Solid state transformers keep missing their moment, and the economics explain why
Years of hype around solid state transformers have collided with a stubborn reality: the century-old iron-and-copper design is still cheaper and longer-lasting than its electronic replacement.
A 2012 forecast predicted solid state transformers would grow 82 percent a year, reaching $5 billion by 2020. That did not happen. The gap between enthusiasm and deployment points to a structural problem that analysts have been tracking for years.
You're taking a hunk of iron and a hunk of copper... that's going to last 40, 50 years... why the hell would anybody in their right mind try to replace that with a bunch of electronics that are going to be more delicate? It also costs way more. Jon Y
The core issue is the incumbent technology. Conventional iron-and-copper transformers are cheap, durable, and well understood by the utilities that buy them. Jon Y, who contributed to a 2022 paper on the topic, argues that trying to replace them with electronics was a strategic mistake from the start: “Why the hell would anybody in their right mind try to replace that with a bunch of electronics that are going to be more delicate? It also costs way more.” That 2022 paper found that solid state transformers and hybrid transformers, which merge a traditional transformer with a power converter, were not economically viable without a 60 percent reduction in capital costs.
The market test confirmed it. Many startups building so-called energy router-style solid state transformers found that few utilities wanted to buy or deploy them. Without utility customers, the business cases collapsed. The technology may yet find a niche in applications where the unique capabilities of power electronics outweigh the cost penalty, but the direct-replacement strategy has repeatedly stalled on the same numbers.