Transphorm: the New Data Center Waste Power Slayer

Google Ventures invests in all sorts of novel technologies, but an invention designed to run data centers more efficiently and cut power use is no doubt near and dear to Google’s heart. So it’s not surprising that Google Ventures became the lead investor in a startup called Transphorm, which made its formal public debut and announced a $20 million C round on Wednesday.

“One of the things that attracts us to Transphorm is we understand the problem of wasted power,” said Bill Maris, managing partner of Google Ventures. “It’s not good for our shareholders, our data centers and our world.”

Transphorm, located next to Santa Barbara, Calif., is developing a power conversion module that it says can significantly reduce electricity losses when power is converted from alternative current (AC) to direct current (DC) or the other way around. This conversion takes place many times from when electricity leaves a power plant (in AC) to when it reaches servers, which could run on AC or DC depending on their designs.

A bit of electricity is lost along the way partly because of the power needed to make that conversion and partly because of the materials and design of the converters. The losses are dissipated as heat, which then often prompts the need for cooling technology. In a hybrid electric car, for example, a radiator sits next to the combustion engine to cool it while a second radiator cools the power electronic system that powers the electric motor. The company said its technology could eliminate the need for the radiator to cool the power electronic system.

Generally, about 10 percent of power loss occurs during each conversion step. Collectively, all these losses can add up to terrawatt hours of power, the company said. Transphorm’s technology can reduce that loss by up to 90 percent, said Umesh Mishra, CEO of Transphorm.

Transphorm, founded in 2007, is unveiling its first product next month and will first target power supply equipment makers that sell their wares to data centers, Mishra said during a press conference at Google Ventures’ Silicon Valley office. Data centers are notorious energy hogs, and they doubled their electricity use between 2000 and 2005 worldwide. A 2010 Pike Research report estimated that investments into energy-efficiency software and hardware for “greening” data centers will grow annually to reach $41.4 billion by 2015.

What makes Transphorm’s technology stand out among other power conversion equipment is its use of gallium nitride, Mishra said. Power converters today rely on silicon, which has reached its limit to improve conversion efficiencies, he added. Gallium nitride, on the other hand, is better at preventing leaks by holding onto the maximum voltage when it’s not delivering power, he said. But making gallium nitride, which can’t be found in nature, so that it doesn’t degrade and lose its ability significantly presents a technical challenge.

Although there is no shortage of research into using gallium nitride to improve power conversion, a lot of that is focused on low-voltage conversion, Mishra said. Transphorm’s first product will be in the 600-volt range and suitable for industrial operations such as data centers, solar panels and automotive drives, said Primit Parikh, president of Transphorm. The company is working on 900-volt designs, he added.

Many data center operators already have a bag of tools for reducing power use, from servers that power down when not in use to investing in better cooling technologies. There also are suites of software for monitoring and adjusting power use onsite or remotely. By minimizing power losses during conversion, though, Transphorm’s technology also can help eliminate other expenses such as for cooling equipment.

Maris said it’s too early to say whether Transphorm’s modules will eventually find a home at any of Google’s server farms. Google could certainly provide Transphorm’s technology department ample opportunity to test its products, but that hasn’t happened yet, Maris said.

Nailing the technology is important, but Transphorm won’t succeed if it can’t offer attractive pricing for its products. The company plans to make its own modules and currently has a factory set up at its headquarters, said Parikh, who declined to disclose the production capacity or cost. The startup’s initial product won’t be able to compete in cost with silicon-based equipment, but it expects to reach parity in five to seven years, provided that demand is there, Mishra said.

The company, which has raised $38 million total since its inception from investors including Kleiner Perkins and Foundation Capital, already has attracted customers. Companies that are evaluating Transphorm’s technology include industrial control and automation equipment supplier, Yaskawa Electric Corp., and solar inverter maker, Satcon. Transphorm expects to start shipping the modules later this year.