The investment opportunity in fusion technology

Fusion technology holds the key to unlocking a clean energy revolution by replicating the energy generation process of stars right here on Earth. With the world’s continuing reliance on carbon-creating fossil fuels, the urgent need for sustainable alternatives has never been greater. This is where fusion steps in, offering both an investor opportunity and the potential for game-changing startups to address critical energy transition needs. 

In our latest Sector Focus article Dr Melanie Windridge, world renowned physicist, CEO and founder of Fusion Energy Insights gives us the low down…

What is fusion technology?

In a nutshell, fusion technology aims to replicate the energy generation process of stars here on Earth for clean energy production. 

Creating a controlled fusion reaction involves generating extreme conditions similar to those in stars, such as temperatures of hundreds of millions of degrees. This can be achieved using methods like lasers or high magnetic fields. The technology encompasses various complex systems, including machines like Tokamak (a magnetic machine) or laser fusion devices. Additionally, there are supporting technologies like gyrotrons, neutral beam injectors, and cryogenic gases that are crucial for building a fusion power plant.

Fusion technology replicates the energy generation process of stars here on Earth
What are the reasons for the rising interest in fusion technology?

The increasing interest in fusion technology can be attributed to several key factors. Firstly, the field of fusion science has matured over the years, with significant progress in understanding the physics and different approaches to fusion. While challenges remain, the knowledge base is substantial.

Secondly, advancements in enabling technologies have emerged, presenting new possibilities for fusion. Innovations such as high-temperature superconductors, improved lasers, high-performance computing, and advanced manufacturing have positively influenced fusion research and development. These technologies enhance the efficiency, cost-effectiveness, and feasibility of fusion power plants.

Thirdly, the pressing concerns of climate change and energy security have propelled the drive towards clean energy solutions like fusion. Governments now prioritize sustainable alternatives to combat climate change and ensure a stable energy supply. This shift in focus has generated a stronger mandate for exploring fusion technology. We have this vision of a better future and that drives, I think, the vast majority of people who are working in fusion.

Additionally, the fourth factor contributing to the rising interest in fusion technology is increased private investment. The involvement of private companies and investors brings additional resources, expertise, and motivation to advance fusion research and move closer to commercialization.

Collectively, the convergence of mature science, enabling technologies, environmental imperatives, and private investment has fostered a heightened enthusiasm and momentum in the field of fusion technology. Its time has come.

What challenges does fusion technology need to overcome and what barriers still exist?

The transition from fusion science to commercial implementation poses significant challenges. Key obstacles include demonstrating the science of fusion reactions in various approaches and engineering practical power plants. Material selection is crucial due to extreme temperatures and high magnetic fields, while managing the damaging effects of high-energy neutrons. 

The creation of tritium, a vital fusion fuel, within the machine itself requires further research. Overcoming these challenges necessitates advancements in material science, tritium breeding, and engineering. While private companies aim for electricity generation by the early 2030s, addressing these barriers is essential for the viability, safety, and economic feasibility of fusion power plants.

In the current economic climate, investors are increasingly seeking proven returns on investment, presenting additional challenges. When it comes to fusion technology, it is crucial to adopt a long-term perspective. Although fusion is undoubtedly the future, there is a shorter-term investment challenge compared to a year ago—ironically due to an energy crisis caused by Russia’s invasion of Ukraine, which further underlines the need for a clean sustainable energy source like fusion.

A substantial amount of fossil fuels are still expected to be in the energy mix by 2050
What is the investor opportunity?

Fusion technology presents a significant investor opportunity due to the ongoing reliance on fossil fuels in the global energy mix. Despite efforts to achieve net-zero targets, a substantial amount of fossil fuel is projected to remain in the energy mix by 2050. This “hard to decarbonize” segment includes industries like cement and steel production, shipping, aviation, desalination, and other processes requiring large amounts of heat. 

Fusion technology offers potential solutions by generating both electricity and heat, making it applicable to these challenging sectors. Furthermore, fusion’s ability to produce hydrogen, synthetic fuels, provide district heating, and propulsion further expands its potential applications. As a long-term solution, fusion has the capacity to eliminate fossil fuels altogether and contribute to maintaining a sustainable zero-carbon future. The scale of this opportunity is enormous, representing trillions of dollars and addressing critical energy transition needs.

Which companies are doing interesting things in this space?

In the UK, the main fusion companies are First Light Fusion and Tokamak Energy, both based in Oxfordshire. 

First Light Fusion is working on an inertial fusion approach similar to laser fusion, but instead of using lasers to trigger the fusion reactions (via implosion of a tiny fuel pellet) they use a one-sided projectile impact. This simplifies the power plant design. Much of the company’s intellectual property is in the design of the target, which takes the one-sided impact shock and bends it to compress the fuel from all sides while also amplifying the compression. 

Tokamak Energy is working on a spherical tokamak concept with high temperature superconducting magnets. The tokamak design is one of the most mature fusion concepts—a ring-doughnut shaped chamber surrounded by strong magnets that trap the hot fusion fuel away from the walls. The “spherical” tokamak is a squashed-up variation that is more efficient, and high temperature superconductors make higher magnetic fields than other materials, which make a more effective trap for the fuel and enables smaller designs of power plant.

Aside from fusion developers, there are also supply chain and enabling technology companies. 

Kyoto Fusioneering is a spin-out from Kyoto University in Japan that is developing various high performance technologies required for a commercial fusion power plant. It sees itself as an enabler for the fusion industry and, as well as international contracts and collaborations, is forging relationships with Japan’s industrial organizations as part of its supply chain and aiming to contribute towards the evolution of a new high-tech fusion industry.

Then there’s my company, Fusion Energy Insights. We help people keep up to date with developments in the growing fusion industry so that they can see opportunities emerging for their business. With all the news and developments happening in fusion (scientific, financial and political), and the information available from disparate sources, we do the work of curating it all for busy professionals, providing updates and insights. We provide a free newsletter and blogs to all; extended updates and deep-dive Q&A events for members; and Fusion Advisory Services to investors looking for specialist information. 

About the author
Dr Melanie Windridge is a specialist in fusion energy who helps people see the value, opportunities and excitement of fusion. Melanie is the founder and CEO of Fusion Energy Insights, which keeps people up to date with developments in the growing fusion industry. She has a PhD in plasma physics (fusion energy) from Imperial College London, where she remains an Academic Visitor, and she sits on the Advisory Boards of the UK Fusion Cluster and US non-profit Energy for the Common Good. Melanie was previously UK Director of the Fusion Industry Association. In 2022 she was elected a Fellow of the Clean Growth Leadership Network. Melanie is the author of Aurora: In Search of the Northern Lights and Star Chambers: the race for fusion power, as well as writing for Forbes online.

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