When Drew Baglino left Tesla in April 2024 after 18 years as an executive at the electric automaker, he quickly went searching for his next venture. He talked to investors. He attended conferences. No matter what industry he queried, everyone had problems with the current state of one technology: power electronics.
“You talk to fusion people, they complain about power electronics. You talk to long-duration energy storage people, they complain about power electronics. You talk to thermal battery people, they complain about power electronics,” Baglino told Latitude Media. “I had friends that were solar developers who had developed a lot of solar over the past five years, and even they were complaining about their power electronics.”
A year later, Baglino launched his new company, Heron Power. The California-based manufacturer has designed a new type of solid-state transformer that promises to modernize the grid and make patching more wind and solar onto the power system easier and safer.
Last month, Heron raised $38 million in funding. The venture firm Capricorn Investment Group led the Series A round, which also included the Bill Gates-owned Breakthrough Energy Ventures, Energy Impact Partners, Gigascale Capital, Powerhouse Ventures, Valor Equity Partners, and investments from Tesla co-founder JB Straubel and Tesla’s former chief financial officer, Zach Kirkhorn.
The company aims to have its first production line up in the Golden State and running by 2027.
The Heron approach
Heron’s transformers cut out a key step on either end of the grid when it comes to direct-current power. A traditional transformer requires an inverter to take on power from a battery or a solar panel. And those same transformers need a rectifier to help disperse those electrons to a data center or a charging station.
That’s because legacy transformers can’t convert a direct current to an alternating, control bidirectional energy flows, or regulate voltage. The Heron Link — the company’s first product — can. The solid-state transformers run software that regulates voltage and frequency, making it possible to add more invert-based power to a grid without risking blackouts.
Heron’s technology could ease demand for traditional transformers amid a years-long global shortage brought on by COVID-related supply chain disruptions, surging load growth, and reconstruction from increasing extreme weather. Wait times for transformers have grown from weeks to years, and prices have surged by as much as 80% since 2020.
Demand for transformers is forecast to double in the next 10 years — when wind and solar are projected to be among the fastest growing sources of new power generation. Heron expects its solid-state transformers will be churned out faster than traditional equipment because it doesn’t need to tap into the nation’s limited supply of grain-oriented electrical steel.
“The interesting thing that I learned at Tesla is power electronics, especially highly-integrated power electronics…it’s highly multi-physics and you can’t just simulate it with off-the-shelf tools that you optimize,” Baglino said. “Only a couple hundred, maybe a couple thousand, professionals in the world actually know how to make super optimized, super cost-effective and power dense power converters.”
The grid-equipment industry moves slowly, he said. At Heron, he recalled meeting with a major manufacturer to discuss integrating a product that was supposed to be “the new technology,” he said.
“We were like, ‘So, when did it come to market?’ and they said, ‘oh, like 1991,’” Baglino said. “But it replaced technology that had been on the market starting in 1965. That is the electricity sector in a sentence.”
New pressure to innovate
During a period of slow load growth, he said, there wasn’t much pressure to innovate.
“It wasn’t until the last decade where you had a ton of independent power producers and independent power developers doing solar, batteries and data centers, where there’s more of a competitive market for electrical equipment,” Baglino said.
In that slow period, much of the manufacturing moved to China, where the country’s industrial clusters helped make the assembly cheaper and faster, but the fundamental design remained the same. Asked how Heron would avoid having its American-made product undercut by an overseas manufacturer in Asia, Baglino said the company planned “do something that hasn’t been done before — bring it to market before anybody else does and iterate on our first release to market faster than anybody else does.
Only a couple hundred, maybe a couple thousand, professionals in the world actually know how to make super optimized, super cost-effective and power dense power converters.
“That way we’re always two to three technology generations ahead,” he said. “With the team I led at Tesla, that was how we approached it. Every 18 to 24 months, there’s a new generation of power electronics out there.”
Asked if that strategy might hinder sales as customers await a new generation with better functionality, Baglino said the transformers are designed to last 20 years.
“It’s going to be deployed for 10, 15, 20 years,” he said. “You deploy it, maintain it, and don’t go back. I expect that to continue to be the case. But the benefit I see of continuing to ride the power electronics wave is you’re always the most competitive solution in the market, and over time, you can address more and more applications.”
Baglino said Heron would remain focused on its core product for now. But other potential applications could include pure transformers that handle not just direct currents but alternating currents as well, or else motor drives that regulate cooling in data centers.
Within weeks of announcing Heron’s first big investment in April, a major electricity catastrophe exemplified the need for more power electronics on the grid. The blackout that crippled the grid in Spain and Portugal came in part due to voltage fluctuations from a shortage of thermal power and not enough inverters to hand electricity from solar panels — the exact kind of thing Heron’s transformers protect against.
“If Spain had more grid-forming inverters, it could have been different,” Baglino said. “I haven’t specifically analyzed how much inertia or synthetic inertia would have been needed, or how many megawatts would have been needed for Spain to avoid that problem. But what I can tell you is, you can’t build a grid-following-only inverter-based grid. It just won’t work. You have to have some source of the frequency, and that’s what grid-forming inverters are.”
Baglino analogized the way his technology works by holding up two chargers. In one hand, he held a clunky black power-pack from a 1995 Compaq Armada laptop: “This is like 40 watts,” he said. “It has one output.”
In the other, he held a small power adapter he bought off Amazon the other day: “This is 65 watts,” he said. “It has three outlets. It does six different voltages. It’s power sharing between the outlets dynamically. It provides 50% more power… and it’s roughly one-quarter of the size.”
He added: “That’s what we’re doing. Not for consumer electronics, but for the grid.”
