Powering Up: Investors Warming To Nuclear Fusion

Although much of the talk about clean and environmental tech focuses on topics such as climate change software, electric cars and new battery technologies, investors seem to have found a new favorite in a concept that has been talked about for a century.

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The promise of real commercialized fusion energy seems to have fired up some venture and investment firms which are now betting big—very big in some cases—in the space. Just earlier this month, Cambridge, Massachusetts-based Commonwealth Fusion Systems raised a huge Series B of more than $1.8 billion led by Tiger Global and also included investments from Bill Gates, Marc Benioff’s Time Ventures and about two dozen others.

While the round marks the largest for any nuclear fusion startup—all of which are vying to create carbon-free energy—it was far from the only one.

In early November, Everett, Washington-based Helion Energy closed a $500 million Series E led by Sam Altman—with an opportunity for an additional $1.7 billion tied to reaching performance milestones. Then a day before Commonwealth announced its massive round, British Columbia-based General Fusion raised a $130 million Series E led by ​​Temasek Holdings and included an investment by Jeff Bezos.

Although it may seem the flood of investment dollars is due to the trend toward more eco-conscience investment, those in the fusion industry see something else also driving it. That is mainly the fact we likely are now years—not decades—away from commercializing carbon-free energy.

How close?

Before laying out a timeline for fusion, it probably is important to understand what it is. In its most simplistic explanation, fusion energy is created when two atoms are merged—that merging causes a release of energy which in theory can be harnessed and has zero carbon emissions.

“You are talking about the holy grail of energy,” said Scott Krisiloff, Helion’s chief business officer.

Helion plans to use its new cash to help complete the construction of Polaris—its seventh-generation fusion generator—which it broke ground on in July. The company is aiming to use Polaris to demonstrate net electricity production in 2024.

Krisiloff said that time frame is possible due to other technology advancements in the last decade-plus that have made Helion’s technique for fusion possible. Things such as new switches and even modelling software that did not exist several years ago have made commercializing fusion energy more of a reality than ever before.

“There is lot of enabling tech that has more recently been developed that has made our approach possible,” he said,

Similarly General Fusion is hoping to be able to demonstrate the ability to economically produce fusion conditions by 2025 at the U.K. facility it is building. Greg Twinney, the company’s CFO, said progress in areas such as plasma physics and other tech have made the company’s target timeline possible.

“There’s just been significant advancement in the past 10 years,” said Twinney, mentioning improvement in advanced computing and 3-D printing in particular.

More is needed

While tech advancements have played a role in fusion’s rebirth with investors, another driver that has field new investment is the realization that while many first-gen cleantech renewable energies may help the battle climate change, alone they will not be enough.

“There is now the recognition of the global imperative to fight climate change,” Krisiloff said. “And wind and solar alone just cannot produce all the power we need.”

Adam Rodman, founder and chief investment officer at Segra Capital—which is an investor in General Fusion—said while everything from EVs to new wind tech will be needed to battle climate change, his firm has remained bullish on nuclear fusion due to what success would mean in the field.

“Investors are realizing the limitations of renewables,” he said. “Fusion will be unrivaled in terms of clean, zero-waste energy. It has been overlooked for 10 years as people have focused on other things.”

Rodman said the flood of new investment also is due to the fact that fusion is no longer just theories or small scale models.

“If it was still in the garage phase, you would not see this amount of capital,” he said.

Twinney said it is not at all out of the question that there could be a commercial fusion facility fully up and running by the end of this decade; meaning decades of promise could finally pay off for both developers and investors.

“It is important to enter these investments with a realistic timeline,” said Rodman, adding that while revenue production may be years away, there is a significant value in demonstrating the ability to disrupt a multitrillion-dollar energy sector.

“We have a detailed day-by-day gameplan,” he said. “This is a very exciting time in the space.”

Illustration: Dom Guzman