Solid-state transformers could support the AI boom's growing power needs.

A one-megawatt solid-state transformer built in a university lab has passed its first realistic utility test, a small but concrete step toward modernizing a grid component whose basic design has barely changed in a century. The device, tested in August by the New York Power Authority and the Electric Power Research Institute (EPRI) at an EPRI test site, ran at roughly 98% efficiency. That matters because conventional transformers are in short supply, with wait times stretching as long as five years for the largest units.

Background: Why Transformers Are the Grid's Backbone

Moving electricity efficiently requires stepping voltage up and down. The higher the voltage and the lower the current, the less power is lost as heat along the lines. A solar plant's output may be converted from direct current (DC) to alternating current (AC) by an inverter at around 480 volts, stepped up to 115,000 volts for transmission, then stepped back down to 120 volts and 240 volts for a home in the US. That sequence can involve multiple transformers at solar farms, substations, and neighborhoods.

Conventional transformers do this with loops of copper wire wound around a core of grain-oriented electrical steel. The number of loops on each coil sets the voltage ratio: more loops on the secondary coil steps voltage up, fewer steps it down. Incoming electricity forms a magnetic field in the core, which induces a voltage on the other side—a process called magnetic induction. Beyond voltage conversion, transformers often provide galvanic isolation, meaning no direct electrical path runs through them, which limits disturbances traveling across the grid and improves safety. Srdjan Lukic, a professor of electrical and computer engineering at North Carolina State University, describes transformers as the backbone of electricity transmission and distribution—and today's versions as big, bulky, and difficult and expensive to replace.

Development: How Solid-State Transformers Work

Solid-state transformers add power electronics—semiconductors that convert and control electricity—to the conventional blueprint. Instead of operating at the grid's frequency, they control the frequency of the current. Typically, incoming AC power is converted to DC, then to higher-frequency AC using switches made of a semiconductor such as silicon carbide. A magnetic component then changes the voltage. Because the advanced semiconductors give so much control over frequency and stability, the magnetic core can be far smaller—some designs come in at roughly one-tenth the size with the same capacity, according to Lukic. Additional power electronics then convert the high-frequency AC back to its required form, generally to DC and finally to lower-frequency AC.

The payoff goes beyond size. Solid-state transformers can absorb the jobs of rectifiers and inverters, shrinking the total footprint of electrical equipment and potentially cutting losses. In the August test, the prototype—built in Lukic's lab and the first such test for a transformer of that capacity—lost only about 2% of the energy fed in. An equivalent conventional transformer and rectifier together would be about 96% efficient, Lukic says, meaning the solid-state unit could cut power losses from conventional equipment in half.

The prototype is still a relatively low-voltage system, operating at about 15,000 volts. Industrial facilities like larger data centers often need higher-voltage connections, and transmission lines typically run at hundreds of thousands of volts. Adapting the technology to those levels will require further engineering. One goal of the project was to build utility confidence in the components, Lukic says—crucial if they are to be used on the power grid. In the near term, solid-state transformers could supply electricity for server racks inside data centers.

Latest: Money Flows Toward Data Centers

Companies developing the technology are largely focused on data centers right now, Lukic says, because funding is flowing and voltage requirements are lower than they will be for long-distance transmission. In February, Heron Power raised $140 million to commercialize its solid-state transformer, the Heron Link. Founder and CEO Drew Baglino says the technology could be used in data centers, solar power arrays, and grid batteries. Ten megawatt-hours' worth of batteries at Heron's headquarters in Scotts Valley, California, will soon undergo testing with Heron transformers, and the company is planning a pilot with a nearby solar farm.

Heron is also building a $100 million factory in California to make advanced transformers. The facility should begin production in 2027 and reach its full production rate of 40 gigawatts' worth of transformers per year in 2029. On reliability, Baglino points to a modular design: many small devices work together, so if one fails the rest of the system keeps running until the affected part is replaced, without shutting the whole unit down. That contrasts with conventional transformers, which typically go offline entirely on failure, causing power interruptions—and solid-state power electronics have more failure modes overall.

What to Watch: The High-Voltage Gap and the Supply Chain

Investment is rising but not fast enough. Benjamin Boucher, a supply chain analyst at Wood Mackenzie, says companies making grid equipment have put $1.7 billion into the US supply chain for power transformers used in high-voltage transmission, plus an additional $1.3 billion for distribution transformers—the smaller devices serving homes and businesses. Even so, wait times for large conventional transformers—the kind needed to connect new power plants, long-distance transmission, and high-demand sites like data centers—are stretching as long as five years. Boucher calls transformers one of the biggest bottlenecks for utilities, generation developers, and even data centers, noting that new manufacturing is slow to start because the process is highly technical and demands specialized labor, so facilities announced years ago are still years from opening.

Solid-state transformers could ease some of that pressure, but the high-voltage devices needed for power plant connections and transmission lines are the holy grail, Lukic says. Existing solid-state technology cannot yet serve those applications; the industry will need new materials and designs that support high voltages and handle electricity safely in a compact device. For now, the technology has proven it can work under real conditions at low voltage and is heading into data centers first—while the grid's biggest transformer bottleneck remains unresolved. As Boucher puts it: "Without the transformers, you don't really have an electrical grid."