Data centers, where rows of computers reside, are the brains that make Google (GOOG), Facebook and your favorite online sites hum along without trouble. But those computers are also energy hogs, a fact that has spawned billions of dollars in investments to make them energy-efficient.
A new company, Transphorm, believes its technology can cut electric bills significantly -- as well as increase mileage for hybrid electric cars and boost the amount of electricity flowing from solar panels.
Located near Santa Barbara, Calif., Transphorm made its public debut on Wednesday at the Silicon Valley office of Google Ventures, which led a $20 million round of investment in the startup. Transphorm had been quiet about what it was developing since its founding in 2007. Overall, it has raised $38 million in venture capital from other investors such as Kleiner Perkins, Foundation Capital and Lux Capital.
The company now says it plans to launch its first product next month and start shipping to customers later this year.
Reducing Inefficient Power Conversion
What Transphorm has apparently come up with is a better way to convert electricity from alternating current (AC) to direct current (DC), and vice versa. Electricity flows out of power plants as AC, but it gets converted along the way because of how the electric grid and electronics are designed.
For example, solar panels produce power in DC and rely on a converter to change that to AC, to feed the grid or the circuits inside a home. When you plug in your computer, however, the hefty adapter that's part of the power cord then converts the AC to DC for the computer to use.
All these back-and-forth conversion steps lead to electricity losses, mostly in the form of heat. In fact, an estimated 10% of the power is lost during each conversion. That may not seem a lot, but Transphorm officials say those losses collectively amount to terawatt-hours of electricity, or the equivalent of taking the U.S. West Coast off the electrical grid.
"What everybody is doing is paying a hidden tax because of the inefficiencies of power conversion," says Umesh Mishra, Transphorm's CEO. Mishra says his company's power-conversion module will cut the power losses by up to 90%
Cutting Energy Costs
What makes Transphorm's technology so different from other power-conversion gear, according to Mishra, is its use of gallium nitride, a material that's reportedly better than silicon -- the material used in converters today -- when it comes to preventing power leaks. Gallium nitride isn't found in nature, and ensuring it doesn't lose its energy-saving ability can be difficult. Transphorm also plans to make its power-conversion gear, from creating the gallium nitride to the final device assembly, at its own factory.
The startup plans to tackle the data-center market first, due to its size and the amount of dollars data center managers are willing to spend to cut their energy costs. Market research firm Pike Research estimates the market for equipment and software that can cut data centers' energy bills could grow annually to $41.4 billion worldwide by 2015.
Google, which owns many data centers around the world, would seem a natural customer for Transphorm's technology. But the search engine isn't willing to commit to that right now. Nevertheless, says Google Ventures managing partner Bill Maris, "we understand the problem with waste heat. It's not good for our shareholders, our data centers and our world."
Transphorm also is talking to the makers of converters for solar energy systems. The inverter sales are likely to grow from around $2.8 billion in 2009 to $8.5 billion in 2014, according to market research firm IMS Research.
Targeting Hybrid Vehicles
The converter startup is eying the automotive market as well. Hybrid electric cars like the Toyota (TM) Prius currently need two radiators – one to cool the gasoline engine and the other to cool the power system that runs the electric motor. But with a better power converter, a radiator for the electric motor won't be necessary, says Carl Blake, vice president of marketing at Transphorm. Eliminating waste power, he says, also means the car can travel an extra four miles per gallon.
Transphorm has started lining up customers, such as industrial automation equipment maker Yaskawa Electric (YASKF) Other customers evaluating Transphorm's technology reportedly include Satcon (SATC), which makes inverters for solar panels. Converting a nifty idea into a solid business is Transphorm's challenge now.
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