Heron Power Picks Morgan Hill for a 40 GW Power Conversion Plant Backed by a $26.4 Million California Credit
- Investment: $100 million
- Annual output: 40 GW
- Facility size: 286,000 square feet
- Jobs: 600
- State tax credit: $26.4 million
Heron Power will convert a 286,000-square-foot warehouse in Morgan Hill, California into its first factory, the company said on August 13, 2026. The plant will build Heron Link, a 5 MW medium-voltage power conversion system, at 10,000 units a year. That works out to more than 40 GW of conversion capacity annually.
Heron Power will invest more than $100 million and add over 600 jobs. California awarded it a $26.4 million California Competes tax credit. Commercial production starts in late 2027.
Drew Baglino founded Heron Power and runs it as chief executive, after leading powertrain and energy engineering at Tesla. Heron Link pairs a bidirectional inverter with a solid-state transformer in a single medium-voltage unit. The company sells into utility-scale solar, battery storage and data center projects, where the alternative is a separate inverter, a separate low-frequency transformer, and the switchgear to tie them together.
Why It Matters
Solid-state transformers have been a laboratory story for a decade. This plant has a site, a state tax credit, a unit target and a date, which moves the technology out of the lab and into procurement.
Buyers should ask Heron Power for fault-ride-through and short-circuit numbers. A power-electronic front end fails differently from a copper-and-steel transformer, and protection schemes built around the older device do not always cover the newer one. Ask also what 10,000 units assumes about shifts and yield. A first factory rarely hits nameplate in its first two years.
The incentive deserves one caveat. The $26.4 million CalCompetes award is a tax credit, not cash, and Heron Power earns it against California tax liability as it meets hiring and investment milestones. If the 600 jobs arrive late, so does the credit.
The number that matters is lead time, not gigawatts
Heron Power measures its 40 GW a year against what the US grid added in 2025. That comparison flatters the plant. The sharper question is whether it shortens the transformer queue.
Large power transformers have run three to five years of lead time since 2022, and medium-voltage equipment has stretched past two years. Developers now order switchgear before their interconnection studies finish. A combined inverter-transformer unit attacks that queue directly, because it removes a long-lead item from the bill of materials instead of adding capacity to one.
The site choice carries its own signal. Morgan Hill sits about 30 minutes south of San Jose, inside PG&E territory, in one of the most expensive labor markets in the country. Heron Power named PG&E, the City of Morgan Hill and California GO-Biz as partners.
Converting an existing warehouse is what makes a late-2027 start credible. Greenfield electrical manufacturing in California does not reach production in 26 months.
Critical Perspective
The 40 GW figure is not new. Heron Power attached the same number to a 40 GW US factory when it closed a $140 million Series B in February 2026. What changed in August is the address, not the capacity claim. A target that survives six months without moving is a plan, not yet a result.
The announcement also names no customer. There is no disclosed order book, no anchor offtake, and no utility or developer on record buying Heron Link. Grid equipment buyers commit years ahead, so an empty customer list at site-selection is normal. It is also the single number that would tell you whether 10,000 units a year is demand or aspiration.
Then there is the gap between a 5 MW unit and a qualified one. Utilities do not energize a novel medium-voltage device on a datasheet. They want type tests, fault duty, and ideally an installed base that has ridden through real events. Late 2027 is when the first unit ships. Add the qualification cycle after that, and the relief this plant offers to today’s transformer queue arrives well into the decade.
Sources
- Heron Power, “Heron Power Selects First Factory Location to Build Next-Generation Power Electronics in the United States,” August 13, 2026
- Energy-Storage.News, “Startup Heron Power to build 40GW power conversion manufacturing facility in California”
- PR Newswire, “Heron Power Selects First Factory Location,” August 13, 2026
- Morningstar, “Heron Power Selects First Factory Location,” August 13, 2026
