DG Matrix and Heron Power raise millions to modernize transformers

Three startups have secured major funding rounds to scale up production of solid-state transformers—devices that use power electronics instead of traditional copper windings and iron cores to manage electricity. The recent transactions include:

• DG Matrix raised a $60 million Series A funding round.
• Heron Power secured $140 million in a Series B round.
• Amperesand raised $80 million in November to target the data center market.

These investments come as the electrical grid faces severe capacity constraints. Traditional transformers have not changed significantly since the invention of the light bulb, remaining passive devices made of steel, copper, and oil. According to the National Laboratory of the Rockies, most transformers on the grid are several decades old. In the U.S. alone, the grid hosts as many as 80 million transformers. Drew Baglino, founder and CEO of Heron Power, noted that over 50% of distribution transformers are 35 years old, creating a critical need for upgrades. He explained that old-school transformers lack monitoring and control, making them a liability during power surges or plant outages.

Solid-state transformers use power semiconductors to convert and direct electricity, acting as flexible, software-updatable routers for power. Subhashish Bhattacharya, co-founder and CTO of DG Matrix, said of the technology, “It becomes a very powerful device, equivalent to your internet router.”

While solid-state transformers are unlikely to replace grid substation transformers in the near future due to cost premiums, they are finding an initial market in data centers. For these facilities, the technology replaces multiple pieces of equipment. For example, Heron Power’s Heron Link transformer occupies 70% less space than existing parts and can provide racks with 30 seconds of power while backup sources boot up. Haroon Inam, co-founder and CEO of DG Matrix, stated that by eliminating other necessary equipment, their system costs only 60% to 70% of the total cost of the components it replaces.

Modernizing this infrastructure is becoming urgent as electricity demand rises. The National Laboratory of the Rockies expects the amount of power flowing through transformers to double by 2050. By replacing passive mechanical objects with intelligent solid-state alternatives, operators can increase grid capacity. Baglino noted that this intelligence allows utilities to make infrastructure more affordable by routing more kilowatt-hours through the same existing poles and wires.

Why it matters

Startups are modernizing aging electrical grid transformers with solid-state technology, which offers better control and efficiency for data centers and grid operators, despite a current cost premium.