEO of Heron Power, told TechCrunch. In instances where electricity surges or a power plant trips offline, that can be a liability.
The new devices can incorporate power from a range of different sources—including traditional power plants, renewables, and batteries—and transform that electricity into either alternating current (AC) or direct current (DC) at a number of different voltages, allowing them to replace several devices.
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Market Context
For data centers, solid‑state transformers offer an appealing alternative, allowing them to shrink the footprint of their power systems while giving them finer control over where and how electricity is directed.
Solid‑state transformers are poised to arrive at a time when existing transformers are aging and demand for new ones is surging—a classic tech supercycle. Most transformers on the grid today are several decades old, according to the National Laboratory of the Rockies. As demand from data centers, EV chargers, and other parts of the grid rises, the NLR expects the amount of power flowing through transformers to double by 2050.
While data centers are the first market those companies are chasing, they also have their sights set on the electrical grid, which in the U.S. alone hosts as many as 80 million transformers.
“All of the distribution transformers are ultimately going to need to be replaced. Over 50 % of them are 35 years old. There’s a big need for an upgrade,” Baglino said.
Because they’re made from silicon‑based materials, solid‑state transformers are flexible, controllable, and software‑updatable. They’re also immune from price fluctuations that rock the copper market.
“Power semiconductors keep getting cheaper. Steel, copper, and oil, unfortunately, is not in that situation,” Baglino added. “Commodity prices can move all over the place, and they generally move up.”
Technical Overview
How Traditional Transformers Work
- Input side – Power flows into copper wires wound around one side of an O‑shaped iron core.
- Magnetic induction – The current creates a magnetic field in the core.
- Output side – The magnetic field induces electricity in another set of copper windings.
- Voltage ratio – If the input windings outnumber the output windings, the output voltage drops; if the ratio is reversed, the voltage rises.
How Solid‑State Transformers Differ
- No copper windings – They use semiconductors (silicon carbide, gallium nitride) for frequency conversion.
- Three‑part architecture
- Rectifier – Converts AC to DC.
- DC‑DC converter – Adjusts the DC voltage.
- Inverter – Converts DC back to AC at the desired voltage/frequency.
- Bidirectional power flow – Unlike iron‑core transformers, they can handle power in both directions, making them ideal for backup‑power scenarios.
Benefits for Data Centers
- Consolidation – One solid‑state transformer can replace multiple pieces of equipment (step‑down transformer, UPS, backup converters, etc.).
- Behind‑the‑meter integration – Easier connection of on‑site generation (e.g., solar, fuel cells) directly to the data center.
- Battery coupling – When paired with grid‑scale batteries, they can eliminate traditional UPS systems, freeing up rack space.
“If you add up the cost of everything we’ve taken out, we’re 60 % to 70 % of that cost,” Haroon Inam, co‑founder and CEO of DG Matrix, told TechCrunch.
DG Matrix focuses on its Interport technology, which can route power from multiple sources to multiple loads of differing voltages—a setup covered by several patents.
Heron Power, meanwhile, is working on transforming medium‑voltage power in data centers, solar farms, and other grid‑adjacent applications.
All quotes and figures are sourced from the linked TechCrunch articles.
Opportunities and Limitations
- In a data center, Heron Link transformers can provide racks with 30 seconds of power while backup sources come online. Altogether, Heron Link occupies 70 % less space than existing parts.
- At a solar farm, Heron Power’s transformers can perform the duties of an inverter and a transformer for the same price.
Head‑to‑Head Comparison
- Cost: Solid‑state transformers still command a cost premium over iron‑core transformers.
- Adoption Timeline: Because of the higher price, they’re unlikely to replace the giant humming boxes at grid substations in the very near future.
Where Solid‑State Transformers Are Gaining Traction
- Data centers – replace several pieces of equipment, freeing up space and improving reliability.
- EV charging hubs – consolidate functions, reducing footprint and simplifying installations.
When they finally hit the grid in larger numbers, they have the potential to cut down on transmission and distribution costs, one of the biggest contributors to utility‑bill inflation.
Grid‑Level Benefits
Because today’s transformers are passive and unable to react to fluctuations, distribution networks have been built with a significant amount of spare capacity, according to Baglino.
Solid‑state transformers, however, can respond to changing conditions, allowing grid operators to send more power through the same lines.
“You can actually make the infrastructure more affordable because you’re putting more kilowatt‑hours through the same poles and wires,” he said.
“That’s where intelligence, in place of passive mechanical objects that were designed 100 years ago, can make a big difference.”