Closer than you think?
600 GT CO2 removed between 2023 to 2050. That’s the scale of the potential emissions reductions from replacing coal and natural gas with fusion-powered energy.
For reference: in 2019, the world emitted 51 gigatons of CO2-equivalent greenhouse gasses. Project Drawdown estimates we need to cumulatively eliminate 1,000 GT from 2020-2050 to keep global warming below 2° Celsius.
What You Should Know
What is fusion? Why is it so tantalizing?
Fusion energy refers to the energy released when two smaller atoms ‘fuse’ into one heavier atom. Fusion reactions are the source of the sun’s power; there are ongoing nuclear fusion reactions in the sun’s core, in which hydrogen atoms fuse into helium atoms.
If humans could predictably harness this process, it could offer a new form of clean, 24/7, highly energy-dense, 100% renewable (and safe!) electricity and heat.
24/7: Decarbonizing the grid with renewables will require a massive buildout of energy storage and high-voltage transmission. And yet, even with a massive renewable energy buildout, a sizable share of electricity will still need to come from less variable power sources like nuclear fission, geothermal, hydroelectric, or in the future, fusion!
Energy density: Another benefit of fusion is the amount of energy that it can produce with a small amount of fuel. For reference, a large research university like Stanford uses ~200,000,000 kilowatt hours of electricity annually. A single cup of fuel releases that much energy when used in fusion reactions.
100% Renewable: Fusion isn’t just fuel efficient. The most common fuels for fusion (different kinds of hydrogen) are quite abundant in seawater.
Safe: Unlike fission reactions, fusion reactions are not self-sustaining. Said differently, they don’t occur outside highly specified conditions. This reduces the risk of nuclear ‘meltdowns,’ a bogeyman that has hamstrung the nuclear fission sector.
What megatrends are shifting the industry today?
Fusion has had a long and storied history you can read more about here. Today, many fusion startups are trying to take the baton from an original international collaboration called ITER that poured a ton of capital into developing a commercial fusion reactor.
Many of the startups that have sprung up over the past decade are trying to build smaller, more modular reactors compared to ITER. Companies like Commonwealth Fusion and Helion Energy work on magnetic confinement-based reactors that would be significantly smaller than ITER’s campus. Other startups like Avalanche Energy have gone as far as to propose fusion reactors no bigger than a lunch pail in size.
Part of the rationale for going smaller and modular is informed by trends in nuclear fission, where cost overruns and construction delays have plagued larger reactors.
Market Map: Key players across approaches to fusion
The Global Fusion Industry in 2022 report noted that almost $3B was invested in private nuclear fusion companies in 2022 alone. These bets on fusion companies today are bets on two ideas:
- Reactors will eventually produce more energy than it consumes
- Reactor designs will be replicable at competitive costs
To that end, we divide today’s fusion marketplace by their core technology to highlight and track companies’ (and their investors’) approaches.
This is the reigning design of the past decades of global fusion research. The basic principle is this: Use very strong magnets to keep the extremely hot plasma in the shape of a torus (think donuts) without touching the reactor’s walls. Many advanced labs globally use this design for other applications, adding a source of external R&D for the companies working in this area.
While these designs can look very similar to tokamaks, pinch designs look to add significant new magnetic strength to the reactor by running additional electrical currents within the devices.
Microsoft and Helion recently inked a PPA for 50MW of fusion-powered electricity. The PPA is for 2028, which would constitute a dramatically accelerated timeline for fusion deployment versus most analysts’ expectations (including mine). When they last raised in 2021, Helion earmarked 2024 as a target to demonstrate net electricity gain with their systems.
With a surging interest in fusion, many companies have dusted off promising ideas from past research that countries abandoned due to low funding in the 1970s-2000s. This includes:
- the stellarator, a complex array of rotating magnets,
- the magnetic mirror, which features one of the simplest geometries (the reactor forms a straight cylinder),
- the orbitron, which keeps the plasma contained within electrostatic fields, and
- the dense plasma focus design, which creates tesla coil-like plasma between two concentric cylinders.
Inertial confinement designs feature a pellet of fuel at the center of an array of very high-powered lasers. The lasers all fire to compact the fuel, pushing the atoms together to achieve fusion. While this approach is the first to achieve “more energy out than in” at the U.S. National Ignition Facility, those labs are quick to caution that inertial confinement is typically seen more as an approach for weapons advancement and “to ensure the U.S. arsenal of nuclear weapons is safe and reliable” as opposed to commercial energy generation. The main reason for this is that electricity requires consistent reactions, whereas inertial confinement and firing lasers to stimulate reactions is a more discrete process.
Opportunities for Innovation
🔬 Research and Development
- What’s front of mind for most fusion companies today is simply more research and development to build a device that produces more power than it takes to run. This opportunity takes talent from top scientists and engineers as well as the funding necessary to conduct high-CAPEX R&D.
💲 Intermediate value adds
- As scientists wrangle plasma and engineers determine how to pull usable energy from billion-degree substances, how can leaders in these businesses find monetization opportunities before first-of-a-kind plant operation is reached 10 years from now?
🛠️ Building parts fusion firms need (e.g., better magnets, containment capsules, etc.)
- How can parts manufacturers new and old adjust to provide the cutting-edge components required for the intense environments and R&D efforts needed to make fusion reactors a reality? In particular, how can fusion companies get the long-life neutron-resilient materials they need at low cost?
🥳 What did you think? Let us know here.