Gridco Systems, the startup developing digital power electronics, has just raised an $8.5 million Series B round, according to an SEC filing. Chalk up one more investment in the exciting, if hard-to-explain, world of solid-state transformers, grid power routers, digitally identifiable energy flows, and other next-generation power equipment.

It’s the second investment for the Woburn, Mass.-based startup founded by Naimish Patel, founder of Sycamore Networks and more recently an entrepreneur in residence at General Catalyst Partners. In July 2011, Gridco raised $12.5 million, according to an SEC filing, which would bring its funding to at least $20.5 million.

While the filings don’t disclose the investors, they do name company directors as Ric Fulop, a partner at North Bridge and founder of A123 Systems; Peter Hebert, co-founder of Lux Capital; and Hemant Taneja, managing partner at General Catalyst. News reports have named North Bridge and General Catalyst as investors.

Just what Gridco plans to do with the money is less clear, though it falls into the general category of power electronics that manage actual flows of electricity via digital means, rather than via the “analog” magnets-and-coils of wire transformers that now permeate the power grid.

As Michael Rigney, Gridco’s vice president of business development, said at Greentech Media’s The Networked Grid conference earlier this month, Gridco’s goal is “the precise control of power flows in the distribution system.”

Another good description of the technology comes from Vinod Khosla, an investor who is otherwise rather bearish on the smart grid, but has had a lot of good things to say about next-generation power electronics: “A 50-year-old transformer made of copper wire wound around a ferrite core can't respond to a signal, so we can't control it," he said at a conference last year. "If we invest in new power electronics devices, things will change radically.”

These kinds of devices are already out on the grid today, Rigney said, in the form of the static VAR compensators that balance out wind farm power, the advanced inverters that connect solar panels and energy storage devices to the grid, and in high-voltage direct current (HVDC) systems, to name a few examples.

In fact, there were about 100 gigawatts of such power electronics deployed in such applications that “essentially surround the distribution grid system,” he said. That means that the technology is already market-ready today, at least where it can compete on cost against traditional “analog” AC grid gear, or can simply do things that the traditional gear can’t do, he said.

That includes lots of wind power, solar power and energy storage applications where power flows are erratic and two-way, something today’s grid technology finds hard to handle, he said.

“What are the implications of having power electronics pervading the perimeter of the distribution system, but not in it itself?” Rigney said. His answer, not surprisingly, is that the grid will need to adopt technologies like those Gridco is developing to manage all those distributed renewables, plug-in EV chargers and storage devices.

Grid giant ABB has also been experimenting with “solid-state transformer” technologies for the distribution grid, Gary Rackliffe, vice president of smart grid operations, said at The Networked Grid. ABB has already been using similar technology for 50 years or so in HVDC applications, and more recently in flexible AC transmission systems, he noted.

Fellow digital power tech startup Varentec raised $7.7 million from investors including Khosla Ventures in January, on top of work with the Department of Energy’s ARPA-E program.  President and CTO Deepak Divan said at The Networked Grid that Varentec’s ARPA-E work focused on power routing devices to connect distribution feeder lines in a way that can control real and reactive power to stabilize the grid, based on “fairly inexpensive” technology he developed at Georgia Tech.

We’re seeing a lot of research into technologies like these for distribution grids, such as at the FREEDM Systems Center in Raleigh, N.C., which is looking at technologies like fast EV charging, solid-state transformers, energy storage and digital power grid controls. Earlier this year, the Electric Power Research Institute (EPRI) tested its “Intelligent Universal Transformer” technology in a plug-in car charging application that could make it a lot easier to integrate two-way charging flows with grids or building power systems.

On the large-scale planning side, Japanese companies including ORIX, NEC and National Instruments have formed the Digital Grid Consortium to study how solid-state transformer technologies can be integrated into the grid. Japan’s national grid is split up into two systems using different frequencies, 50 hertz and 60 hertz, making technology to link them together a valuable subject for research. In the United States, the proposed Tres Amigas project to interconnect the country’s three main grids could also make use of solid-state, AC-to-DC-to-AC transformers.

Because these digital transformers are digitizing real power, not a separate communications signal, they can actually add data -- such as the place the power was generated, where it came from and where it’s supposed to go -- to the power itself in the midst of doing their jobs as transformers. Startup Power Tagging is developing digital power signal data technology, with the hope of tracking renewable energy from source to consumption.