Catalyst with Shayle Kann - The rise of grid power electronics with Drew Baglino

Episode Date: February 19, 2026

For decades, the physical equipment underpinning the electric grid has remained largely unchanged: passive, "dumb" devices installed as far back as the 1970s that lack much real-time control. But today, in the face of skyrocketing energy demand, a new class of technologies has emerged. In this episode, Drew Baglino, the founder and CEO of Heron Power, returns to the show to discuss his company’s new generation of solid-state transformers, or SSTs. After a 17-year career at Tesla — where he led energy and powertrain development — Drew is now focused on replacing the grid’s aging infrastructure with these advanced power electronics. Shayle and Drew take a deep dive into the history of the power transistor, and then explore how the SST has the potential to transform the grid into a highly optimized and intelligent machine. They cover topics like: The evolution of power electronics Why we still haven’t fixed the transformer shortage How Heron Power’s SSTs remove legacy transformers and switches to create a substantial uplift for project developers The potential to remove 70% of traditional electrical equipment at data centers by distributing power directly to the rack Why Drew thinks SSTs offer a "pathway toward affordability" Resources Catalyst: Drew Baglino on Tesla’s master plan Latitude Media: Inside Heron Power’s plan to transform the grid Catalyst: Understanding the electric transformer shortage Open Circuit: The grid resilience dilemma Latitude Media: These Autogrid alums want to change how data centers use power Credits: Hosted by Shayle Kann. Produced and edited by Max Savage Levenson. Original music and engineering by Sean Marquand. Stephen Lacey is our executive editor. Catalyst is brought to you by Uplight. Uplight activates energy customers and their connected devices to generate, shift, and save energy—improving grid resilience and energy affordability while accelerating decarbonization. Learn how Uplight is helping utilities unlock flexible load at scale at uplight.com.  Catalyst is brought to you by Antenna Group, the public relations and strategic marketing agency of choice for climate, energy, and infrastructure leaders. If you're a startup, investor, or global corporation that's looking to tell your climate story, demonstrate your impact, or accelerate your growth, Antenna Group's team of industry insiders is ready to help. Learn more at antennagroup.com. Catalyst is brought to you by EnergyHub. EnergyHub helps utilities build next-generation virtual power plants that unlock reliable flexibility at every level of the grid. See how EnergyHub helps unlock the power of flexibility at scale, and deliver more value through cross-DER dispatch with their leading Edge DERMS platform, by visiting energyhub.com.

Latitude Media, covering the new frontiers of the energy transition. I'm Shail Khan, and this is Catalyst. Not only will SSTs ultimately cost less per unit of voltage conversion, but they'll also add all of this additional value-outed functionality that allows you to get more out of every wire existing and new that utilities build. And that is the pathway towards affordability. That is what the 21st century grid will look like. Coming up at long last an ode to power electronics.

When utilities need flexible capacity they can count on, they turn to Energy Hub. Energy Hub works with more than 170 utilities, coordinating over 2.5 million devices to manage 3.4 gigawatts of flexibility built for the moments when utilities can't afford uncertainty. Energy Hub builds and operates virtual power plants that utilities actually stake their grid planning on, coordinating EVs, batteries, thermostats, and more through a single platform, built for utility scale. Predictive, verifiable, and designed to perform when it counts. Learn more at energy hub.com.

Trillions of dollars are flowing into clean and critical infrastructure, but those investments aren't driven by technology alone. They're shaped by markets, by policy, by capital, and by the institutions that connect them. I'm Alfred Johnson, CEO of Crux, and host of a brand new podcast, Critical Capital. Each episode, I talk with people deploying capital, shaping policy and building the clean economy.

Tune in as we unpack how progress is actually made. Listen to Critical Capital on Spotify, Apple, or wherever you get your podcasts. Catalyst is supported by Fish Tank PR. An award-winning PR firm focused on climate and energy tech, renewables, and sustainability. Fish Tank is known for generating prominent and effective media coverage for the brands they work with. If you want a PR partner that's thoughtful, shoots straight, and gets results, you'll like Fish Tank PR. To learn more about Fish Tank's approach, visit Fish Tank That's f-i-s-h-fish-tankpr.com.

I'm Shale Khan. I lead the early-stage venture strategy and energy impact partners. Welcome. All right, so my friend Drew Baglino came on this podcast about two years ago, right after he'd left Tesla, after a 17-year stint,

culminating in him leading energy and power train and a whole bunch of other stuff there. At that point, he was taking some time off and figuring out what was going to come next for him. Turns out it was power electronics. Drew started a company called Heron Power,

and Heron is introducing a new type of device to the grid that combines solid-state power electronics with software and controls to dramatically simplify a whole class of grid infrastructure while simultaneously imbueing it with a host of new capabilities. For all the time on this pod that we spend talking about what's going on in electricity, I think we actually haven't spent enough of it talking about the actual equipment that underpins the market. We know that there are long lead times for things like transformers and switch gear.

But is there an opportunity to leverage the unprecedented growth in the market right now that we've talked about many times to catapult a new class of technology onto the grid at scale? I think so. For disclosure, I'm an investor in Heron, and I have been since their first external round. And actually just this week, Heron announced a $140 million Series B led by Andresen Horowitz, where we at EIP also doubled down. Anyway, here's Drew. Drew, welcome back. Thanks, Shale. Happy to be back.

All right, let's talk about power electronics. I want you to start by explaining basically what power electronics are, but maybe through a history lesson. Like, tell me the history of power electronics. Yeah, I'll try my best here. I think people have heard many times about the history of the transistor, right? And Moore's Law. how transistors went from vacuum tubes to three nanometer devices inside of GPUs, right?

Like I think most people are familiar with that. But at the same time, and using some similar technologies, an equivalent thing happened with power transistors or power semiconductors over basically the same time frame from like the 70s through to today. But what was improving was not the size, although the size didn't improve, and it wasn't just the size alone. But actually, it was some other very important things to power semiconductors, like the voltage that you can block with the power transistor or the power MOSFET or the power IGPT. And also, it was the current capability that you could, you know, basically the current density is the way to think about it. amps per millimeter squared that you can get through the power transistor. And then one of the more important things more recently is actually like the thermal conductivity that you can achieve through the device.

So like if you have better thermal conductivity, it's easier to keep the device cool, which means it's easier to go to higher current density. And then maybe one of the most important things that has improved over the four or five decades is the switching speed of the device. Like how quickly can it change states? And you might be asking like, well, why does that matter? But I think to think about why it matters, it's useful to consider the world of electricity more broadly. So how does electricity work, right?

Until batteries existed, you couldn't really store it. It's generated in one place. And it's connected through a contiguous circuit, like continuous conduct. to where it's used at the end use. And any, like, branches or Y's in the circuits, they're all, like, simultaneously affecting each other unless you have devices in the middle to decouple the flow of electricity. If you don't have any devices, decouple the flow of electricity.

So anything that is connected to the circuit affects anything else that is connected to the circuit. And instantaneously, it's amazing, actually. how this happens. And that's why when people say the electricity grid is like the world's largest man-made machine, they're not wrong because all of the devices, the motors,

the everything that's plugged into every wall is in some way affecting everything else that is plugged into the wall. And the only thing that can change that is if you can control the flow of electricity. And that is what power

electronics, as they have improved, over the past four or five decades actually allow you to start to do, is dynamically, and with modern devices that are made out of like silicon carbide and gallium nitrate, millions of times per second, stop and start the flow of electricity through a power transistor and ultimately, therefore,

control the power flow through circuits in a device or on the grid. So that's like a very zoomed-out view, and I can certainly go into more details. Well, I think a key point to make here, right, is you're talking about, you talked about the electricity grid and what power electronics can do on the grid. But that's actually not mostly, first of all, it's not mostly what's on the grid today. And second of all, it's actually not mostly where power electronics are used today. So I want to spend a minute on one of the places where power electronics are used today and where you have a bunch of personal experience and then get back to like what that enables for. for the grid, which is what you're building in Heron. But, right? Like, am I wrong that... I know we have some power electronics on the grid, but it's not common.

Yeah. Well, the first applications of power electronics in, like, the late 70s and early 80s were built on relatively slow switching, relatively large format, thyristors and IGPTs. And the first place that they went to be applied was towards variable frequency drives on large industrial motors. And this is a great example of, you know, before power devices existed in this way, those motors were kind of just always spinning, always ready to go at full power. And even if the pump in your factory or, you know, the fan on some large air handling system didn't need to run at full speed, it was.

Or you had to have like large mechanical relays to like switch it on and off. But you could only do that like a couple thousand times or the switch would fail. And it wasn't like a fast-moving switch. So it was sort of like, you know, you'd go over and hit a breaker and turn it on or something like that. And then it'd be on for the whole day. So those first applications, these variable frequency drives, instead what they would do is they would match the like need of the load, whatever the water flow rate you wanted or whatever you wanted to do with your electric motor and your manufacturing process to. the electrical load would match the mechanical load. And all of a sudden you had a lot of efficiency in industry

because of variable frequency drives. The next real application was actually large AC to DC to AC switching stations on the grid. These were air insulated, like the size of central exchanges, if you remember what telecoms buildings used to look like. And they would allow you to decouple like an islanded grid from another islanded grid using a DC link between them. These are sort of uncommon infrastructure, but actually useful when you look at the U.S.

with five separate major balancing authorities in the electricity grid. There are DC links between them. They're not very high power capability, but there are DC links between them, and they allow the frequency to be different in those different places, and yet you can actually tie power flow between them.

Yeah, right. So it's like people talk about Urquot, like it's an island grid, and it is, like, technically an island grid, but it's not like there isn't a physical connection to, I guess, probably three of the other grids around it. There are these DC links that allow some power flow between the different regional authorities, and there's, I mean, there's other DC links, like between Europe and the UK or North Island and South Island and New Zealand. They're pretty common, and the way they were built in the 80s was using early power electronics devices.

that switched really slowly, but, you know, maybe thousand times a second, but allowed you to do this DC-to-AC-to-DC kind of conversion. Sorry, AC-D-D-C kind of conversion. And then power silicon started to become better. And these are like silicon MOSFETs. Okay, so 100-volt, 200-volt silicon MOSFets. And that was early 80s. You started to see these in switching power supplies on like PCs,

VCRs, TVs, like cordless phones, answering machines. All of the consumer electronics of the 80s and early 90s had some small switching power supply, or it had like silicon diodes in it with a traditional transformer. So you'd have like a 60 hertz transformer that would go from, in a wall wart on your wall, that would go from 120 volts down to like 10 or 8, and then that would go through a bridge rectifier, which is a power device, to make a DC volt.

that would go into the electronics device. So that was sort of edge-based power electronics for consumer low-powered power applications. But then silicon IGBTs and got better and were able to do like 600 volts or maybe even 1,200 volts. And in the early 90s, you started to see solar inverters and early drive inverters for electric vehicles. And maybe variable speed,

fans for HVAC systems and homes and all of these edge interesting applications for where you needed to go either AC to AC at different frequency for variable speed motor or DC to AC with solar or AC to DC for a battery or in an electric vehicle from the DC battery to the AC on the motor in the electric vehicle. So these are all like awesome applications of devices that existed at the time, that could switch like tens of thousands of times per second and do, you know, 600 to 1,200 volts. Maybe you could do 100 amps in a single device. And then as you get into the like 2000s and 2010s, some researchers in the U.S.

started working with some new wider band gap semiconductor materials, silicon carbide, gallium nitride, that had some intrinsically awesome characteristics like silicon carbide can switch super fast. It's got really good blocking voltage capability. And, you know, while I was at Tesla, we started using silicon carbide to make drive inverters in cars because the incremental cost of the more expensive transistor was more than outweighed by the savings in battery because the drive inverter could be so much more efficient using silicon carbide. So while you might spend $100 more on silicon carbide devices in the car, you'd save $400 or $500 in the battery. Is it true? So, okay, I wanted to to this. So, you know, when you're at Tesla, you were working with silicon carbide because it's in

every Tesla inverter. Was the, were electric vehicles what really drove the supply chain scale up for silicon carbide? What is the supply chain like for silicon carbide? And like, how has it matured over the past, I guess, decade now? Yeah. In 2010, the supply chain for silicon carbide was like tiny. It was, you know, silicon carbide was used in LEDs and nothing else, really. But, but, you know, But some folks at Wolfspeed and Infinion and a few other device manufacturers were like, this is going to be an amazing power semiconductor platform and started to develop a whole bunch of different devices, first in like the 600-volt class to support EVs and then later at higher voltages to support great applications. And the first way that we incorporated it into Tesla's was with Model 3 in the onboard charger.

you know, we wanted to make the onboard charger more affordable. The best way to make power electronics systems that involve isolation more affordable is go up in frequency, because to get isolation, you basically need to use a transformer of some type, and transformers become smaller as you go up in frequency. It's just a linear relationship between frequency and size, and that's just based on how much energy you can store an inductor and how quickly you're charging and discharging that inductor. If you charge and discharge it faster, you can kind of like, you're moving more energy per unit time,

and you can make the inductor smaller. And so we really wanted to make the onboard charger smaller. So we used these early silicon carbide devices to make the onboard charger. Yeah, I think we reduced, increased its power density by like a factor of two. We dramatically reduced its cost. And at the same time, that onboard charger was also, also did the like DC to DC conversion between the battery bus and the low voltage net in the vehicle. And and so it was a great like integration play. So Silicon Carbo went there and then Silicon

carb I went into the drive inverter to make the drive inverter about 1% more efficient, which you're like, oh, that doesn't seem like a lot. But when you think about you, you size the battery to give you, let's say, 300 miles range, you know, that 1% is worth three miles of battery size. And one, uh, 1% of battery is a lot. All right, so let's then, so we, you walk through a good history there of our electronics and sort of ending with, like, your own personal experience with silicon carbide specifically as a class of power electronics

within Tesla vehicles. Let's contrast that to what's on the grid today. So let's go back to electricity now in the grid. Like what do we use today at those branching Y's on the grid? And like, how is it different from these things? We, you know, prior to power electronics really becoming a thing in the 70s and 80s, the only way you could switch electricity or the flow of electricity was with mechanical switches. You know, think of the breakers in your breaker panel or maybe you've looked into your neighborhood utility switchyard and seen these like huge armatures that, you know, spring open to disconnect one feeder or reconnect another feeder. You know, these are large, bulky, slow.

Slow is in like it actuates in hundreds of milliseconds and can actuate, you know, once every couple of minutes. And it's really not meant to actuate more than like a couple thousand times in its total lifetime. That's how electricity is controlled at the grid scale. there's really not a lot of real-time, you know, millisecond control. And this contrast with, like, the latest generation of battery inverters or solar inverters or, like, the way you charge an EV, the power electronics are actively controlling voltage and current, you know, hundreds of thousands of times per second using really small magnetic devices. And it's not just that grid develop designers and electrical engineers working on

power systems. They're really limited on the tools they can use. So they have these slow switches. And the switches there, they're using to isolate a fault or if they want to route through a different line because one of these lines is overloaded, you know, they maybe are bringing new lines in and old lines out or something like that, rerouting power slowly on this, like, one second type time frame or once an hour type time frame. They also don't have any dynamic control over

voltage, frequency, power factor using power electronics at thousands of times thousands of cycles per second. They just have static voltage transformers, AC to AC transformers. These are these gray boxes you see on your street corner

or on your telephone pole, maybe you've seen some large ones in a in like a commercial subdivision or something like that that is those those are passive think of that as like fixed ratio passive voltage dividers or voltage multipliers and there's no control over how power flows through there

it's just passively moving as as following the path of lease resistance right and and there's and and so that is that is still the state of the art what I described was true at 1970, and it's still kind of true today in, in, in, in 2020s. And in fact, many of the Transformers on the Grid today were installed in the 1970s. Like, they're very old, on average. Yeah.

Yeah, over, something like over, I can't remember the numbers, like over 70% of them or over 30 years old distribution transformers, something like that. Something like that. Some crazy statistics. But, but, yeah, you know, there's some. Some stuff on the edges, starting to, some additional tools in the toolkit

and maybe in the last five to ten years where like stat comms are an example where you have these like switch capacitors that you can use to do some power factor control. And there's some power electronics in those. They're not used that often. But those do exist. But what you can do with power electronics

is much more. And I think what we've seen happen with silicon carbide. Silicon carbide 10 years ago was 600 volts or 1.2 kilowatts. You know, nowadays, there's silicon carbide devices that are 2.3 kv capable or 4.6 kv capable. And when you look at distribution voltages in the U.S. that are 7 kv or 12 kv or 21 or 35 kv, you don't need too many of those devices in series to interact with the grid at those voltages. And yeah, with the progression of silicon carbide, it's now possible to make solid-state transformers

that can be much more capable than just a passive switch or passive voltage divider. Yeah, so I want to come back to what solid-state transformers do for what they can do in various applications. Before we get off of the traditional transformer stuff, though, I'm curious your perspective on like, what is, so what's happened in that market in traditional oil-filled transformer world is we've had this supply chain that's been gummed up for years now.

I mean, it dates back to, you know, when all supply chains started to get gummed up during COVID. And then one by one, most supply chains kind of cooled off and like lead times for most stuff around the world kind of went back to normal. And it did not happen with transformers. And the lead times now for traditional transformers, I think both distribution and high voltage stuff are basically as long as they've ever been. And I've had a lot of people, when I talked to them about this, express some mystification about it because, I mean, sort of as you described it,

they're, like, quote, dumb things. We've been producing them for 100 years. You would think we could solve that problem quicker than we have. What's your perspective on, like, why, absent new technology, like, why haven't we just solved the transformer shortage? Yeah, I think there's so many factors, so many at play. I'm not going to try to get them in order. I'm just going to start rattling them off, though.

So first is just straight up demand. So we now have growth again, and it's broad-based growth. There's growth of loads that are interconnecting at transmission, like large data centers. There's growth of large generation, and that's partially because some assets are being retired and partially because we need just in general more generation. So there's a bunch of generation transformers and large transmission load interconnect transformers. And then we have like broad-based distribution load growth from electric vehicles, home electrification. Some of that is policy-driven.

Some of that is pure just demand-driven. So we have broad-based increases in demand. In fact, I have some statistics here. You know, power transformers, these are generator transformers. Demand is up is over double since 2019. For generation step-up transformers, it's up over 250%. Distribution transformers up over 100%. And so just straight up demand increase.

And I think you can't say the demand increase is just load growth because it's not. Some of it is replacing what you said is totally right. A lot of these core transformers on the grid or for large interconnects that were built, they were built in the 70s. And so stuff can last as long as it can last, but at some point it needs to be replaced. So some of it is just aging infrastructure and some of it is low growth. So there's this demand piece. And then I think there's a little bit of regulatory uncertainty.

So you saw the DOE, you know, start saying things like we're going to change the basic materials in transformers or at least take some public comment about potentially doing that. And that was in the name of making, you know, transformers more efficient, you know, For some background, Transformers are generally 99, 99.2, 99.3, depending on how they're loaded or size efficient. So there's not a lot of room to make them more efficient, but they're everywhere. And one thing that's interesting about Transformers is that efficiency rating, this is traditional Transformers, I'm saying. That efficiency rating is at rated load. But actually, there's loss in transformers that never go away.

it's the steel, the magnetizing losses in the steel. And that's one of the reasons why transformers have this laminated grain-oriented electric steel is to actually reduce that vampire loss or idle loss. And so some of the, and most of the transformers on the grid are not fully loaded. And so you end up with a lot of that, like idle loss adding up all over the place. So that DOE investigation was about reducing that idle loss. And I think, you know, with that regulatory uncertainty, maybe some people didn't make investments in expanding grain-oriented electric steel supply, which is one of the most

important, I mean, biggest by mass contributors to passive transformers. And then maybe some people were thinking solid-state transformers were going to come. I mean, I've been thinking that. Obviously, that's one of the reasons why I started Heron Power. Sure. Was because I believe that solid-stage transformers are going to replace passive ones. So you have people sitting in this industry wondering whether the grain-orrented electric steel is going to be designed out by policy, wondering whether

we're just in a bubble of replacing a whole bunch of stuff built in the 70s, and this electricity demand growth isn't going to be sustained. And so they're not investing as quickly as they otherwise could. Anyways, those are some thoughts I have. Yeah. What do you think? Well, great. I mean, I think all those things are true.

I mean, the only thing I would add to it is having spoken to a bunch of old-school legacy transformer manufacturers, you know, they have gone through boom-bust cycles in their business over their lifetimes, and they're reticent to get out over their stuff. skis. And so they want to, they're expanding. Like, everybody is expanding capacity. There's a lot of announcements. But yeah, but they're measured about it, right? They're not expanding by 5x. They're like building a new factory and expanding by 2x and that takes a couple years. And by the time you catch up, like now the data center demand forecast has gone up by another 2X anyway. And so we're still behind. So I think that's part of it too, is just like reticence to overinvest amongst the

incumbents, which is I think like people can fault them for it, but it's actually like a reasonable. I'd rather be, if it's like, it's a tragedy of the comments type of problem, right? Like any given one of them would rather be in an undersupplied market, because then they have pricing power and margin power, rather than oversupplied. And so they might as well expand to whatever they feel like highly confident they're going to be able to sell out of. Yeah, there's another regulatory uncertainty item that I didn't mention, which is tariffs. and, you know, with the rapidly changing tariff set of rules and regulations, both from the U.S. and from other countries, you know, sometimes it's hard to know where to build a factory. And these factories, they're relatively large investments, and it's not just the investment that is at risk.

But if you pick the investment in the wrong location, you could be on the other side of a tariff that you hadn't ever predicted before. So people are sort of waiting for a lot of these things to shake out, I think, when, when maybe. making these expansion decisions. Virtual power plants are becoming a reliable way for utilities to manage capacity, but enrolling devices is just the start. What really matters is confidence, knowing those resources will perform when dispatched and being able to prove it, from the control room to the living room. Energy Hub's platform handles the full picture, from near-real-time forecasting,

locational dispatch, and the kind of rigorous verification that holds up when regulators, grid operators or leadership ask, did it deliver? Easy enrollment creates momentum, proven performance builds trust. That's why more than 170 utilities rely on Energy Hub to manage over 2.5 million devices delivering 3.4 gigawatts of flexible capacity.

See what that looks like at energy hub.com. We're living through a profound economic shift, and energy sits at the center of all of it. Trillions of dollars are flowing into power plants, transmission lines, battery factories, data centers, but the future of energy isn't shaped by technology alone. It's shaped by markets, by policy, by capital, and by the institutions that connect them. I'm Alfred Johnson, CEO of Crux, the capital platform for the clean economy. Join me for my brand new show, Critical Capital, as I talk with people deploying capital, shaping policy, and

building projects. Together, we unpack how risk is priced, how incentives are structured, and how progress is actually made. Listen to Critical Capital Capital on Spotify, Apple, or wherever you get your podcasts. Are you tired of overpaying for big-name PR firms, but not really knowing what they're delivering? Is your comms team wasting time reviewing lengthy messaging briefs and decks instead of engaging journalists or producing content?

Are you wondering why your competitors are getting press and you aren't? Fish Tank PR is an award-winning climate and energy tech, renewables, and sustainability-focused PR firm dedicated to elevating the work of both early stage and established companies. Whether you need to position yourself as a thought leader in between project announcements or translate complex ideas and technologies into tangible, compelling stories that resonate with the media, Fish Tank can help. Check out fish tankpr.com. That's F-I-S-C-H-Fish-Tankpr.com. All right, which creates in some part the market opportunity for you to come in and introduce new

technology. So back to what you are doing, which which is solid-state transformers. But I think that kind of undersells it in some ways because what you're building is sort of, it contains a solid-state transformer, but it actually replaces more than that in terms of what would otherwise have to get built if it didn't get deployed.

So I just want to talk about what these, this class of power electronics, what these solid-state transformers can enable by different category. Because as you said, they're used all over the place. So let's talk about the markets that you're focused on, starting with, okay, if I'm going to connect a new solar project or a new battery to the grid, what are the list of things that I normally need to go from generator to grid?

And then in contrast, what does it look like if I install a Heron Link, which is your product? Yeah. So I'm building a 100 megawatt solar facility and my single line diagram, what's on it. So you start with trackers in the field and some combiner boxes that are collecting DC, somewhere around 1,500 volts DC. That 1,500 volts DC is brought into most of the time, but not all of the time, central inverters. These central inverters are central inverter skids, and on that skid, you have a DC-to-AC inverter,

modular to like the one-meagawatt level, so maybe you'll have four, one-meagawatt. DC to AC inverters. So the input voltage is 1,500 volts. The output voltage is 690 volts AC. And then on the other side of the 690 volts AC, you will have some protection devices, maybe a main breaker, some fusing. And then you connect to the low side of a step-up transformer,

a medium-voltage transformer. Usually it's oil-filled. Sometimes it's a dry-type transformer. And on the other side of that transformer, you've got 34kVAC, most typically. And there's also some fusing and potentially switch gear there on the skid. And then you connect that 34KV in a like daisy chain configuration to a bunch of these inverter skids, maybe five or six.

And then eventually you get to a medium voltage feeder breaker, feeder. feeder breaker that is about 600 amps worth of 34,000 volt inverters, usually something around 30 to 40 megawatts at that breaker. And then on the other side of that breaker, you now have a generation step-up transformer. That would typically be rated for like that full 100 megawatts. And on the other side of that generation stepped up transformer, you'll have hundreds of kilovults. So depending on the grid, 200-kilovolt, 300, 600.

So that is the typical single-line diagram of solar. It also looks like batteries look very similar. Inside the skid, you know, you've got companies like SMA, EPC, power electronics, Huawei, Sungro. You know, they make the power electronics part, that DC to AC part. Some of them might make the transformer. Most of them don't. They co-package sometimes, right?

They'll like put a transformer. in a box with an inverter. Yeah, they'll put the transformer on the skid, like the plinth so that it's like easy to land, but they usually don't make the transformer. The transformers are generally made these days in like China, India, and Mexico. Very few of them are actually made in the U.S. And in that total system, you know, you'll have that 99% efficient transformer and you'll have maybe like a 98% efficient inverter.

And so you have like 97% efficient conversion. or maybe 98.5, if you're lucky, a percent inverter. So you'll have like a 97.5 percent efficient total conversion system. So when we do this with a solid-state transformer, we basically move the 60-hertz transformer to 100-killerhertz transformer, and that makes it much smaller, like 50 to 100 times more power-dense. And now we have power electronics control on both. sides of that 100 kHz transformer. And we have not a modularity of a megawatt.

We have a modularity that is sized to that small isolation transformer, so more like 100 to 200 kilowatts. And the interesting thing about that level of modularity is it gives you robustness to faults, because if you have a fault, you only lose like 100 kilowatts. You don't lose a megawatt. Or in the case of the transformer that would be on that skid, if that transformer failed, you'd lose 4 megawatts and you'd need a crane to replace it

and you might need to wait weeks to months to get that replacement transformer. So that's sort of like what we're doing at a high level and what we remove from the single line diagram is we remove the legacy transformer. We remove that 690-volt, you know, breaker or fuses protection there. And we also, because we don't have that

medium voltage transformer anymore with the inductance of that medium voltage transformer We get to remove some of these power factor correcting capacitors that are at the central plant. And we also get to have simpler protection on that medium voltage feeder because we don't have a transformer that could have a really hard, short, and light on fire. We have like a power electronics front end that is, if it's going to have a fault, it's going to be like 1.2 per unit or like just slightly overloaded current. So the protection gets a lot simpler as well. So that's the kind of thing we're doing for solar and batteries and also for data centers. And what that, although the data center story is a little bit more nuanced.

Yeah, we're going to get to that one in a second. For solar batteries, I mean, I think, okay, there's been a long history of electricity, less so, I guess, in the like solar battery inverter world, but to some extent there, where people introduce some new technology, I'm thinking about like a bunch of like the distribution automation stuff that happened in like the era of the 2010s and stuff like that, where, you know, you can make a pitch that like, this is better. It enables something, some control that you didn't have otherwise or whatever. But better isn't always what wins in the electricity market, right? And so I think the important thing is to say, like, what is the net outcome

that actually matters, right? And in the case of solar and batteries, It seems to me, and I'm curious what you think, the rank order killer apps thing, because this is one of these things that has, like, numerous benefits, but which ones really matter? It does enable greater control, but to me, it seems the key ones for solar and batteries, maybe the biggest is reliability, actually.

Like, it's a step function change in reliability, which people don't appreciate, like, how much failure there is of utility scale solar in particular because of inverters, and maybe transformers to a lesser extent, I think. But reliability, space savings, CAP-X, what are the things that you feel like, like when you're talking to customers,

what do they care the most about? Yeah. Reliability is a big one. So solar inverters are the largest source of underperformance on utility scale solar plants. It's not the modules. You'd think it would be the modules because there's so many of them

and they're out in the field and you worry about hail and you worry about whatever. But actually, no, it's the inverters. There are availability, central inverter availability is, on average, in the industry, 97 and a half to 98%, which basically means 2 to 2.5% of the time when they should be producing power, they're not.

And so that's just straight bottom line on your project. You thought you'd be getting dollars for kilowatt hours delivered and you're not. The other thing, and it's not just the inverters, it's actually the transformers. So from some statistics we've learned, And transformers are not really designed to run at their rated power, you know, as long as they do in these desert power plants, you know, where they're, first of all, very hot because they're sitting in the sun. And second of all, because they're running at nameplate rated power for eight or nine hours a day.

So they are failing about 1.4% per year on average. And so that transformer that's pretty hard to replace is, needs to be replaced. And if you have 100 transformers on your utility, you know, solar facility, you're replacing a transformer or more a year. And that's not fun. And the last thing is they have no monitoring. You know, there's no real intelligence built into these transformers. And so I've been talking to these large owner operators of renewable power plants, and they have to send people out to, like, measure what the oil health looks like and look at all the bushings and do all of these things to make sure that they don't have thermal events in the field. So they're a big pain point that people look to get rid of.

So reliability is one, and you mentioned that. The other is the solution is about 1% absolute, more efficient. So that drives production value. And for something like battery installations, it's round-trip efficiency improvement. So it's not just like, it doesn't just count one. It counts twice. And the other thing is we're taking this opportunity to simplify the O&M. Like we don't have any of the transformer O&M.

You don't need to check the oil or replace the oil. There's just a whole set of systems that you can delete. We don't have that switch gear either, like I was mentioning. So, yeah, altogether we see a 5 to 6% NPV uplift for our customers building with this type of inverter versus an alternative type of inverter. All right, so let's talk about the large load of the data set of use case, where Bicense is there's a similar set of benefits that you get from. switching to solid-state transformers. But actually, one big difference, at least as I've seen, is the delete a bunch of stuff side,

because it seems there's a lot more stuff to delete in the data center use case. Yeah. Data centers still distribute power today the way they did when they first came into Vogue in the 90s, which is, you know, all the racks are connected at AC, usually like 240 line-to-neutral AC, and like 415 line to line.

And so that means you're starting with hundreds of kilowatts outside the data center. You're doing sub-transmission voltage 13 or 34 kV to the different data hall areas. And then you have like a 3 megawatt medium voltage transformer going from that medium voltage to that 400 voltage. AC, let's say, and then that 400 volts ACs is, you know, brought into the data hole through a gray space area with a bunch of maybe UPSs and protection and power distribution, and then through bus bars overhead above the racks. And in a world where, you know, data center racks are 10 kilowatts, that's maybe a fine approach, but as they become 100 kilowatts or a megawatt, you know, it starts to look like, you know,

EV charging or grid batteries or solar, for that matter. And it needs to change. And rather than using AC as a distribution means, you start looking at power electronics to go directly to DC and higher voltage racks as well. And so now the rack rather than being native backplane voltage of 48 volts, which is just a legacy thing from the telecom switching stations of the 80s and 90s, you know, now the backplane voltage of the racks will be 800 volts or even

higher, and then you can use a SST-based solution to go from medium voltage, 34KV, all the way to 800 volts with no gray space rooms with UPSs and power distribution panels and anything like that, no additional transformers at all. And you can incorporate just the amount of energy storage you need on that 800-volt side to handle like GPU ripple or whatever other power ripple you have, and also allow for 30 seconds of hold up time to support facility transitions, you know, to generators or from one medium voltage connection to another. And you can remove 70% of the stuff in the electrical diagram and a similar amount of footprint.

And you're like, oh, does that really matter? The GPUs are where all the money is? Well, that's true. the GPUs are where all the money is, but where a lot of the time is and the labor shortage is in the certified electricians that are doing a ton of electrical work, a ton of AC electrical work, and you're removing all this copper demand because you're not distributing power at a low voltage anymore, and you're bringing high voltage as close as possible to the wreck. So it's a major, like, headache alleviator or, you know, painkiller, as you like to say, Shale,

for people building data centers. Yeah, for sure. I mean, and the other thing is space, right? You mentioned you're deleting a bunch of stuff, which frees up a bunch of space. And space is at a premium in data centers. Yeah, you get to bring the stuff that needs to be low latency

and close together as close together as possible because you've removed all of this power distribution equipment that would otherwise be occupying white space. Okay, so we talked about solar and best and we talked about data centers. So let's go back to the grid then, just to wrap up. over time, and obviously this will take a long time, but if over time, if we go and start to one by one, go throughout the transmission distribution system and replace all of these

traditional oil-filled transformers that are on the grid right now, ultimately with solid-state transformers, like big picture, what does that enable from a grid management perspective? Well, utilities and grid operators right now are facing a lot of pressure, right? They've got aging infrastructure, growing demand, and they're in the market for new solutions. Luckily, SSTs can provide a ton of value propositions beyond just voltage transformation. An SST can have a cost similar to a traditional oil-filled transformer, but at the same time provide functions that would be provided by popcorn components around the transformer. Functions like overcurrent protection, fault isolation,

what an automatic tap changer does for voltage correction, What three-phase balancers do to enable higher utilization on the different phases in the distribution grid? They can provide the spinning inertia type functionality that synchronous condensers do for frequency regulation. And they can also take the place of cap banks for power factor correction. So with a choice to go SST, the next time they need to place a distribution substation down or replace an aging 50-year-old, you know, 34KV to 208 transformer, they're at the same time getting all of those other value-added functions kind of for free. And what those other value-added functions do is enable more utilization of the existing poles and wires.

And utilization is the key to affordability. If you look at the rate cases for public utilities at PUCs around the country, You know, they take their total costs of new CAPEX and maintaining existing CAPEX, and then they divide that by kilowatt hour served. And the best way to serve more kilowatt hours is to increase the utilization of the existing poles and wires. And to do that, you need intelligent infrastructure that can dynamically respond to the conditions of every circuit and maximize the utilization of every circuit. And so not only will SSTs ultimately cost less per unit of voltage conversion, but they'll also add all of this additional value-added functionality that allows you to get more out of every wire existing and new that utilities build.

And that is the pathway towards affordability. That is what the 21st century grid will look like. When you were describing how the grid works before I was thinking about a network of tributaries, I was thinking about a river system, right? and at every spot where like two rivers converge, there's a, there's a why, right? Like, it's going possibly the opposite direction of what I'm imagining here from a river system perspective, but from a, if we're trying to find the right metaphor here, it's like at every one of those connection points, you know, we've always had to build a dam and we still have to

build a dam that allows us to control the water flow, but we used to build it with like sticks and rocks, and now we have concrete. and whatever the Hoover Dam is built out of, and we can control it to a much higher degree than we could before. Well, I think a better analogy... Imperfect. If we're going to use a water analogy,

because I've thought about it, a water analogy would be, like, the way the grid works today, for if you have, like, a hundred units of water that are flowing through the upstream side of the river, and then, you know, if you had control in the past,

it would be that, like, 10 units go one way, and 90 units go the other. And, like, you couldn't really change much about that. Like, it was going to always be that way. So if it were 200 units coming down the river, it would be 180 and 20. And if it was 50, it would be 40 and 10 or 45 and 5. But with power electronics, you can have whatever you want on the other side of that dam. And I think another example is, like, locks.

Like, oh, locks are used to kind of, like, adjust levels. And imagine locks as, like, they take a long time. to move the boat up and down potential, right? That's what you're doing, is you're changing the potential of the boat, literally, like, the gravity, like, how high above, uh, in altitude the boat is relative to, like, other parts of the river. So, yeah, that's kind of what power semiconductor devices are.

They just can move, you know, the most recent generation of devices can move like thousands of volts in nanoseconds. you know and that bolts are potential that's the analog right and that that's compared to like you know mechanical switches in the past you know they were moving in milliseconds or tens of milliseconds or even seconds to do the same thing so that's the analogy i guess the the locks metaphor uh really comes it it's perfect for me specifically i grew up you know this i grew up in madison wisconsin and i literally grew up across the street from a locks. There's a river that goes from two lakes that are in Madison. Anybody from shout out to anybody who lives in the Tenney Lapham neighborhood of Madison,

Wisconsin, who goes to locks. The locks take forever. They do take forever. And I actually, it was a great, I brought my three-year-old back to Madison last year when he was three at the time. And it's like a big activity. You can go watch the locks. And it's like, it can waste a whole bunch of time with a three-year-old. That's great. Yeah. Well, there's a lot of hydrology analogies to electrical circuits. Do you know Waterhammer? I've heard Waterhammer, yeah. Yeah.

So Water Hammer is basically like an undamped transition. Like if you go and like turn off the, you know, your water faucet, like from full water coming out to like water off, you get like oscillations in the water column and you need something to damp that out. And usually if you're a good plumber, you add that. And if you don't, that oscillation could last forever. And the same thing exists in electrical circuits. And you can harness that for good.

That's what resonant converters do. They use that oscillatory behavior to have more efficient, like soft switching when changing from one voltage to the other or one frequency to the other. But it can also be bad things, and you can get oscillations that end up with grids going unstable, like what happened in Spain. So, yeah. Water hammer on the grid. Water hammer on the grid. There it is. We figured it out.

All right, Drew, this was awesome. Thank you so much for your time. Absolutely. Thanks, Shale. Always a pleasure. Drew Baglino is the founder and CEO of Heron Power. This show is a production of Latitude Media. You can head over to latitudemedia.com for links to today's topics.

Latitude is supported by Prelude Ventures. This episode was produced by Max Savage-Levenson, mixing and theme song by Sean Marquand. Stephen Lacey is our executive editor. I'm Shale Khan, and this is Catalyst.