The Climate Council sat down with Matthew Williams, Founder & CEO of IONATE, to discuss their proprietary hardware, the Hybrid Intelligent Transformer – reimagining an age-old technology with the future in-mind. We caught Matthew at an exciting time as IONATE secured £3.3 million Seed financing to scale their deep tech innovations.

The seed round was led by deep-tech investor IQ Capital, with the participation of Smartworks, the investment arm of leading Austrian energy supplier Wien Group, cleantech impact VC Cycle Group, deep-tech climate investor Zero Carbon Capital, and the University of Edinburgh’s venture fund, Old College Capital.

Can you provide us with a brief overview of what you do and where the idea for IONATE came from?

My background is in electrical and control systems engineering. About 10 years ago, I was leading an Australian systems engineering company, doing upgrades of large energy users and power stations when Australia started its push for decarbonization. Large capacity wind and solar was coming onto the grid, and I was well-positioned to see just how unprepared our power systems were to deal with all the change this would bring.

There was some great innovation, but almost exclusively focused on improving generation or efficient consumption: smart homes, grid edge (consumers), EVs etc. In the meantime, the power grid – the passive network connecting it all – was being ignored. As a systems designer, it was clear to me that trying to balance power flows by controlling the endpoints of a dynamically changing grid was not going to be enough. A sustainable system needed smarter, resilient, capable grid infrastructure.  

I founded IONATE to develop just that. Our technology provides the optimal solution for controlling power both locally and on a system-level, with the capabilities needed for a sustainable energy transition.

What exactly are the constraints of traditional transformers that limit their use in the energy transition?

We still need to transport high voltage for long-distances and then transform the electricity to a low-voltage for safe end-use, which is what transformers have been doing for us for over 100 years. But the energy transition is bringing vastly new types of power flows and power quality issues, such as voltage fluctuations and harmonics. When renewables took up only a little bit in the energy mix, this didn’t make a big difference. Now that they are taking over, this passive infrastructure won’t be enough.

In a simplistic sense, a transformer still does its job fine, but now we need additional capabilities to control power and prevent issues that threaten stable electricity supply. Right now, system operators need to invest in additional equipment for this: filter banks, capacitor banks, FACTS devices, tap changers. This is a lot of extra equipment to control various aspects of power flow, which add up to massive additional CAPEX and O&M costs and nontrivial space requirements. For example, substations can be underground where there is no space to add-on these modern functionalities.

But we will still need these capabilities somehow, right? How do you approach this in your own device?

Control will be key to achieve the system flexibility we need to safely transition to renewables, EVs and digitalization. And from a grid design perspective, substations and especially transformers provide great nodal points for upgrading the whole system. So, it would be quite useful to bring in extra capabilities in exactly these locations. Doing this in an affordable and robust way is the jackpot!

This was the underlying motivation for our design. IONATE’s device is called a Hybrid Intelligent Transformer (HIT). It is the size of a traditional transformer and connects into the grid like one. It still does the basic voltage change, like a traditional transformer does. But it has an entirely innovative design to provide all the cumulative benefit of the equipment mentioned above. And timing is just right: transformers themselves are now going past their lifespan, so we have a network with an ageing infrastructure problem. This means replacement cycles could facilitate an upgrade to a more efficient system.

So what is unique about the IONATE HIT vs. additional solutions that can also control power flows?

First, with other control solutions, you need many things. You need a traditional transformer to carry out your voltage transformation, sensors to see what is happening, plus various other hardware such as power electronics, depending on what aspects of power you wish to control. This whole approach of layering electronics and digitalization onto the grid scaffolds it incrementally – but it will always be limited by the base it’s built onto. Ultimately, this is a sub-optimal way of upgrading, as far as system design is concerned, because each new technology adds a layer of fragility, a new point of failure, another costly thing to maintain.

IONATE replaces the passive backbone with one plug-and-play device that provides all the missing control. Its sensing and monitoring provide real-time visibility without the additional digitalisation costs. And unlike other solutions, IONATE’s data is coupled with an instantaneous point of control back into the system: the HIT dynamically controls the voltage independently on each phase, removes harmonics and corrects power factor. From a power systems perspective, those are really the key functions grid operators need. At the end of the day, it brings all the capability, without the enormous CAPEX and fragility of other solutions. Importantly, it introduces no additional grid failure modes: should anything happen to its control system, it defaults back to standard transformer operation until a hot swap of the electronics.

How can your technology provide such a different proposition?

It comes down to our design innovation. As a device, the HIT still has the electromagnetic core, and we also have a local controller and a small amount of power electronics to monitor the input-output. But in contrast to electronic add-ons, our innovative arrangement allows us to control the power flow in the magnetic domain. This enables comprehensive control while we keep our power electronics affordably small whilst scaling-up to higher power levels. In the end, we capture all the precision of power electronics, at a device cost closer to that of a transformer.

Are you cost competitive with a transformer?

Our big focus is not trying to be cheaper than a traditional transformer; we’re all about adding capabilities at the best possible price. We see our customers are faced with two choices: either buy IONATE’s one technology or buy a traditional transformer plus buy layers of electronic technologies. We are still many times cheaper than getting the equivalents capabilities this alternative way. But we bring benefits way beyond simple cost reductions.

Can you tell us more about these benefits?

The HIT immediately adds value to the system while solving key technical challenges from day one. You can drop it into the electricity grid, set and forget, and it will keep the electricity network just how you want it.

But that would be underutilizing it – as a smart device you can connect it back to your control system, getting real-time information and control power flows on a system-level using multiple devices in strategic locations. Through our own software platform, we can coordinate and control these devices, ultimately providing real-time balancing of the electricity grid. This flexibility is what we see as the greatest benefit of our technology.

When looking at a traditional first-world type grid, where we have had independent power studies done to show what IONATE can unlock. Researchers from Imperial College compared performance of a traditional grid and one where transformers are replaced with IONATE devices. The results were:

• A 6% reduction in losses through the network
• 25% increase in the amount of power one could send through the network
• On average, a 33% increase in the number of EVs/Heat pumps and other variable loads that can be connected stably

So, in the long run, we may stay slightly more expensive than a traditional transformer. But again, that is the wrong comparison when reflected against the ongoing benefits. In terms of getting the most out your network, including GHG emissions reductions – companies will understand that a 6% reduction in losses translates to savings in the hundreds of thousands of tonnes of CO2 (for instance, in the UK, where the tests occurred).

Can they be effective for third-world consumers too?

Absolutely, we believe there is huge potential for our technology globally, including third-world applications. The same way telecommunications leapfrogged past landlines to cellphones in the third world, we expect renewables and micro-grids to be the drivers of electrification in developing nations. These are exactly the environments that could benefit from technology enablers of more affordable and reliable power. So, we think our Hybrid Transformers can add much value in these economies.

What is the target market for IONATE’s transformer? Is it aimed at a consumer, commercial or utility-scale level?

The key gap in the market for us is in the distribution grid, one point up from the consumer level, as  there are no technologies that can provide affordable power flow control on this level. Our customers here are the distribution utilities themselves, renewable power generators, battery storage, large power users in industry, manufacturing, data centres – anywhere that is using electricity and cares about power quality, has their own grid connection, owns transformers. We have a huge value proposition there.

What are the applications of the IONATE hybrid transformer in terms of expanding solar, wind and renewable storage efficacy?

We have good early traction within these sectors already. Because of their recent proliferation, one of the key problems renewables developers are now faced with is that all the ‘good spots’ on the grid are already taken. What remains are areas that may come with worse power quality or be capacity constrained and unable to accept more renewable generation. These constraints have been in the industry media quite a lot recently.

Compensating for these issues, network upgrades and the various power conditioning equipment mentioned can make a project very expensive or ultimately uneconomical. This is where we come in – we can substitute the grid-tie transformer and provide nice, clean input into the grid at a CAPEX and OPEX that’s suddenly worth it. This is true for various types of distributed energy projects. Those expecting power quality issues, it is a logical move to integrate IONATE’s technology.

We have great value proposition for wind farms, where Hybrid Intelligent Transformers can go into the output stage of an offshore wind turbine, saving significant CAPEX, while seeing operational improvement. We’re working with the Offshore Renewable Energy Catapult in the UK, as part of their Launch Academy program to show exactly that.

Solar farms also have specific requirements for their grid connection, concerning harmonics, voltage and even power factor. We spoke with one developer who had to put in additional equipment to provide the power quality needed to connect into the grid, adding a whopping US$1 million to their CAPEX. If our technology was ready at the time, we would have saved them that cost, by simply providing their grid-tie transformer.

Similarly, for energy storage, our device replaces their grid-tie transformers. From a technical view, batteries are an asset that degrades over time. You really care about round-trip efficiency. One thing that isn’t getting a lot of attention outside of the engineering world is how issues like harmonics and power quality impact battery storage degradation. Through resolving that, IONATE can significantly extend battery life and provide significant value to storage.

How did you find raising capital in this climate?

We just closed our Seed round with expert investors from deep tech VC, utility, and academia. Our main challenge was that we have the word “hardware” in our value proposition, which is not seen as classical low-hanging fruit. But we find that tech savvy investors see how radically novel IONATE’s technology is – and the possibilities it can unlock. 

And everyone in and out of Silicon Valley expects the big digital revolution of the energy system to be the economic opportunity of our generation. It is a 100-year-old system that has yet to benefit from 21^st century tech, after all. But the truth is, this overhaul simply cannot happen with software alone – even the best software needs technology that will connect it into the system, so it can adjust power in the physics. In other words, you need to upgrade the hardware for the software to work with. IONATE is the full package. Our Hybrid Intelligent Transformer is ready to deliver game-changing benefits from day one in the power flows. But it’s ultimately there to provide a technology backbone for the software to connect into and optimize the whole system.  

What is the (5/10-year vision) for IONATE? Is there a level of scale you hope to achieve in this time frame and what would you need to achieve this goal?

Our goal is for the hardware to be technology of choice to replace ageing transformers. But what excites me the most is our software platform: it will coordinate and control devices, optimizing the network based on criteria that can adapt to what we want our energy system to work towards.

It’s like a distributed energy resource management system (DERMS) platform, or a grid optimization platforms doing demand-side response. But unlike those that need to control millions of EVs or home batteries through a third-party software, we achieve network flexibility within our own platform, with only thousands Hybrid Intelligent Transformers.

Ultimately, our solution approach solves the current issues while futureproofing against problems down the line in the energy transition. And it’s not just us saying this. The UK Energy Innovation Centre (EIC), the collective of utilities here have recently awarded us the Future Energy System award for promising the biggest impact towards the energy transition. The utility and industry judges called our tech ground-breaking. We believe it will be transformative.   

To learn more about IONATE's groundbreaking innovations and exciting ambitions, follow to their website.