Nuclear fusion companies are selling the sun, and venture capital is buying

Fusion power is likely still decades away, while its funders — and the climate crisis — demand a much quicker return.

The CEO of a nuclear fusion industry group shared an striking statistic last week during a meeting at the White House. Eighty-three percent of the companies his group represents expect to see commercial fusion power come online in the 2030s or before — a bold prediction for a power source with 70 years of failure behind it and no obvious path to near-term success.

The optimism within the industry may seem straightforward — it’s from the companies trying to make it happen — but it is also practical. As startups move into a field that was once largely the purview of governments, they need to show a return on investment.

“We are an industry backed by private capital, venture capital,” said Andrew Holland, CEO of the Fusion Industry Association, at the White House, with at least a hint of quiet-part-loud. “So there is a limited time frame that investors have. They want to figure out a way to return their money.” Private firms have raised $3 billion in venture capital funding in 2021 alone.

Unfortunately, nuclear physics doesn’t care much about the length of venture capital funding cycles. Fusion has been the shiny prize just out of reach for well over half a century now: technology that would reproduce the power of the sun and solve the world’s energy woes in one fell swoop. But the technical difficulty of producing usable electricity from the fusion of atoms — rather than splitting them, as existing nuclear plants do — has proved too much for the world’s scientists, from governments and national laboratories to academia. Containing 100 million degree temperatures using magnets or lasers is not the most straightforward of propositions.

Still, the new wave of startups insists it can get us over the hump. “The 2030s will be the decade of broad fusion deployment around the world,” Holland said, with five industry CEOs nodding along to his left. And multiple others at the White House event, titled “Developing a Bold Decadal Vision for Commercial Fusion Energy,” touted the accomplishments of 2021 as a sort of watershed moment in fusion.

But recent achievements only highlight the yawning chasm the industry must bridge to get fusion power on the grid.

In December, the Joint European Torus facility in the U.K., which uses massive magnets to contain the enormously hot plasma where fusion occurs, achieved an output of 59 megajoules for 5 seconds — enough to boil about 60 kettles of water. This doubled the previous record for output, which was set a quarter-century ago. It was also nowhere close to what’s known as break-even, where the output from fusion surpasses the energy needed to power the reactions.

Last summer, Lawrence Livermore Laboratory’s National Ignition Facility, which uses lasers rather than magnets, also achieved a record — 1.3 megajoules — without reaching break-even. The biggest fusion device in the world, another magnetic confinement facility, is still under construction in southern France; its cost has ballooned by tens of billions of dollars, and “full fusion” has been pushed back from a target of 2023 to 2035. These massive devices are all experimental, and none actually turns the energy output into electricity.

Moving the goal posts

Notably, those milestones are taking place in facilities built and run by governments, not VC-backed startups. At the White House summit, the company representatives were confident of fusion’s impending deployment, in some sense almost because of the new funding model’s existence.

“There is accountability in this,” said Michl Binderbauer, CEO of TAE Technologies. “You start with a promise, you put a project plan together, you say you’re going to deliver something in two years, three years, whatever it is — if you don’t, as a private company, you’re gone.”

But history shows that’s not always true.

“We aim to have a commercial plant operational in six years,” claimed the website of one White House event attendee, Helion Energy — in 2014. (It does not have such a plant.) In 2004, another industry leader, Canada’s General Fusion, set a goal of demonstrating “this new clean, safe and economical concept by the end of 2006.” In 2007, the company’s homepage promised “to demonstrate this new clean, safe and economical concept by 2010.” By 2011, the company was aiming for a net gain in energy within four years, projecting that “commercialization would take place before the end of the decade.” (That did not happen.)

Last November, General Fusion, now promising to sell its reactors starting in the early 2030s, announced a new $130 million funding round — framing it as a “prelude” to a bigger round in 2022. Investors’ appetite for fusion power plays has not dried up, even in the face of such repeated delays. In fact, the VC world is salivating for more.

Early in 2021, TAE announced $280 million in new funding. Zap Energy, another White House event attendee that promises a smaller, more modular fusion reactor, nabbed $27.5 million last May, less than a year removed from a previous haul of $6.5 million. And in November, Helion Energy secured $1.7 billion in VC money. Secretary of Energy Jennifer Granholm said at the summit that all told, $3 billion in fusion investments came pouring out of the VC fire hose in 2021 alone.

No climate solution

Throwing money at a complex problem that, in idealized form, really could transform the world isn’t such a horrible idea on its face. But the startup and VC worlds’ entry into the fusion industry has almost certainly skewed the promised timelines. An illustrative example: Back in 2002, when fusion was still almost entirely an academic and government concern, the Fusion Energy Sciences Advisory Committee met at a hotel in Gaithersburg, Maryland, close to Washington. Among the topics discussed that day was whether a new proposed target timeline for fusion power on the electrical grid was overly optimistic. That timeline was 35 years.

The difference between that more cautious discourse and the promises from private industry “is due to the ignorance, self-delusion, fantasizing and need for hyping by the so-called fusion startups,” said Daniel Jassby, a retired nuclear physicist who spent many years at the Princeton Plasma Physics Laboratory, a Department of Energy institute managed by Princeton University. Jassby has written extensively about the fusion industry. He said that while some of the startups may eventually produce advances that will help shepherd in grid-connected fusion power, those results are still decades away at best.

The disconnect in timing and rhetoric isn’t entirely academic or just a matter of separating VC firms from their money. Front and center at the White House summit was the idea that fusion should be considered part of the solution to climate change.

“We’re here today because the world is on fire,” said Alondra Nelson, acting director of the White House Office of Science and Technology Policy, adding that the hope is for fusion to be part of a suite of “clean energy game-changers.” National Climate Adviser Gina McCarthy was even more explicit: “Getting fusion energy to viability could be a critical tool for reducing emissions,” she said. But the idea seems disastrously out of touch with both the urgency of the climate problem and the near-term potential of fusion.

Scientists agree that to minimize the harm from climate change, humanity needs to keep warming to 1.5 degrees Celsius (2.7 degrees Fahrenheit). And that would require the world to halve its greenhouse gas emissions by 2030 and reduce them to essentially zero by 2050. There is nothing about the fusion industry, either publicly funded or private, to indicate it might help with those goals.

“Fusion power absolutely cannot contribute to solving the climate crisis,” Jassby told Grid. “It is simply not possible for private industry or government-funded programs to deliver practical fusion power for many decades, and perhaps not before the end of this century.”

Dave Levitan

Nuclear fusion companies are selling the sun, and venture capital is buying