Solid State Transformers Are Finally Replacing 140-Year-Old Grid Tech — And Startups Are Racing to Lead the Charge
The iron-core transformer has quietly powered civilization for over 140 years. But as artificial intelligence reshapes the energy landscape, this aging technology is finally meeting its match. A wave of well-funded startups is betting that solid state transformers will replace the old hardware — and the latest contender says it can build the smallest system ever seen.
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| Credit: Comezora / Getty Images |
Why the 140-Year-Old Transformer Is Running Out of Time
The iron-core transformer is one of the most successful technologies ever built. Clunky, heavy, and decades old in design, it has survived simply because it works. Utilities and data center operators have never had a strong reason to replace something so reliable — until now.
The explosion of AI computing has sent data center power demand soaring to levels that traditional grid infrastructure was never designed to handle. At the same time, batteries and renewable energy sources like solar and wind are claiming larger shares of the electrical grid, creating new demands for flexible, precise power conversion. The old transformer, which was designed for a world of stable, one-directional power flow, is struggling to keep pace with a grid that is increasingly dynamic and unpredictable.
This is the moment that engineers and energy entrepreneurs have been waiting for. The technology to replace the iron-core transformer — known as the solid state transformer — has existed in laboratories for years. What changed is that the urgency finally caught up with the innovation.
What Is a Solid State Transformer and Why Does It Matter?
A solid state transformer replaces mechanical and magnetic components with advanced power electronics, allowing for far more precise and flexible control of electricity. Unlike the century-old design it aims to replace, it can handle bidirectional power flows, making it ideal for grids that must manage both traditional power generation and renewable energy inputs.
For data centers specifically, the advantages are significant. Solid state transformers can cut the number of power conversion components required, reduce the physical footprint of electrical infrastructure, and improve overall grid stability. In an industry where every square foot of space and every watt of efficiency matters, those gains translate directly into competitive advantage.
The technology is not entirely new, but until recently it was too expensive and too unproven to compete with the iron-core transformer at scale. The dramatic rise in data center energy demand has changed that calculus entirely — and investors have taken notice.
$330 Million Pours Into the Solid State Transformer Market
Just a few months ago, the solid state transformer market barely existed as a commercial category. Today, startups in the space have collectively raised over $330 million, a signal that serious institutional capital now believes this technology is ready for the real world.
Several well-capitalized players have emerged to define the field. One was incubated by the early-stage fund of a major sovereign wealth vehicle. Another counts one of the world's largest industrial conglomerates among its backers. A third was co-founded by a former executive from one of the most influential electric vehicle companies in history and is backed by a prominent Silicon Valley venture firm.
Each of these companies is targeting the same fundamental problem: the electrical grid and the data centers that depend on it need smarter, more compact, and more efficient power conversion hardware. The race is now on to determine who can deliver that hardware at scale, at a competitive price point, and with the reliability that grid operators demand.
Hyperscale Power Enters the Race — With a Bold Claim
Into this increasingly competitive landscape steps Hyperscale Power, a startup that openly acknowledges it is arriving late but insists it has a technical edge that justifies the timing. The company says its solid state transformer system will be smaller than anything else currently on the market.
"We haven't seen something that is as small as our system will be," said Daniel Rothmund, co-founder and CEO of Hyperscale Power. That is a striking claim in a field where several well-funded rivals have already been developing their technology for years.
To back up that ambition, Hyperscale Power recently closed a €5 million seed round, led by two European venture firms focused on climate and deep technology investing. The capital will be used to build a working prototype and advance the company toward commercial deployment.
The Founders Who Have Been Building This for Years
While Hyperscale Power is new as a company, its founders are not newcomers to the technology. CEO Daniel Rothmund completed his PhD at one of Europe's most prestigious technical universities — ETH Zürich — where part of his doctoral work involved designing and physically building a solid state transformer that achieved 99.1% efficiency. That is a number that matters enormously in power electronics, where fractions of a percentage point in efficiency can translate into millions of dollars in operating costs at scale.
His co-founder, Sami Pettersson, brings complementary expertise that rounds out the technical leadership of the company. Together, they represent a founding team that has been embedded in the core engineering challenges of solid state power conversion well before the commercial opportunity became obvious to the broader market.
This kind of deep technical foundation is increasingly what separates credible hardware startups from well-marketed ones. In the power electronics world, where a failed component can take down critical infrastructure, years of hands-on research matter far more than speed to market.
Why 2026 Could Be the Tipping Point for Grid Technology
The convergence of several trends is making 2026 a genuinely pivotal year for electrical infrastructure. AI data centers are now among the largest single consumers of electricity in many regional grids. Renewable energy installations are accelerating globally. Battery storage is becoming cost-competitive at utility scale. Each of these shifts puts new pressure on power conversion hardware that was designed for a simpler era.
Solid state transformers address all of these pressures simultaneously. They can manage bidirectional power flows from solar and storage systems. They can deliver the precise, high-quality power that sensitive computing hardware requires. And their compact, modular design means they can be deployed faster and in tighter spaces than their iron-core predecessors.
The question is no longer whether solid state transformers will replace traditional technology — it is which companies will survive long enough to own the market when adoption accelerates. With over $330 million already committed by investors and a growing roster of serious competitors, the next two to three years will likely determine the winners.
A Grid Built for the AI Age
What is unfolding in the solid state transformer market is part of a much larger story about rebuilding electrical infrastructure for the demands of the 21st century. The grid that powers modern life was largely designed in an era before personal computers existed, let alone the server farms required to run large language models and real-time AI applications.
Updating that infrastructure is not optional. It is a prerequisite for the continued growth of the digital economy. Every major technology company with data center ambitions has a direct stake in whether the electrical grid can keep up with their expansion plans.
Startups like Hyperscale Power are positioning themselves at the center of that transformation. Whether their technology proves out at the scale and price point required remains to be seen. But the fact that serious investors, experienced engineers, and major industrial partners are all converging on the same technology at the same moment suggests that the 140-year reign of the iron-core transformer may finally be drawing to a close.
