Data centers become “killer application” for new power transformer tech

Data centers have become the largest driver of surging electricity demand that is straining US power grids. But the AI data center boom has also accelerated investment in a technology that could provide a silver lining for everyone—solid-state power transformers that replace industrial-age technology with modern power electronics.

Power grids currently rely on conventional transformer technology that is painstakingly assembled by hand and has a fundamental design dating back to the 1880s. Two copper wire coils manually wound around a steel core create electromagnetic fields that help step up voltage levels of alternating current electricity for long-distance transmission or step down voltage levels for the electricity use of homes and businesses. The largest power transformers cannot be mass-manufactured but are instead custom-built for each utility company’s electrical substations.

Manufacturing constraints, coupled with the scramble to upgrade US power infrastructure, have meant utility companies and other customers must wait up to several years for delivery of new power transformers. That is not only a problem for expanding power grid infrastructure to support growing electricity demand, but also delays the process of replacing aging power transformers.

Tech companies building the largest AI data centers are interested in solid-state transformers because they are embracing direct current (DC) power architectures to support server racks packed with energy-hungry AI chips. Solid-state transformers can directly convert alternating current (AC) power from a local grid’s distribution network into the DC power that such data centers require—all without the need for a separate electrical device to perform that AC/DC conversion.

“It’s kind of this one magic box that eliminates a lot of the infrastructure and also provides one control location that eliminates a lot of the interoperability challenges that you may see in a traditional data center, where various components within the data center are trying to regulate the same thing,” said Srdjan Lukic, a professor of electrical and computer engineering at North Carolina State University. “Now you have one conversion stage outside the data hall and then you just go straight to the rack.”

From “killer application” to mass adoption

Data centers have become the “killer application for solid-state transformers right now,” Lukic told Ars. Several US companies, including Amperesand, Heron Power and DG Matrix, have collectively raised more than $280 million in funding over the past year to commercialize solid-state transformer technology.

Solid-state transformers could also greatly reduce the amount of copper and other materials needed by data center projects, while their smaller physical footprints allow data center developers to do other things with the available space, Lukic explained.

In the long run, successful commercialization of solid-state transformers could even help ease the broader supply chain shortage affecting power transformers. That would make transformers more readily available for power grid upgrades and expansions beyond data center projects.

“There are relatively few specialized companies that manufacture [conventional] transformers, while solid-state transformers are like an electronics device,” Lukic said. “It completely opens up the space for who can play in the transformer space, and also opens up where transformers can be manufactured.”

The same benefits of solid-state transformers also apply to electric vehicle charging’s similar reliance on DC power. Lukic and his colleagues recently demonstrated how a solid-state transformer connected to a live grid power line could handle up to 1 megawatt of power when supporting the charging of an electric vehicle battery—the solid-state transformer performed the necessary step-down in voltage while also doing the AC to DC power conversion.

The NC State demonstration is taking place at a power delivery laboratory belonging to the nonprofit Electric Power Research Institute in Lenox, Massachusetts, and is the culmination of a collaboration with the New York Power Authority that began in 2018. The solid-state transformer—about 1 meter by 1.5 meters by 2 meters in size—has been sitting in a shipping container at the site since May 2026 and is scheduled to return to NC State in September after months of testing in summertime conditions.

“It looks like a big transformer box with a slightly different form factor, a big blob of what looks like steel,” Lukic said. “It replaces three blobs of steel with one blob of steel and removes a lot of the wiring and trenching that you would typically have to do for an electric vehicle application.”

The solid-state transformer has a modular design with an active front end interacting with the power grid, an AC/DC converter, and a high-frequency isolation transformer that either steps up or steps down the voltage. The crucial technology was the custom-made isolation component that can sustain the “full stress of the grid, the full distribution voltage” across the relatively compact device, Lukic explained.

Engineering and commercialization challenges still lie ahead for the technology. But Lukic is hopeful that data center adoption of solid-state transformers can help “derisk” the technology for mass adoption beyond the tech industry’s AI infrastructure buildout.

“Beyond data centers, we can think about electric vehicle charging in densely populated areas,” Lukic said. “A lot of loads within our homes are now DC, so having that ability to distribute DC in modern homes will have some significant benefits.”

Jeremy HsuTech Reporter
Jeremy HsuTech Reporter
Jeremy Hsu is a reporter exploring a wide range of topics across deep tech and AI. He has previously written for New Scientist, Scientific American, IEEE Spectrum, Wired, Undark Magazine and MIT Tech Review, among many other publications, about topics such as deepfakes, data centers, drones, battery tech, robotics, and GPS jamming. He also has a Master of Arts in Journalism from NYU, and a bachelor’s degree from University of Pennsylvania in History and Sociology of Science, with a minor in English.