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Nuclear fusion has attracted more than $2 billion in VC and private funding

Fusion fans have been saying for decades that success is just around the corner. Are they finally right this time?

Eric Wesoff
Eric Wesoff
8 min read
Nuclear fusion has attracted more than $2 billion in VC and private funding

"I believe we are at the dawn of the fusion age," said Michl Binderbauer, CEO of TAE Technologies, a company working to develop commercial fusion power.

For more than 70 years, nuclear fusion's massive energy-generation potential has attracted physicists, governments, oil and gas giants, and entrepreneurs. But while nuclear fission plants have been providing electricity around the world since the 1950s, nuclear fusion has never become viable.

Could that be about to change now that private investors are more aggressively searching for a path to cheap and abundant carbon-free energy?

The billionaire class and once-sane venture capitalists are enthusiastically embracing deep-tech fusion physics. More than $2 billion from dozens of private capital sources has been aimed toward commercializing nuclear fusion over just the last few years.

Our sun performs the fusion trick by confining hydrogen and other nuclides with its own massive gravity. Humans, attempting to recreate the physics of the sun on Earth, have to rely on massive magnets, heroic laser arrays or other extreme means to compress and control the plasma.

Fusion science is real, but there's been nothing resembling practical, controlled, Earth-based fusion energy despite billions of research dollars spent over decades.

Either fusion has made great gains toward commercialization or venture capitalists and corporate investors have developed a markedly higher risk tolerance — or we're in the midst of an irrational decarbonization bubble.

Fusion fundamentals

Here are some fusion basics.

Hydrogen, heated to tens of millions degrees Celsius, changes from a gas to a plasma in which negatively charged electrons are separated from positively charged atomic nuclei. Plasma is considered to be a fourth state of matter, and it's the medium in which fusion occurs.

Fusion machines compress and confine the plasma in order to bring nuclei so close as to overcome repellant electrostatic forces and allow the nuclei to fuse. Fusion occurs by virtue of the nuclear strong force and yields helium and energy in the form of neutrons.

Neutrons generated from a fusion reaction would be absorbed in a molten salt or metal surrounding the core. Heat energy collected from the molten material could be used to drive a conventional turbine.

"The fundamental challenge is to achieve a rate of heat emitted by a fusion plasma that exceeds the rate of energy injected into the plasma," according to the World Nuclear Association.

If net-energy fusion does occur, the likely near-term reaction will be between the nuclei of the two heavy isotopes of hydrogen (deuterium and tritium), although other fuel cycles are possible at higher plasma temperatures.

Proponents claim that fusion energy, if harnessed, would have none of the proliferation or meltdown risks of fission. While fusion does pose less of a radioactive waste issue than fission, it certainly comes with its own set of radioactive materials, as well as proliferation and societal health risks.

Fusion technologies

There are a handful of incumbent methods focused on delivering commercial fusion.

Magnetic confinement fusion has been the fusion research method status quo for 60 years. It uses massive, expensive magnetic coil structures to confine and stabilize plasma during the reaction. The most deployed scheme uses a vessel shaped like a hollow doughnut, called a toroid, where the magnetic field forms a closed loop.

Inertial confinement fusion uses high-powered lasers to ignite the fuel and contain a plasma reaction. The National Ignition Facility at Lawrence Livermore Lab is a laser-based inertial confinement fusion research machine that focuses 192 laser beams onto a pea-sized fuel target for a few billionths of a second. Having never achieved true "ignition," the NIF is now more a DOE nuclear stockpile maintenance tool and less a potential energy source.  

Magnetized target fusion, developed by General Fusion, combines magnetic confinement with the compression and heating of inertial confinement.

Z-pinch compresses plasma with an electric current that generates a magnetic field.

Venture-funded fusion

More than $2 billion of private capital has flowed into fusion research in the last few years. Here's a roundup of recent private investments.

TAE Technologies announced $280 million in funding in April, bringing its total to more than $880 million from investors including Vulcan, Venrock, Rusnano Group, NEA, Wellcome Trust, Google and the family offices of Addison Fischer, Art Samberg and Charles Schwab. TAE's fusion design shoots beams of plasma into a vessel where it’s held in place by a magnetic field while spinning. The design shares some properties with particle accelerators, as Katie Fehrenbacher reported for GreenBiz. The company has built a series of its own experimental reactors in Southern California.

TAE plans on commercializing an aneutronic boron fuel cycle that requires even higher temperatures than other fusion methods. The firm hopes to license its technology for deuterium-tritium fusion, while scaling to use the more environmentally friendly hydrogen-boron fuel cycle, Binderbauer said in an interview with Canary Media.

Binderbauer said, "It became clear to us early on that tritium is a very nasty substance, and it drove us to the hydrogen-boron fuel cycle."

The CEO described the TAE approach as "a different concept of confinement that can be made at smaller sites with less complex magnets and can scale to something that can be economic."

"AI and computing have finally caught up [to plasma science], so now we can do remarkable things in real time. We can move the plasma around or we can change its shape. We can also change the rotation rate, we can accelerate it and we can break it."

Last year, U.S. fusion startup Commonwealth Fusion Systems raised $84 million led by Temasek along with Equinor and Devonshire Investors, as well as existing investors Breakthrough Energy Ventures, The Engine, Eni Next, Future Ventures, Hostplus, Khosla Ventures, Moore Strategic Ventures, Safar Partners, Schooner Capital and Starlight Ventures. MIT researchers founded the company in 2018, and it has raised a total of more than $250 million. The 150-person firm is soon expected to demonstrate its high-temperature superconducting magnets at scale.

Canada's General Fusion, a developer of magnetized target fusion, was founded in 2002 and claims that it is developing "the fastest, most practical and lowest-cost path to commercial fusion energy." Investors include Chrysalix Energy Venture Capital, Bezos Expeditions and Cenovus Energy, and it has amassed a funding total approaching $200 million, according to Crunchbase. The company produces a toroid-shaped plasma in an injector, compresses it with a magnetic field and then injects it into a spherical chamber.

Daniel Jassby, who was a principal research physicist at the Princeton Plasma Physics Lab through the end of the 1990s, is skeptical. Last year he wrote, "General Fusion has been promoting variants of its scheme for 20 years, always claiming that it’s about five years away from producing commercial electricity."

An issue with magnetic fusion approaches is that fusion produces neutrons, and neutrons tend to destroy magnets. Zap Energy’s sheared-flow stabilized Z-pinch reactor is designed to compress plasma without using magnets.

Zap Energy raised $27.5 million in Series B funding last month for its fusion energy technology in a round led by Addition, with participation from Energy Impact Partners, GA Capital and Fourth Realm, as well as existing investors Chevron Technology Ventures and Lowercarbon Capital. The company closed a $6.5 million round last year.

Zap sends a blast of electric current through the plasma and creates a magnetic field that compresses the plasma instead of using expensive magnets to do it.

The company envisions a camper-size fusion reactor providing 200 megawatts of thermal energy at a cost that's two orders of magnitude cheaper than a magnetic coil reactor. Shayle Kann, a partner at Zap investor Energy Impact Partners, told Canary Media, "We think Zap's approach may be easier, less capital-intensive and faster."

Helion Energy raised $78 million from Mithril Capital, Y Combinator, Capricorn Investment Group and Dustin Moskovitz for its magneto-inertial fusion that combines magnetic fusion and the heating of pulsed inertial fusion.

The U.K.’s Tokamak Energy has raised over $150 million from private investors including L&G Capital, Hans-Peter Wild, and David Harding of Winton Capital. The firm's spherical tokamak design uses high-temperature superconducting magnets.

LPPFusion is crowdfunding its aneutronic hydrogen-boron fueled Dense Plasma Focus technology.

First Light Fusion, a University of Oxford spinout, is researching inertial fusion energy with seed capital from the IP Group and Parkwalk Advisors.

Government fusion projects

A large tokamak plasma confinement chamber, the International Thermonuclear Experimental Reactor, or ITER, is under construction in southern France, jointly funded by China, the European Union, India, Japan, Korea, Russia and the United States. Like most international consortiums, it is billions over budget and years behind schedule. The first deuterium-tritium plasma is now not expected until 2035. (If the moonshot had relied on international consortiums, we'd still be on the ground in Houston, and we wouldn't have Tang.)

Image: DOE

Jassby opined in 2018 that ITER will produce streams of energetic neutrons whose only apparent function at the tokamak "is to produce huge volumes of radioactive waste as they bombard the walls of the reactor vessel and its associated components."

The Joint European Torus project in the U.K. is a large operating tokamak that uses deuterium-tritium fuel.

China has spent around $900 million on research and has awarded another $900 million to start building a fusion reactor, Reuters reported in 2019. The Chinese Fusion Engineering Test Reactor is a tokamak that is reported to be larger than ITER; it is due for completion in 2030. Meanwhile, China's Experimental Advanced Superconducting Tokamak has achieved plasma temperature at 120 million degrees Celsius for 101 seconds and 160 million degrees Celsius for 20 seconds, according to the Chinese state-affiliated newspaper Global Timesworld-record performances if the reporting is accurate.

Bubble think

There is no silver bullet to save humanity from climate change. Models like MIT's En-ROADS show that we're going to have to use every tool we have to face off against this existential threat. That includes fusion — provided that it's economically deployable.

While the technologies differ, the wildly aspirational language, unachievable and receding targets, and investor herd mentality in fusion are the same bad behavior seen in previous bubbles (the dot-com bubble, the optical switching bubble, the biofuel bubble, the thin-film solar bubble). In fact, it's some of the same investors as in previous bubbles.

See these quotes from fusion CEOs:

“Fusion will provide unlimited, clean, safe and cheap energy.”
"Enough fuel on earth to power all of civilization for the life of the planet. And it's freely available and equally distributed in water."
"In the next three years, I'm 100 percent certain we will get a prototype [fusion] plant on the grid."
"Commercialized fusion power plants will be deployed in the early 2030s."
"We’re on a near-term path to achieving nuclear fusion energy at a low enough cost to replace all fossil-fuel based energy sources and end fossil fuel use."

If that doesn't set off red flags, you haven't been paying attention. Fusion is scientifically feasible, but we're billions of dollars in and no company or lab has come close to reaching energy breakeven.

Innovation drives progress, and we must explore new energy avenues like fusion, but we have to deploy our money and our human capital with common sense. If we're putting tens of billions of dollars into chasing a fusion solution that won't be producing grid-coupled energy for decades to come, we need to assess whether that money would be better spent on commercial solutions that can be deployed today or research that has a more immediate payback.

Eric Wesoff

Eric Wesoff is a prominent industry journalist, analyst, writer, consultant, speaker, thought-leader and expert witness in the renewable energy field.