It’s no secret that the power grid is aging, but one part stands out above the rest. Transformers haven’t changed much since Thomas Edison made his first light bulb.
Now a number of startups are working to modernize the transformer and replace 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 that is equivalent to your internet router,” Subhashish Bhattacharya, co-founder and CTO of DG Matrix, told TechCrunch.
Three startups recently raised sizeable rounds to scale up production of their semiconductor transformer technologies. This week, DG Matrix raised $60 million in a Series A round and Heron Power raised $140 million in a Series B round. In November, Amperesand raised $80 million to address the emerging data center market.
Existing transformers are reliable and efficient, but that’s about it. They are relatively crude tools, made mostly of copper and iron. They passively react to changes in the network and are able to solve only one task per device.
“The old-school steel, copper and oil transformer has no monitoring, no control,” Drew Baglino, founder and CEO of Heron Power, told TechCrunch. In cases where there is a power surge or an offline power plant, this can be a problem.
The devices can take power from a number 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 range of different voltages, allowing them to replace several devices.
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For data centers, solid-state transformers offer an attractive alternative that allows them to reduce 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 rising—a classic technology supercycle. Most of the transformers in today’s grid are several decades old, according to the National Laboratory of the Rockies (NLR; formerly the National Renewable Energy Laboratory). As demand from data centers, EV chargers and other parts of the grid grows, NLR expects the amount of power flowing through transformers to double by 2050.
While data centers are the first market companies are chasing, they are also targeting the electrical grid, which hosts up to 80 million transformers in the US alone.
“All distribution transformers will eventually need to be replaced. More than 50% of them are 35 years old. There is a big need for modernization,” Baglino said.
Because they are made of silicon-based materials, they are flexible, controllable and software upgradeable. They are also immune to the price swings that rock the copper market.
“Power semiconductors are getting cheaper and cheaper. Unfortunately, steel, copper and oil are not in that situation,” Baglino said. “Commodity prices can move all over the place and generally rise.”
In an old transformer, power flows into the transformer through copper wires wound around one side of an O-shaped iron core. As electricity flows, it induces a magnetic field in the core. On the other side of the core, the magnetic field induces electricity in another set of copper windings. If the conductors wrap around the core more times on the input side than on the output side, the output voltage drops. If the ratio is reversed, the output voltage will increase.
Solid state transformers eschew copper windings in favor of semiconductors and use materials such as silicon carbide or gallium nitride to process the frequency. They can come in a number of configurations, with the most complex setup consisting of three basic parts: a rectifier, which converts AC to DC, an inverter, which changes the voltage of the DC, and an inverter, which changes the DC back to AC.
Unlike iron-core transformers, solid-state transformers can handle power that flows in both directions, making them useful in places that need backup power, such as data centers.
In a data center, a semiconductor transformer can replace several different pieces of equipment, not just a transformer that steps down the voltage from the grid. Every data center uses backup power that requires a number of devices to supply power to the equipment. Solid state transformers handle all these tasks in one box.
The technology also allows data centers to more easily integrate so-called back-the-meter power, where the generating capacity is connected directly to the data center rather than to the grid. These usually require an additional set of transformers.
And in conjunction with grid-scale batteries, solid-state transformers can also eliminate uninterruptible power supplies (UPS), freeing up space inside the data center for additional racks.
“When you add up the cost of everything we’ve taken out, we have 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 different voltages, a setup for which the company holds several patents.
Meanwhile, Heron Power is working to transform medium voltage power in data centers, solar farms and grid battery installations. In a data center, its Heron Link transformers can provide 30 seconds of power to racks while backup sources are online. Heron Link takes up 70% less space overall than existing parts. In a solar farm, Heron Power transformers can perform the functions of an inverter and a transformer at the same price.
In direct comparison, solid state transformers are still more expensive than iron core transformers. For that reason, they are unlikely to replace the giant humming boxes in the mains switchboards in the very near future.
But in data centers and charging hubs for electric cars, where solid-state transformers replace several devices, they begin to make inroads.
When they finally come online in greater numbers, they have the potential to reduce transmission and distribution costs, one of the biggest contributors to energy bill inflation.
Because today’s transformers are passive, unable to respond to fluctuations, distribution networks have been built with significant amounts of spare capacity, Baglino said. However, solid-state transformers can respond to changing conditions and allow grid operators to send more power over the same lines.
“You can actually make the infrastructure more affordable because you’re putting more kilowatt-hours over the same poles and wires,” he said. “That’s where intelligence, instead of passive mechanical objects that were designed 100 years ago, can make a big difference.”