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- This is a transformer. It may not be a lot to look at, but there's more than meets the eye. It's the key for making sure the world's electricity gets where it needs to go safely and efficiently. But new demands are putting a strain on an increasingly dated system. - The reality is that over the last 20 to 30 years, the electric grid, which is the largest, most complex machine humans have built, is also changing at the fastest pace that it has in its history. And that's happening because a whole slew of new technologies are being added to the grid. - So how do we manage this change?
Enter something called the solid-state transformer, a fancy high-tech version of an age-old device that isn't just made up of copper and steel, but uses semiconductor chips and software. Investors are betting hundreds of millions that it could be an important tool in enabling the global energy transition towards electrification and the energy-hungry AI boom. - This is New Mexico State University's outdoor test bed for a lot of grid modernization technologies. This is what we do here for research and experimentation before it is ready to go into your neighbourhoods and to utilities.
- Olga Lavrova spends a lot of time thinking about transformers. - This is a traditional transformer. This particular one is brand new. It just had its birthday like two months ago. - But its core technology dates back to the 19th century. - Transformers are everywhere. You might not have noticed them, but if you've ever been on a road trip or in a train or seen power lines connected to a substation, you've seen a transformer.
- Olga's lab is one of many researching a next generation version of this device called a solid-state transformer. And there's a growing industry eager to cash in. - There are around a dozen companies rushing to make these solid-state transformers, anywhere from smaller startups to established players to solar companies. - As of 2026, leading startups like Heron Power, DG Matrix, and Amperesand have raised over $300 million combined according to company press releases.
- The electricity sector is at a pivotal moment. We're going after solar, we're going after batteries, data centers, really anywhere where you need to go from DC to medium voltage AC. - Jefferies analysts project that the solid-state transformer market for US data centers could reach $4.3 billion annually by 2030. But if traditional transformers have worked for so long, why rethink them? To understand that, we need a little.primer? Transformers are essential because they change and regulate voltage. Indeed, they transform it. Voltage can be though of as the pressure that moves electric current. If you think of it like plumbing, it's the force moving water through a pipe.
- When you are consuming electricity on your computer, you need to make sure that it's on the right voltage because if it is too high a voltage, your electronic device is going to get fried up. - In order to get to, say a house, electricity is first generated at a power plant. It then goes through a massive network called the grid, changing voltage multiple times via multiple transformers. - No moving parts, no sparks, only the hum, but just what goes on inside the transformer? - Traditional transformers are analog, mechanical devices that work using electromagnetics.
They have a magnetic core, typically made of laminated steel, and copper wires that are coiled around it, called windings that step voltage up and down depending on how many times they're wound. And they run on AC power or alternating current as opposed to DC or direct current. This has to do with one of the fundamentals of electricity, AC versus DC. No, not that AC/DC. As electricity moves through a traditional transformer, the current and voltage swing between positive and negative at a fixed frequency. For the grid, that's 50 or 60 times per second or 50 or 60 hertz, depending on where you live.
Traditional transformers do their job well, but they're inflexible, which means each job needs its own specific transformer, and that worked fine until recently. - Previously, the grid was designed for a single direction power flow, and that power was sent in one direction and one direction only from the power plant to the regular consumer. - As the world electrifies more and more, each application increasingly needs its own specific type of power, and traditional transformers have a hard time keeping up.
- With the advent of solar, batteries, microgrids, the grid has become more of a multi-way highway in which energy has to flow through multiple directions, forwards, backwards, change voltages, change currents, and all of that needs to be controlled by smarter and smarter technology. - And that is where the solid-state transformer comes in. - You can think of solid-state transformers like the Swiss army knife of transformers. - Solid-state transformers incorporate semiconductors and advanced power electronics to tailor electricity to the demands of the modern grid.
Unlike a traditional transformer, solid-state transformers work at very high frequencies. So instead of switching 50 or 60 times per second, think closer to 10,000 times per second or more. It's important because solid-state transformers use semiconductors and power electronics to transform and convert electricity at incredibly high speeds, which can only be done at higher frequencies. The result is cleaner, more stable power, and a device that can actively respond to power fluctuations and needs brought on by all the electrical devices using it.
- So in here, what you're seeing is the heart of the transformer is this plainer high frequency transformer. It is still doing the same function. It's still converting one voltage level to another level. And you can see those semiconductor switches. That's what makes the semiconductor and solid-state transformer work because this switch is operated much, much higher frequency. - Rather than just changing the voltage up and down, they also control the electricity in terms of the direction that it's flowing, in terms of its current and making sure it's smoothed out and clean to use.
- And because they use power electronics, solid-state transformers can also convert DC into AC and vice versa, which is useful because more and more of the grid is using DC power. - Renewables plus solid-state transformer are a really good match together because renewables can fluctuate a little bit, renewables can produce different voltages, different currents, and a traditional transformer may have difficulty matching those voltages. While a solid-state transformer could say, "Oh, voltage is a little low, no problem." A solid-state transformer can say, "Oh, voltage is a little high.
No problem." - As the grid adapts to these changes, demand for high-tech solid-state transformers could increase, but for the moment, there's one use case that has taken the spotlight and most of the money: AI. - The only reason we're talking about solid-state transformers right now is because of their application data centers, if I'm being honest. - These data centers have these computer racks and lots of them that consume electricity on the order of tens of homes or sometimes hundreds of homes in this one unit that is the size of a typical fridge, which means it is moving a lot of electricity in
and around a very tiny place. And these devices can also ramp up and ramp down their consumption of electricity really, really quickly based on whether you have just sent an AI query asking about the best breed of dog you want to buy. Managing around that spike of electricity consumption is important and something solid state transformers can do and make easy relative to existing technologies. - AI companies have a vested interest in electricity use because, well, they use a lot of it. - BloombergNEF estimates that a solid-state transformer could save $1.4 million per megawatt in a data center by eliminating some
of the other equipment that's no longer required once a solid-state transformer comes into the picture. And for a gigawatt-sized data center, that means billions of dollars in savings if the solid-state transformers are actually made and can be put into data centers, which has yet to happen. - solid-state transformers are at a pretty early stage of commercialisation, which means relative to a conventional transformer, they're pretty expensive. - But there's another incentive. In 2025, NVIDIA, one of the largest chip companies in the world, proposed a new type of power architecture for data centers called 800 Volt DC, a high voltage delivery system
that NVIDIA claims could be cheaper and more efficient. The idea was enough to kickstart a new wave of interest in the technology. - Going on a field trip, team. So across the parking lot, 54,000 square feet. We'll go walk around, you can see it. We're actually going to move our corporate headquarters into that location. Watch the puddle. By the way, that's a transformer, that green box. - One startup that's focused on commercializing the solid state transformer is DG Matrix.
They reportedly raised $60 million in series A funding. - So this is the actual transformer itself. This is where the IP lives, which is why it's closed. We don't let anyone see inside of it because it really is where the magic happens. - We have a working factory out of our Lahore facility. We've had that for over 18 months. I think over the next 12 to 18 months, we expect to have at least 200 people working in DG Matrix in Raleigh, Durham.
- DG Matrix started by making units for microgrids and EV charging, but they shifted their focus to data centers. - So when we started DG Matrix in 2022, EVs were the hot rage, and lo and behold, we found as AI took off that's where the biggest demand is going to come from. So we've pivoted towards concentrating on AI data centers, AI factories. However, electrification remains a massive market. - It's still early stages for solid-state transformers, and they won't be used everywhere.
- They are not quite ready yet to be deployed at the large power distribution national level. That still is the job of a conventional transformer. - But they still might be an important step to rethinking how we use electricity to match a world that's electrifying quickly. - Of all the forms of energy that we have, electricity is the most complicated, the most used, and the least understood.
We just need to get better at dealing with its complications, and that requires us to improve the technologies that allow us to interface with it, to manage it, to control it, to make it safe, and that's going to be complicated, but the fact is we have many of those technologies already. We just need to start to deploy them and make electricity tamer than it is.
