May 29th, 2025 — Load growth and the proliferation of inverter-based resources (IBRs), like solar and batteries, are fundamentally transforming the modern grid in the Age of Electricity. Transformers are critical to interconnecting generation and load to the grid, but there is insufficient supply and rapidly increasing costs. This transformer gap is further exacerbated by aging grid infrastructure and more frequent extreme weather events.
Furthermore, legacy transformers lack grid communication capabilities and are designed for centralized flow, which makes them ill-suited to support the proliferation of IBRs. The technological inadequacy of legacy transformers significantly increases interconnection timelines due to the extensive modelling that is subsequently required to reliably interconnect IBRs.
Heron Power’s modular solid state transformer technology and advanced grid stabilizing software controls provide a lower-cost solution that is easier to manufacture and maintain, provides enhanced voltage and frequency regulation for IBRs, and significantly reduces interconnection timelines. Founder & CEO Drew Baglio was previously SVP of Powertrain & Energy at Tesla, where he gained over two decades of experience leading teams at the forefront of power electronics innovation — few people on the planet have brought more power electronics systems from prototype to deployment at this scale. While software is only one piece of Heron Power’s product, Powerhouse Ventures is excited by the opportunity to back an exceptional founder from our network with the vision and expertise needed to modernize grid infrastructure for today’s energy demands.
Transformers are both a critical bottleneck and a rapidly growing market
Inverter-based resources (IBRs) are rapidly proliferating, with over 500GW of DC generation and load interconnected globally in 2024 alone. But to meet the demands of an ‘electrify everything’ future, deployment of generation, transmission, and distribution infrastructure will need to triple.
Transformers are the critical technology enabling this buildout. In 2024, an estimated 60-80M distribution transformers were in service in the U.S. yet current supply is insufficient.
The global transformer market is expected to double to $100B by 2035, and next generation solid state transformer technologies are urgently needed to meet this growing demand and reliably integrate IBRs at scale.
Legacy transformers suffer from decreasing availability, rising costs , and limited performance
Lead times for legacy transformers have increased dramatically from weeks to three years, while prices have risen 60-80% since 2020. This is driven by reliance on scarce input materials like grain-oriented electrical steel (GOES), as well as the limited modularity of legacy designs, with over 80,000 unique transformer models requiring complex, bespoke manufacturing processes.
Legacy transformers are based on century-old technology. They cannot convert DC to AC, control bidirectional energy flows, or regulate voltage — all essential capabilities to integrate future renewables, sustainable fuels, and new data centers. They also struggle with harmonic distortion and lack the responsiveness needed to support a dynamic modern grid, which raises reliability risks as IBR penetration increases.
Solid state transformers are urgently needed to reliably operate modern grids
While nascent, solid state transformers have the potential to significantly reduce costs by eliminating the need for scarce inputs like GOES, reducing the overall amount of inputs needed, and standardizing manufacturing to leverage learning curves.
Furthermore, solid state transformers exhibit major performance improvements when converting DC to AC, are able to control bidirectional power flow, and can utilize intelligent control algorithms that enable real-time monitoring, voltage regulation, harmonic filtering, and fault isolation.
With 55% of in-service distribution transformers nearing the end of life, there is an immediate opportunity to upgrade the transformer fleet. Solid state transformers are not just a future solution — they are a critical near-term tool for maintaining grid reliability in the 21st century.
Heron Power’s solid state transformer and control software are cost effective, offer compelling performance advantages, and enable increased deployment of IBRs
Heron Power’s first product, the Heron Link, is a bidirectional inverter-rectifier designed to connect new energy technologies directly to 34.5kV. The Heron Link replaces a traditional transformer paired with an inverter and STATCOM, uses significantly less material (including GOES), and is designed for mass manufacturing.
Its modular design results in an inherently redundant system, delivering higher uptime and operational reliability. Additionally, operational performance improvements include fewer losses from power conversion and a wider operational voltage range. Heron Link’s improved performance characteristics are expected to drive a 30% reduction in lifetime power conversion costs compared to the status quo.
The performance advantages of the Heron Link are further enhanced with Heron’s universal synchroverter control software. These controls build on proven approaches to virtual inertia used in large-scale battery storage power plants, enabling the delivery of intrinsically-stable power flow in all grid conditions for all power electronics-connected loads and sources. This capability provides a substitute for spinning reserves and unlocks greater penetration of IBRs, while shortening interconnection modeling timelines
Powerhouse Ventures is proud to be the first venture dollars into Heron and honored to be part of their $38M Series A. The round was led by Capricorn Investment Group’s Technology Impact Fund, with participation from Breakthrough Energy Ventures, Energy Impact Partners, Powerhouse Ventures, Gigascale Capital, Valor Equity Partners, Tesla co-founder JB Straubel, and former Tesla CFO Zach Kirkhorn. The round brings the total funding raised by Heron Power to $43 million.
We look forward to working with CEO Drew Baglino and the entire Heron Power team as they modernize grid infrastructure for today’s energy demands.
Special thanks to author Gabriel VanLoozen and research by Lucy Reading.
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