A wave of startups is working to replace traditional iron-core transformers with solid-state alternatives, promising to revolutionize how electricity flows across data centers and the power grid. These next-generation devices use modern power electronics, giving operators unprecedented control over energy distribution.
“It becomes a very powerful device, equivalent to your internet router,” said Subhashish Bhattacharya, co-founder and CTO of DG Matrix, to TechCrunch.
Recent Funding and Industry Momentum
The field of solid-state transformers (SSTs) has seen a surge of venture capital interest:
- DG Matrix raised $60 million Series A to scale its production.
- Heron Power secured $140 million Series B, focusing on medium-voltage applications.
- In November, Amperesand raised $80 million targeting data center applications.
These investments reflect the growing demand for more flexible, controllable, and software-updatable transformer technologies.
Why Replace Traditional Transformers?
Traditional transformers are reliable but fundamentally passive. Made mostly of copper and iron, they:
- Can handle only one task per device.
- React passively to fluctuations on the grid.
- Lack monitoring or real-time control.
“An old-school steel, copper, and oil transformer doesn’t have any monitoring, doesn’t have any control,” said Drew Baglino, CEO of Heron Power. “In instances where electricity surges or a power plant trips offline, that can be a liability.”
In contrast, solid-state transformers can integrate electricity from multiple sources—traditional power plants, solar, wind, or batteries—and deliver it at multiple voltages in AC or DC form. This allows them to replace several devices at once, reducing complexity and footprint.
Applications in Data Centers
Data centers are an early adopter market for SSTs because the devices shrink power infrastructure and improve control:
- They can replace multiple backup power devices in one box, including transformers, inverters, and UPS systems.
- They facilitate behind-the-meter power, integrating local solar, batteries, or other sources.
- They free up space for more server racks, cutting up to 60–70% of equipment costs, according to Haroon Inam, DG Matrix CEO.
DG Matrix focuses on Interport technology, routing power from multiple sources to multiple loads with differing voltages, while Heron Power’s Heron Link systems provide temporary power in data centers and combine inverter-transformer functionality at solar farms.
How Solid-State Transformers Work
Unlike iron-core transformers that rely on copper windings around an iron core, SSTs use semiconductors such as silicon carbide or gallium nitride to:
- Rectify AC to DC
- Convert DC voltage
- Invert DC back to AC
Advantages include:
- Bi-directional power flow
- Software-updatable operation
- Flexibility in handling multiple power sources
- Immunity to commodity price volatility (copper and steel prices fluctuate, semiconductors steadily decline in cost)
This architecture allows SSTs to respond dynamically to grid conditions, enabling more efficient use of existing infrastructure.
Broader Implications for the Power Grid
With the U.S. grid hosting around 80 million transformers, more than half of which are over 35 years old, solid-state technology could eventually play a critical role in modernizing distribution networks.
“All of the distribution transformers are ultimately going to need to be replaced,” said Baglino. “There’s a big need for an upgrade.”
Because SSTs are active and intelligent, they allow grid operators to push more kilowatt-hours through the same poles and wires, potentially reducing transmission and distribution costs and improving energy efficiency.
While SSTs currently carry a cost premium over traditional transformers, their ability to consolidate equipment in data centers and EV charging hubs makes them increasingly attractive. As prices continue to drop and production scales up, they are likely to become a key component of the modern electrical grid.
The Future
Solid-state transformers mark a shift from passive, century-old mechanical devices to intelligent, software-driven infrastructure. By enabling dynamic control, bi-directional power flow, and integration with renewables and batteries, they could redefine how electricity is delivered and managed—much like routers transformed the internet.
“You can actually make the infrastructure more affordable because you’re putting more kilowatt-hours through the same poles and wires,” Baglino said. “That’s where intelligence, in place of passive mechanical objects that were designed 100 years ago, can make a big difference.”