ABINGDON, England – Harnessing fusion energy into something commercially feasible – and perhaps ultimately a clean source of energy that will replace fossil fuels for centuries to come – has long been considered by some to be the ultimate moon shot.
But investor interest in fusion energy continues to grow and the number of start-ups in the field is multiplying, with an estimated 1,100 people in several countries making their living in these companies. An industry is taking shape, with a growing network of companies supplying highly specialized equipment, like the components of the powerful magnets that require fusion devices.
The UK government even recently saw the need to regulate fusion energy – a kind of milestone for an emerging industry.
Nobody knows when fusion energy will be economically viable, but private investment is a growing alarm over global warming.
“Nobody has a better plan to deal with the climate crisis,” said David Kingham, one of the three co-founders of Tokamak Energy, a company that has raised about $ 200 million mainly from private sources.
At Tokamak Energy, the goal is to eventually heat hydrogen isotopes hot enough that their atoms combine in a reaction that releases enormous amounts of energy. This is the essence of fusion, which is often described as the energy behind the sun and stars.
In the company’s laboratory in an industrial park outside Oxford, the public address system warns every 15 to 20 minutes that a test is pending and that everyone with the 4-meter-high fusion device should keep away from the room with thick steel walls. There is a whirring noise that lasts about a second. Then a monitor shows an eerie, pulsating video from inside the device as a powerful jet blows into overheated gas known as plasma.
During the test, the prototype tokamak, which cost £ 50 million (about $ 68 million) to make, reached 11 million degrees Celsius. The scientists assume that they will have to reach 100 million degrees Celsius, around seven times the temperature in the core of the sun. They expect to get there by the end of the year.
One of the scientists in the tokamak control room, Otto Asunta, 40, a senior physicist, said the number of employees has increased tenfold since joining the company six years ago, to 180 as the work became increasingly demanding.
“We build first-class equipment,” he said.
The company name refers to a type of device that was invented in the Soviet Union and is now the focus in this area. Tokamaks attempt to achieve fusion by using strong magnets to trap and compress superheated gas – creating a kind of lightning bolt in a bottle.
The company was founded in 2009 by scientists who believed they could do more in a small, nimble company than in large institutional laboratories like the UK government’s fusion research center in Culham or the ITER in the south of France, where a very large device – about 30 meters in diameter – is being built at a cost of $ 25 billion.
The decision back then was a lonely one; now they have a lot of company.
The number of merger start-ups has been growing rapidly since the early 1990s. According to Andrew Holland, executive director of the Fusion Industry Association, there are at least 35 companies in several countries including the United States, Britain, France, Canada, and China. They raised $ 1.9 billion together, largely from private sources, according to an upcoming study by the Federation and the UK Atomic Energy Agency.
Updated
Oct. 18, 2021, 3:56 p.m. ET
Why put money into a distant quest that has never made a dime? Investors are drawn to the prospect of early entry into a potentially breakthrough technology: a fusion reactor that produces far more energy than it contains. Such an achievement could have enormous commercial prospects.
David Harding, the founder of two investment management firms valued at £ 27 million, is one of Tokamak Energy’s key financiers. He said he had long been drawn to the idea of ”cheap unlimited energy through scientific wizardry”, but that “the whole swing of global warming now makes it even more self-evident”.
Investors say they are already seeing gains. Mark White, Investment Director of the UK Science & Innovation Seed Fund, which donated their first £ 25,000 to the tokamak founders, said his fund’s total investment of £ 400,000, based on the prices paid during a fundraising last year, now worth about £ 7.5 million. By that measure, Tokamak Energy’s total value is around £ 317 million.
Another merger investor is Vinod Khosla, founder of Khosla Ventures, a Menlo Park, California-based venture capital firm that supports Commonwealth Fusion Systems, a spin-off from the Massachusetts Institute of Technology.
In an interview, Mr. Khosla said the key to getting a decade-long project like the merger palatable to investors is to break the company down into milestones that investors could monitor before investing more money.
Commonwealth recently announced successful testing of what is known as the world’s most powerful version of the magnet type, which is critical to many merger efforts, an achievement that has been welcomed by investors.
“I don’t think we’ll have any trouble funding it for the next round,” said Khosla.
Fusion supporters say that advances in magnets and other areas have made the chances of success much greater. Contrary to its reputation as a long-drawn-out industry that pays off over the decades, “there has been tremendous progress indeed,” said Phil Larochelle, investment manager at Breakthrough Energy Ventures. Breakthrough, a venture capital company chaired by Bill Gates, has also invested in Commonwealth.
Scientists in the field said that the influx of private funds and the pursuit of different approaches to solving the problem are positive.
“Which of them will win in the end is hard to predict, but there will be a lot of good research and development,” said Jonathan E. Menard, assistant director of research at Princeton Plasma Physics Laboratory.
However, the years to come will require large increases in spending, say Fusion managers. Tokamak Energy plans to build a $ 1 billion pilot fusion machine, using the powerful magnets it has developed, which increase the earth’s gravitational pull many times over. The device could be the basis for the core of electric power plants or for other commercial applications.
It’s not easy to convince investors to jump from a single-digit million dollar amount to the $ 50 million to $ 100 million needed for another generation of prototypes.
“People still measure returns on investment using common metrics,” such as through merger startups.
This pressure has led Mr. Binderbauer to turn some of the technologies that TAE developed on the way to the merger into a business. A TAE subsidiary develops cancer treatments with particle beams. The ventures, he said, are easier for investors to sell.
However, Fusion supporters say a tipping point could come if big investors rush to get involved. “Once the money is behind it, the sky’s the limit,” said Mr. Harding, the hedge fund founder. “There aren’t many merger projects in the world, but there are many investors.”
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