Five companies are aiming to have plants operational before 2030

Ed Crooks, Vice-Chair, Americas, Wood Mackenzie

The crises of the 1970s stimulated a great wave of R&D and innovation in energy. The three technologies that today dominate investment in US power generation – solar, wind and shale gas – all took vital steps forward as a result of pioneering research undertaken in the 1970s. In the current crisis, nuclear fusion power could be a technology that takes a similar leap forward. 

The Middle East conflict is spurring countries around the world to find alternatives to imported oil and gas. Now would be the perfect time for the fusion industry to show that it can be one of those solutions. 

The challenges involved in harnessing fusion power are formidable. It is sometimes described as “making a star on earth” because it is nuclear fusion that releases energy from stars. The fusion startup Helion Energy last week reported a new record temperature of 150 million °C for the plasma in its fusion machine. That is about ten times the temperature at the centre of the sun. 

If the challenges can be managed, the advantages of fusion power could be great. Fusion plants do not need uranium: they use deuterium, which can be extracted from water, and lithium as their fuel sources. 

They are intrinsically safer, with no risk of meltdown. If system power is lost, the process will shut down automatically. They will produce less radioactive waste than today’s nuclear fission plants, and the waste they do produce will become safe much sooner. And the fusion power supply chain cannot be used to support a nuclear weapons programme. 

But despite many decades of research, the fusion industry has still not delivered a single working power plant. Not even a prototype. The old joke is that commercial fusion power is 30 years away, and always will be. 

However, recent breakthroughs in fusion technology have consigned that joke to history. There are several companies now aiming to start up commercial-scale fusion power plants not in 30 years, but within five. 

Helion is aiming to deploy its first plant in 2028, and has agreed a deal with Microsoft for 50 megawatts of power from the project. It is also reportedly in talks with the artificial intelligence company OpenAI about a deal to supply 5 gigawatts by 2030. 

Commonwealth Fusion Systems plans to have its first “commercially relevant” demonstration plant online next year, and to have grid-scale fusion generation in service in Virginia by the early 2030s. It has signed a 200-MW power purchase agreement with Google. 

Inertia, a company building on fusion science pioneered at the Lawrence Livermore National Laboratory in California, raised US$450 million in a financing round in February. It aims to break ground on its first grid-scale pilot plant by 2030, and says its electricity will be competitive with the lowest-cost fossil-fuel generation. 

If the fusion companies can deliver working plants on that timeline, they will be able to keep pace with suppliers of small modular reactors (SMRs), the new generation of fission plants. Those reactors often also use innovative technologies, and like fusion plants, are intended to avoid some of the problems that have impeded the nuclear industry in the past. 

The US government, which played a crucial role in the development of wind, solar and shale gas, is backing fusion. The federal government’s Advanced Research Projects Agency-Energy (ARPA-E) this week announced its largest-ever investment in fusion power, making a US$135 million commitment to support research and the commercialisation of the technology. 

However, what is more important for the fusion industry is that it is now attracting significant private sector investment. The Fusion Industry Association says private sector fusion companies have raised about US$10.5 billion worldwide. Of that, about US$9 billion has been raised by US companies.  

The regulatory framework for fusion is coming together. In February, the US Nuclear Regulatory Commission published proposed rules for fusion machines.  

The proposed regulations note that fusion does come with genuine safety issues. When operating, fusion machines are large radiation sources that require shielding and containment. 

However, the rules emphasise that the radioactive hazards created by fusion are more like the risks associated with “byproduct materials”, such as waste from uranium processing, than those associated with running a nuclear power plant.  

Other countries have also been pushing ahead with plans to develop fusion power. The UK set out its strategy last month. The EU is expected to publish its 2026 fusion strategy soon. 

The world has been waiting for fusion power for so long that some scepticism about its prospects is understandable. A recent article in the journal Nature Energy suggested that fusion could remain a high-cost option for low-carbon power, compared to technologies such as nuclear fission, hydro power and geothermal. 

The industry is now reaching a critical moment, where companies will have to demonstrate success or failure within the next five to ten years. 

The Wood Mackenzie view 

Wood Mackenzie has until now taken a cautious view on prospects for commercial deployment of fusion power. We have not built any contribution from fusion into our base case forecasts for electricity supply. 

However, says Jun Yeang Tan, a Wood Mackenzie research analyst for scenarios and technologies, strong growth in global power demand is driving innovation in a range of new low-carbon sectors, including fusion. 

Wood Mackenzie is forecasting that by the end of this year, total investment in fusion power will have reached about US$15 billion. Since 2022, the number of operational fusion machines has increased by 15%, while the number of fusion projects in the pipeline has risen by 53%. 

Countries’ efforts to reduce their reliance on imported oil and gas will add fresh impetus to the sector’s growth. Accelerated electrification and investment in domestic power generation will be two of the key solutions for strengthening the resilience of energy systems. 

In Wood Mackenzie’s scenario modeling the consequences of prolonged conflict in the Middle East, oil and gas import dependence is halved by 2050. Oil demand is reduced by 20% relative to our base case, and gas demand is reduced by 10%. Fusion power could make an initially small but growing contribution to that. 

“All low-carbon technologies are going to play some part in helping to meet growing demand for electricity,” Jun Yeang says. “We are forecasting that worldwide next-generation nuclear capacity will rise to 523 GW by 2050, from a negligible amount today.  

“While we expect most of that to be in SMRs, we think nuclear fusion plants will take some of the market too, especially after 2040.” 

Given the potential advantages of fusion power, that modest contribution in the 2040s may be only the beginning. If fusion companies can prove that their technology works and is commercially viable, it could have a huge impact on the global energy system in the second half of the 21st century. 

Look out for some in-depth research from Wood Mackenzie on the current state and future prospects of fusion power, coming soon. 

Original article   l   KeyFacts Energy Industry Directory: Wood Mackenzie