Heron Power, founded by former Tesla executive Drew Baglino, announced on Wednesday that it has raised $140 million. The funding will be used to build gigawatts worth of solid-state transformers for data centers and the electrical grid.
This represents a fast turnaround for the startup, which raised a $38 million Series A round in May. Baglino, the CEO of Heron Power, stated the company did not initially need the money. However, after customers expressed interest in buying more than 40 gigawatts of solid-state transformers, the decision was made to raise again. “If our customers are leaning in, we need to lean in as well,” Baglino said. “We gotta go faster.”
The speed of this fundraising highlights how data centers are driving demand for products that can rapidly deliver electricity to their servers. Baglino, who spent nearly two decades at Tesla leading the powertrain and energy groups, is familiar with moving quickly.
The Series B round was led by Andreessen Horowitz’s American Dynamism Fund and Breakthrough Energy Ventures. Participation came from Capricorn Investment Group, Energy Impact Partners, Gigascale Capital, and Valor Atreides AI Fund.
Solid-state transformers have been in development for more than a decade but have only recently matured to the point of being ready for deployment in data centers and other large, energy-intensive facilities. This new technology aims to replace old iron-core transformers, which have existed in essentially the same form for over a century. While iron-core transformers are inexpensive and efficient, they are bulky and generate significant heat. Solid-state transformers are smaller and can be more efficient by replacing several pieces of equipment, solving two major challenges for data center developers.
Solid-state transformers can also manage power intelligently from a range of electricity sources like wind, solar, and batteries because they use semiconductors instead of passive metal.
The startup’s product, branded as Heron Link, can convert medium voltage electricity to the 800-volt power needed by Nvidia’s reference rack designs. Each unit is capable of handling 5 megawatts and contains tens of modules that perform the power conversion. If one module fails, it can be swapped out in about ten minutes, which is far faster than replacing a monolithic transformer.
Each Heron Link also contains specialized lithium-ion batteries that can discharge quickly to provide 30 seconds of power. This smooths the transition to backup power sources like grid-scale batteries, allowing data centers to eliminate uninterruptible power supplies. By removing pieces of equipment, solid-state transformers also eliminate several points of failure and reduce costs. “We can remove 70% of the gear involved,” Baglino said. “For some data center applications, it might be savings of an order of magnitude.”
Data centers currently represent about a third of Heron Power’s business. The remainder is split between solar power and grid-scale batteries, which benefit from the speed and flexibility of solid-state transformers.
Heron Power plans to use the new funding to build a factory capable of producing 40 gigawatts of Heron Link transformers annually. That output represents about 10% to 15% of annual production outside of China, or about 5% to 10% of total global demand. It is equivalent to half the peak power demand of the state of Texas.
The company intends to begin pilot production in early 2027 before ramping up over the following two years. Heron Power is not alone in developing solid-state transformers, and with many of the grid’s old transformers approaching replacement age, competition will be stiff. The startup’s new funding, paired with Baglino’s experience scaling production, could provide an advantage. “We will push as hard as we can,” he said.