Heron Power raises $140M to ramp production of grid-altering tech

Heron Power, a startup co-founded by former Tesla executive Drew Baglino, has successfully raised $140 million to enhance the production of solid-state transformers designed for data centers and electrical grids. This fresh influx of capital comes shortly after the company garnered $38 million in a Series A funding round just five months prior. Baglino, who now serves as CEO of Heron Power, stated that the company was not actively seeking additional funds but decided to pursue this round after receiving substantial interest from clients eager to purchase over 40 gigawatts of solid-state transformers. "If our customers are leaning in, we need to lean in as well," he remarked in an interview with TechCrunch, emphasizing the urgency to accelerate their operations. The rapid fundraising reflects the increasing demand from data centers for technology that can efficiently deliver electricity to their operations. With nearly 20 years of experience at Tesla leading powertrain and energy initiatives, Baglino is well-acquainted with the need for swift action in a fast-paced industry. The Series B funding was spearheaded by Andreessen Horowitz’s American Dynamism Fund and Breakthrough Energy Ventures, with additional contributions from Capricorn Investment Group, Energy Impact Partners, Gigascale Capital, and Valor Atreides AI Fund. Solid-state transformers have been in development for over a decade but have only recently become viable for deployment in energy-intensive environments like data centers. These innovative devices aim to replace traditional iron-core transformers, which have been used for more than a century. While iron-core models are affordable and efficient, they are bulky and produce significant heat. In contrast, solid-state transformers, such as those branded as Heron Link, are smaller and more efficient. They can consolidate multiple components, addressing major challenges faced by data center developers. Additionally, their advanced design allows for intelligent power management from diverse energy sources, including wind, solar, and batteries. Each Heron Link transformer is capable of converting medium voltage electricity to the 800 volts required by Nvidia’s reference rack setups, handling 5 megawatts per unit. The modular design also allows for quick replacements; if one module fails, it can be swapped out in approximately 10 minutes, significantly faster than traditional transformers. Furthermore, these transformers include specialized lithium-ion batteries that can provide rapid power for 30 seconds, easing the transition to backup sources and potentially eliminating the need for uninterruptible power supplies. By reducing the number of components involved, solid-state transformers can minimize potential failure points and lower costs. Baglino claimed that, "We can remove 70% of the gear involved," which could result in cost savings that are an order of magnitude for specific data center applications. Currently, data centers account for only about one-third of Heron Power’s business, with the rest divided between solar energy and grid-scale batteries, both of which also gain from the speed and versatility of solid-state transformers. The company plans to utilize the new funding to establish a factory capable of producing 40 gigawatts of Heron Link transformers each year, representing approximately 10% to 15% of annual production outside of China and about 5% to 10% of total global demand, comparable to half of Texas's peak power requirements. Baglino anticipates beginning pilot production in early 2027, followed by an increase in manufacturing over the next two years. With many aging transformers in need of replacement, Heron Power faces a competitive landscape. However, the recent funding and Baglino's expertise in scaling production could provide the startup with a significant edge. "We will push as hard as we can," he affirmed.