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Why investors are going gaga over solid-state transformers Tim De Chant 6:30 AM PST · February 20, 2026 It’s no secret that the electrical grid is aging, but one part stands out from the rest. Transformers haven’t changed much since Thomas Edison made his first light bulb.
Now, a string of startups are working to modernize the transformer, replacing 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, equivalent to your internet router,” Subhashish Bhattacharya, co-founder and CTO of DG Matrix , told TechCrunch.
Three startups recently raised sizable rounds to scale up production of their solid-state transformer technologies. This week, DG Matrix raised a $60 million Series A and Heron Power raised $140 million in a Series B round. In November, Amperesand raised $80 million to chase after the burgeoning data center market.
Existing transformers are reliable and efficient, but that’s about it. They’re relatively crude instruments, made largely of copper and iron. They react passively to changes on the grid and are capable of tackling only one task per device.
“An old-school steel, copper, and oil transformer doesn’t have any monitoring, doesn’t have any control,” Drew Baglino, founder and CEO of Heron Power , told TechCrunch. In instances where electricity surges or a power plant trips offline, that can be a liability.
The devices can incorporate power from a range of difference sources — including traditional power plants, renewables, and batteries — and transform that electricity into either alternating current (AC) or direct current (DC) at a number of different voltages, allowing them to replace several devices.
Techcrunch event Save up to $300 or 30% to TechCrunch Founder Summit 1,000+ founders and investors come together at TechCrunch Founder Summit 2026 for a full day focused on growth, execution, and real-world scaling. Learn from founders and investors who have shaped the industry. Connect with peers navigating similar growth stages. Walk away with tactics you can apply immediately. Offer ends March 13. Save up to $300 or 30% to TechCrunch Founder Summit 1,000+ founders and investors come together at TechCrunch Founder Summit 2026 for a full day focused on growth, execution, and real-world scaling. Learn from founders and investors who have shaped the industry. Connect with peers navigating similar growth stages. Walk away with tactics you can apply immediately Offer ends March 13. Boston, MA | June 9, 2026 REGISTER NOW For data centers, solid-state transformers offer an appealing alternative, allowing them to shrink 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 surging — a classic tech supercycle. Most transformers on the grid today 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 rises, the NLR expects the amount of power flowing through transformers to double by 2050.
While data centers are the the first market those companies are chasing, they also have their sights set on the electrical grid, which in the U.S. alone hosts as many as 80 million transformers .
“All of the distribution transformers are ultimately going to need to be replaced. Over 50% of them are 35 years old. There’s a big need for an upgrade,” Baglino said.
Because they’re made from silicon-based materials, they’re flexible, controllable, and software-updatable. They’re also immune from price fluctuations that rock the copper market.
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