Fusion Energy: Who Has The Courage To Take It To Market?

As published on Forbes.com 

People used to say that fusion energy, a source of abundant, safe, affordable and clean power, is 30 years out and always will be 30 years out. Now, privately funded fusion energy start-ups like TAE Technologies, Commonwealth Fusion Systems and General Fusion (in which I’m an investor) are leaving the laboratory and starting to build prototype demonstration plants.

Meanwhile, 35 national governments from around the world are collaborating on ITER in Europe, a massive system designed to demonstrate the scientific and technological feasibility of fusion energy. It is very well funded to the tune of billions of dollars, but faster-moving private companies aren’t going to wait for the results of a slow and expensive government effort.

Optimists believe that we are five years away from the first proof-of-concept fusion energy demonstration plant and 15 years from a commercial roll-out at scale. This Holy Grail of clean power would disrupt the $8.5 trillion energy industry and sustain a carbon-zero economy. Fusion is practically a silver bullet for energy scarcity and anthropogenic climate change caused by burning fossil fuels.

Why has it taken so long? Why is commercial fusion energy still not here? The returns on successfully commercializing fusion energy would be so great—both financially and environmentally—that it seems almost ludicrous that private investors and public institutions have largely avoided this opportunity. It has been wildly underfunded. Why could this be?

A Fusion Refresher

Fusion energy should not be confused with present-day nuclear power plants that use fission, a process in which a uranium isotope is split to start a chain reaction. Once that fission process has been initiated it is very difficult to stop it, as the run-away accidents at Chernobyl and Fukushima showed.

Nuclear fusion is as different from fission as wind power is from solar. It’s the energy generation process that takes place in the core of stars like our sun. To replicate fusion on Earth, we heat up deuterium and tritium, two hydrogen isotopes easily derived from water. When the deuterium and tritium reach a temperature of 150 million °C, the atoms are moving at high enough speeds that they collide and fuse.

When deuterium and tritium fuse, they produce helium and a neutron that contains a substantial amount of energy. This energy can be captured and used to create electricity in a traditional way: by using the heat to create steam that drives a turbine and generator.

Fusion energy is safe because if the energy input stream used to heat and speed up the deuterium and tritium is stopped, the process stops. Run-away accidents like Chernobyl and Fukushima are not possible. Also, fusion energy produces only a tiny fraction of the waste nuclear fission produces. That limited residue has a half-life of a few hundred years, not tens of thousands of years, and hence is more manageable than nuclear fission waste.

Furthermore, waste from fusion energy cannot be used to create atom bombs. So, there should be no nuclear proliferation issues.

It takes roughly 55,000 barrels of oil to heat 10,000 homes for one year. With fusion energy, it would take one liter of deuterium and tritium, extracted from water, to power those 10,000 homes. And whereas those 55,000 barrels of oil would release 23,500 tons of carbon dioxide, fusion produces no emissions and will have a lifecycle carbon intensity lower than solar or wind (as measured in CO2 from all construction, manufacturing and operations per kWh produced).

The Hold Up

Perhaps it’s no surprise that building an artificial star on Earth, a prerequisite for fusion energy, is complex, time-consuming and expensive. However, the holdup seems to be more economic and political than technical.

Put simply, fusion is an existential threat to the existing energy industry. If fusion worked cost-effectively at scale, it would complement renewables and provide abundant, safe, affordable and clean energy for everyone on the planet. International relations and economics would be upended in ways that are hard to predict. Fossil fuel companies would be rendered obsolete. This could cause massive disruption on the world stock markets.

For these reasons and the technical challenges, fusion projects in the private and public sector are controversial and, as a result, have been underfunded. That could change if, and only if, fusion innovators can prove its viability, which depends mostly on capital. The availability of enough funds would likely shorten the timelines to commercially available fusion energy.

To date, no one has produced a fusion reaction that creates significantly more energy than it consumes. The first prototype systems are poised to demonstrate that current fusion technologies will indeed provide a path to produce net energy at scale.

Just a few billion dollars invested in a number of these projects could make fusion a reality. That’s relatively little capital. For perspective, Apple’s research and development costs last year were more than $14 billion, while Facebook spent more than $10 billion and Shell has an annual budget of $2 billion to acquire new energy technologies. These days, it’s quite easy to raise $1 billion in venture capital for yet another app in Silicon Valley. But investments in fusion energy, with its tremendous life-saving climate impact, are still struggling.

Is that about to change? The sooner we reach the tipping point where investors recognize the coming reality of fusion, the nearer its reality. In the fight against climate change, our tendency towards inaction—in this case, underfunding a viable path to abundant clean and safe energy—is the barrier to overcome.

The Frontrunners

I mentioned three private start-ups in the beginning of this piece because they all are on viable paths to commercialize fusion in the next five to 15 years. If any of them win, we all win. But they all are underfunded.

TAE Technologies (formerly Tri Alpha Energy) has raised $800 million over the past 20 years and earned notoriety for being backed by Microsoft co-founder Paul Allen. TAE has been experimenting on a $100 million reactor and talks about commercializing the technology in five years, for which they are expected to start raising additional capital soon.

Commonwealth Fusion Systems is backed by the Italian oil company Eni and the celebrity billionaires of Breakthrough Energy Ventures. They expect to add fusion power to the grid in 15 years but have raised only $115 million so far. Again, too little.

General Fusion, based in Burnaby, British Columbia, is currently engineering a $350 million demo plant, set to go live in five years. If that demo plant operates well, General Fusion could have its first commercial plant built in 10 years from now. To date, General Fusion has raised funds from the Canadian federal government, Khazanah Nasional (Malaysia’s sovereign wealth fund), Cenovus Energy, Braemar Energy, Jeff Bezos and Chrysalix, among others.

The common denominator is that, despite their well-known backers, none of these companies currently have all the funding they need to bring fusion to market. These are three of about 22 private companies in the fusion game, so of course, there’s intense competition for the few investors willing to back these high-risk and capital-intensive but very high-return innovations.

A Risky Waiting Game

If TAE, Commonwealth, General Fusion or any of the other companies can demonstrate their technology is ready for commercial systems, there will be a line around the world to invest. But while investors wait to see what happens, the moral travesty of climate change continues largely unabated.

One of these startups is likely to succeed. Is it not time for investors to at least take an option in this industry?

Even the rosiest studies on climate change project a century of rising sea levels, deadly heat, unstoppable wildfires, mass extinctions, crop failure, environmental refugees and other tragedies. Yet here we are working towards a global-scale solution that could be just over a decade away—if enough funding comes through. It is one of the most promising near-term investment opportunities.

If we’re serious about climate change, we should get more serious about fusion energy. We should recognize the opportunity to fund fusion energy projects that are in or nearing the prototype stage. For everyone’s sake, I hope that private investors and national governments will see this opportunity and take a more active role in supporting this game-changing technology.

At this point, it’s hard to imagine that Earth will remain a habitable planet without a revolution in clean energy. Fusion is ready to leave the laboratory. Who will have the courage to help bring it to market?