Why tech investors are betting on energy's Pentecost

The promise of fusion energy has long been out of touch with reality.

Widely regarded as a holy grail technology due to its potential to produce nearly limitless clean energy, fusion power cannot be brought onto the grid despite decades of research. There's a joke going around that says, “Years away.”

But that timeline may finally be compressing, thanks to recent technological advances and increased capital from private investors such as Bill Gates, Jeff Bezos and Sam Altman. The industry has raised more than $6 billion in funding to date, according to data from the Fusion Industry Association (FIA), with companies like Google (GOOG) and Chevron (CVX) also part of a growing list of backers. I am.

“Previously, it was always the government that invested in the Department of Energy and other governments around the world,” FIA CEO Andrew Holland told Yahoo Finance. “Well, right now private industry, private companies, startups are saying, 'What do I need to design from scratch?' How do I design for commercial applications?” So how many? A different calculation will be required. ”

“A completely new energy source”

Fusion energy has been considered a game changer, primarily because of the way it produces power. Unlike nuclear fission, which occurs when a neutron hits a larger atom and splits it into two, fusion occurs by taking two atoms and colliding them to create a heavier atom.

The nuclear fusion process is the same process that powers the sun and other stars. Even more attractive to researchers, fusion does not produce nuclear waste that can be weaponized.

“Successful development of fusion energy could dwarf even AI in terms of its implications for humanity,” said David Callaway, founder of Callaway Climate Insights. “We're talking about a completely new energy source.”

Despite excitement about its potential, technological advances have been largely confined to government research laboratories.

In 2022, researchers at Lawrence Livermore National Laboratory successfully ignited it. This is an important milestone, demonstrating that it is possible to generate more energy than is required to cause a fusion reaction. However, that energy increase lasted him less than a billionth of a second. Researchers are now trying to scale up that plasma reaction to make it sustainable for commercial use.

WASHINGTON, DC - DECEMBER 13: Dr. Marvin Adams, Deputy Director for Defense Programs at the National Nuclear Security Administration, speaks at a press conference at the agency about what Lawrence Livermore National Laboratory has used for breakthroughs in fusion research. Hold up a cylinder that is similar to. Energy Headquarters in Washington, DC on December 13, 2022. Officials announced that an experiment at LLNL's National Ignition Facility achieved ``ignition,'' when the fusion energy produced equals the laser energy that started the reaction. This is a major advance that has the potential to generate abundant clean energy in the future. (Photo by Chip Somodevilla/Getty Images) — Marvin Adams of the National Nuclear Security Administration holds up a cylinder he claims is similar to those used for breakthroughs in fusion research during a press conference in Washington, D.C., Dec. 13, 2022. (Chip Somodevilla/Getty Images) (Chip Somodevilla, via Getty Images)

Challenges remain in the race to commercialize fusion

Currently, more than 40 startups are racing toward the goal of being the first to commercialize fusion. Washington-based Helion Energy has set one of its most aggressive goals, signing a commercial agreement with Microsoft (MSFT) to supply electricity produced by nuclear fusion over a four-year period. Meanwhile, MIT-backed Commonwealth Fusion Systems has raised funding from Gates' Breakthrough Energy Ventures, Jeff Bezos, Richard Branson and others, and hopes to have a commercial plant up and running by the 2030s. We aim to do so.

Bloomberg Intelligence estimates that if fusion energy captures just 1% of the world's gigawatt energy output, its valuation would likely increase to $40 trillion.

“What we do know is that a series of highly targeted, goal-driven experiments and research efforts are underway around the world to try to solve the remaining challenges.” DIII-D said David Pace, deputy director of the National Fusion Facility. It is home to the nation's largest magnetic fusion facility and is funded by the Department of Energy. “These challenges are very focused on issues that prevent the construction of facilities that generate net energy and convert that net energy into electricity.”

Overall view of the circular bioshield at the construction site of the International Thermonuclear Experimental Reactor (ITER) in Saint-Paul-les-Durance, southern France, on November 7, 2019.Reuters/Jean-Paul Pellissier — General view of the circular bioshield inside the construction site of the International Thermonuclear Experimental Reactor in Saint-Paul-les-Durance, France, November 7, 2019 (Jean-Paul Pélissier/Reuters) (Reuters/Reuters)

The government is also increasing funding to accelerate commercialization. The US government has earmarked a record $1.48 billion for fusion research in its 2024 budget alone. And in France, home to the world's largest fusion reactor known as ITER, 35 countries are working together to build the estimated $20 billion facility.

But the path forward, including the process by which fusion energy is likely to be commercialized, is far from clear. For example, facilities such as ITER and DIII-D utilize donut-shaped machines known as tokamaks. The machine uses powerful magnets to confine and insulate the plasma, ensuring it is hot enough for fusion reactions to occur. Lawrence Livermore National Laboratory's breakthrough was achieved through a process that uses lasers.

Experts say the key to commercialization is building smaller, cheaper reactors quickly, in addition to maintaining net energy gains. In the latest FIA report, 25 companies expressed optimism that the first fusion plants could power the grid by 2035.

In the face of climate change, securing reliable sources of clean energy takes on new urgency to advance the commercialization of fusion, as governments aim to limit global warming to 1.5 degrees Celsius. ing.

At the recent United Nations Climate Change Conference, former White House climate envoy John Kerry called for international cooperation to accelerate progress in fusion energy, while recognizing the “scientific and engineering challenges” of fusion energy. A framework was presented.

“There's not much other choice. We have to invest in something,” Callaway said. “We have to give a hurrah to technology in order to respond to climate change and solve this problem that pits oil interests and gas interests and countries against each other. There will be more stories to come.”