A Century-Old Grid Component That Takes 5 Years to Deliver Is First Being Updated at Data Centers

Most people’s only knowledge of transformers might be the gray boxes on neighborhood utility poles. This overlooked device is the backbone of the entire power system, and now it’s holding back all new power projects.

Old Components That Take 5 Years to Deliver

Global grid equipment vendors have invested $3 billion in expanding production in the U.S. in recent years, including $1.7 billion for large power transformers for high-voltage transmission and $1.3 billion for small transformers for residential and commercial distribution, but still can’t keep up with demand growth. Benjamin Boucher, a supply chain analyst at Wood Mackenzie, says the wait time for large conventional transformers has stretched to five years, with new power plant connections, long-distance transmission line construction, and large data center connections all waiting in line. Manufacturing processes are complex and rely on skilled workers, so new factories often take years from announcement to operation, and the capacity gap can’t be closed in the short term.
The basic principles of transformers haven’t changed significantly in over a century. The core is a magnetic core made of grain-oriented electrical steel, with copper coils wound on both sides. It adjusts voltage via electromagnetic induction and provides electrical isolation to prevent local faults from spreading across the grid. Electricity takes at least three to four voltage conversions from power plants to user outlets. For example, U.S. solar farms produce direct current (DC), which is first converted to 480-volt alternating current (AC) via an inverter, then stepped up twice to 115,000 volts to connect to high-voltage transmission lines, and stepped down twice again at the user end to 120 and 240 volts for home use.

1/10 the Size, Half the Losses

To close the capacity gap and meet new electricity demands, the industry is advancing research on solid-state transformers (SSTs), with the core idea of integrating high-power semiconductor devices into the structure of conventional transformers.
SSTs first convert input AC to DC, then use silicon carbide (SiC) semiconductor switches to convert it to high-frequency AC, adjust voltage via the magnetic core, and convert it back to DC or grid-frequency AC for end uses. Because the current frequency can be actively controlled, the size of the magnetic core can be drastically reduced. Srdjan Lukic, a professor of electrical and computer engineering at North Carolina State University, states that for the same capacity, SSTs are roughly one-tenth the size of conventional models.
They also combine the functions of rectifiers and inverters, eliminating the need for separate devices, which reduces the footprint and energy loss of the entire power system.
In August 2026, the New York Power Authority and the Electric Power Research Institute (EPRI) completed a utility-scale test of a 1-megawatt SST at a real-world site. The prototype was developed by Lukic’s lab, the first SST of its capacity to pass field validation. Tests showed the device had an efficiency of 98%, while the conventional transformer plus rectifier combination for the same function had an efficiency of about 96%. The 2-percentage-point efficiency difference means the energy loss of the entire set is directly halved.
The prototype tested has a working voltage of 15,000 volts, which is a low-voltage grade. Industrial scenarios like large data centers have higher connection voltages, and long-distance transmission lines operate at hundreds of thousands of volts, so SSTs need further engineering development to adapt to these scenarios.

Commercialization Starts with Data Centers

All SST R&D companies are choosing data centers as their first commercial applications. These sites require high power supply stability, have strong payment capacity, and have far lower voltage requirements than long-distance transmission lines, so the industry attracts the fastest capital inflow.
In February 2026, startup Heron Power secured $140 million in funding to commercialize its Heron Link SST. Drew Baglino, founder and CEO of the company, said the product is suitable for data centers, solar farms, and grid energy storage. The company’s 10-megawatt-hour (MWh) energy storage battery in Scotts Valley, California (its headquarters location), is about to be connected to the transformer for testing, and a nearby solar farm pilot is also planned.
To address the issue of more failure points in power electronic devices, Heron uses a modular design: multiple low-power units work together, and a single unit failure won’t shut down the entire system. It can be replaced online without cutting off the overall power supply.
Heron is building a $1 billion manufacturing plant in California, scheduled to start operations in 2027 and reach full capacity in 2029, with an annual production capacity of 40 gigawatts (GW) of transformers.

High-Voltage Transmission Is the Ultimate Goal

High-voltage transmission grids are the ultimate application scenario for SSTs. Current technology can’t withstand the hundreds of thousands of volts in long-distance lines, so new semiconductor materials and structural designs are needed to ensure safe high-voltage operation while reducing size—this is the hard nut the industry will have to crack next.
Benjamin Boucher said, “Transformers are the foundation of the grid; without them, there’s no real power grid.” With traditional capacity unable to close the gap, this century-old core component will start with data centers and gradually transition to the new technology path.