The electrical grid’s aging is well-known, but transformers stand out as particularly outdated, having changed little since Thomas Edison’s era. A new wave of startups aims to modernize these with advanced power electronics, offering grid operators improved control over electricity flow.
DG Matrix’s co-founder and CTO, Subhashish Bhattacharya, views the upgraded transformers as akin to internet routers. Three startups recently secured significant funding to enhance their solid-state transformer technologies. DG Matrix raised $60 million in a Series A round, while Heron Power secured $140 million in a Series B round. Amperesand obtained $80 million last November to target the growing data center market.
Traditional transformers are reliable and efficient but limited, using primarily copper and iron, and reacting passively to grid changes. Drew Baglino, founder and CEO of Heron Power, highlights the lack of monitoring and control as potential liabilities during power surges or outages.
Solid-state transformers can manage power from various sources like conventional plants, renewables, and batteries, converting it to either AC or DC at various voltages, effectively replacing multiple devices.
For data centers, solid-state transformers are beneficial, reducing power system footprint while enhancing control over electricity flow. These transformers are arriving at a crucial time, as existing units are aging and demand for new units rises—a typical tech supercycle. Current transformers are often decades old, and with increasing demand from data centers and EV chargers, the power load through transformers is expected to double by 2050.
While data centers are the initial market focus, companies also eye the electrical grid, which hosts up to 80 million transformers in the U.S. Alone. Over 50% of distribution transformers are over 35 years old, signaling a significant need for upgrades.
Solid-state transformers, made from silicon-based materials, offer flexibility, controllability, and software updates, avoiding copper market price volatility. Power semiconductors are decreasing in cost, unlike the rising costs of steel, copper, and oil, Baglino notes.
Traditional transformers channel power via copper wires around an iron core, with magnetic fields inducing electricity. Solid-state versions use semiconductors, such as silicon carbide or gallium nitride, for frequency conversion, comprising a rectifier, a converter, and an inverter.
These modern transformers handle bidirectional power flow, useful for backup power in data centers. They can replace multiple systems, easing integration of behind-the-meter power and eliminating uninterruptible power supplies with grid-scale batteries, thus freeing data center space.
DG Matrix focuses on Interport technology for routing power to multiple loads, while Heron Power works on transforming medium-voltage power in data centers, solar farms, and battery installations. Their solutions offer space and cost efficiencies compared to traditional components.
Though solid-state transformers currently cost more than iron-core ones, their value lies in replacing multiple devices, especially in data centers and EV charging hubs. As they become more common on the grid, they may reduce transmission and distribution costs, a significant factor in utility price increases.
Existing transformers’ passive nature necessitates networks with extra capacity, but intelligent solid-state versions could optimize power flow, enhancing infrastructure affordability and utility through advanced capabilities.