The Moonshot Promise of Fusion Energy
They say that the most compelling investment offering combines some sort of impending doom with the promise of abnormally large returns and – this next part is important – you’ll be one of the select few who saw it coming. As you sip dry martinis on the upper deck of your Benetti FB 277, all those small boats you see in the harbor will act as a constant reminder of your Nostradamus-like investing acumen. One example of such an investment theme would be the “U.S. dollar is going to crash so put every penny you own in gold bullion” thesis which frankly doesn’t sound like the worst idea when you consider the country’s heavy debt load and extreme political polarization that occupies all their time these days.
When it comes to disruptive technologies, there’s no shortage of “moonshot investments” with investors looking to “find the next Microsoft.” Founder & Partner of 100X.VC, Sanjay Mehta, describes a moonshot investment as “something radically hard,” a “seemingly unsolvable problem.” He then gives examples of unnamed startups from his own portfolio of moonshots which include a commercial space station (sounds like Axiom Space), an address for everyone in the world (sounds like what3words), and wireless charging as seamless as WiFi (sounds like one of a half a dozen startups). Today, the moonshot technology we’re going to discuss is the seemingly unsolvable problem of fusion energy.
The Moonshot Promise of Fusion Energy
Progress for moonshot startups is always extremely slow, so about once a year we go down our list of known entrants in any given race and see what new press releases have been published and which companies didn’t meet previously stated milestones. Sometimes, we’ll find some over-the-counter (OTC) company trying to take advantage of Joe retail investor so we’ll point this pitfall out much to the chagrin of the investor relations firms trying to promote it. (We found at least one example of an OTC company that “recently made history that is known and understood by only a small handful of plasma/fusion experts, but not by the general public or investors yet.” Uh-huh.)
Most of the companies working on fusion energy happen to be startups. We identified a handful in the article on 3 Nuclear Fusion Energy Companies for Investors to Watch we published back in 2015. Here’s a brief synopsis of how these three startups have progressed since our last piece:
- Helion Energy – No news from the company and no new disclosed funding. They’re been working on the fusion program of the Advanced Research Projects Agency–Energy (ARPA-E) of the U.S. Department of Energy. You can read this Retrospective of the ARPA-E ALPHA fusion program to learn more about what they’ve been doing.
- Tri Alpha Energy – Re-branded to TAE Technologies and released a machine called Norman in 2017 which has 80,000 settings that need to be tweaked just right for fusion to happen – maybe. They’re using some of Google’s AI technology to speed things up and CEO Michl Binderbauer told Forbes they’ll “bring a fusion-reactor technology to commercialization in the next five years.” (Adds note in Google Calendar.)
- General Fusion – Funding continues to pour in with just over $127 million raised so far. This past March, CEO Christofer Mowry told CNBC that “General Fusion has built all the components to create a reactor, but now it needs to develop a prototype, which will take five years.” They’ve partnered with Microsoft in hopes of using AI to speed things up.
So, everything kicks off five years from now – 2024 – and maybe AI can help make that happen. Since moonshots progress slowly, investors need to be extremely patient while keeping an eye on the giant prize. With fusion energy, one tablespoon of liquid hydrogen fuel could generate as much energy as 28 tons of coal with no radioactive waste. Saint Elon Musk describes the significance of nailing nuclear fusion as follows:
It’s a very, very difficult technical problem, one of the most difficult technical problems that humanity will ever try to solve. But if we solve it, we will have “energy forever”.
That’s why efforts are also being made by nations across the globe to develop fusion energy using tokamak fusion reactors.
The Evolution of Tokamaks
In the simplest of terms, the tokamak is an experimental machine designed to harness the energy of fusion. Over 200 tokamaks are in operation around the world trying to generate net energy, something that’s impossible to do because in order to heat up the plasma needed for fusion to take place, you need more energy than what is actually produced. The world record is 16 megawatts produced by fusion using peak power of 1,000 megawatts. It’s a problem we discussed in our piece on Tokamak Energy and How a Tokamak Reactor Works which highlighted another startup we found working on fusion – Tokamak Energy. Since our last article, the company has managed to generate temperatures that are hotter than the center of the sun (27 million degrees Fahrenheit or about 15 million degrees Celsius) using the ST40 tokamak seen below.
An article by Tech Times talks about the achievement and quotes CEO Jonathan Carling as saying, “We aim to make fusion energy a commercial reality by 2030.”
The 200 tokamaks around the world are all consuming far more energy then they’re generating, but they’re all helping provide data for the largest globe-spanning collaboration of its kind with 35 nations participating in the billion-dollar project. Called ITER, the world’s largest tokamak has ten times the plasma volume of the second-largest tokamak in operation today.
The estimate for when we’ll see the first experiments from ITER, 2025, hasn’t changed, so not much to talk about here except to say they’re spending a lot of cash building it.
We’ve kept an eye on the news and noted at least two more fusion startups throwing their hats into the ring.
Founded in 2017, Massachusetts based Commonwealth Fusion Systems (CFS) is a spinout from MIT that’s now raised $115 million in funding from venture funds backed by Bill Gates, Jeff Bezos, and Vinod Khosla. Magnets are a key component for creating fusion energy, and CFS has developed a new type of compact magnet made from rare earth materials that will be used to build “a small, low-cost tokamak-style reactor.” That’s according to an article by Chemical & Engineering News that says CFS plans “to build its first reactor and demonstrate net energy gain by 2025.” As usual, there are skeptics. One of them is Steven Krivit of the New Energy Times who wrote a piece in July of this year claiming that “MIT and Commonwealth representatives have made public fusion claims that they cannot support.” He also had a few choice words to say about our next startup.
Update 05/26/20: Commonwealth Fusion Systems has raised $84 million in Series A2 funding to continue to grow its capabilities to offer fusion power plants, fusion engineering services, and HTS magnets. This brings the company’s total funding to $199 million to date.
Founded in 2011, UK startup First Light Fusion is a spinout from the University of Oxford that’s taken in around $30.5 million in funding so far to develop an approach they’re calling “projectile fusion.” A copper disc is fired at high velocity to collide with a pellet of fuel that they plan to sell to power plant operators with Forbes calling it “the ultimate Nespresso capsule.” The business model of consumables is based on showing fusion this year and then raising money to conduct a “net energy gain” experiment which they hope will take place – you guessed it – five years from now.
Is Fusion Hot or Cold?
Read Mr. Krivit’s criticisms of CFS and First Light Fusion and you’ll quickly see how controversial the topic of fusion energy is. Like doom-and-gloom investment themes, people love discussing controversies. The pieces we’ve published on fusion energy have generated a great deal of interest from our readers as evidenced by the various comments we’ve received, but none more than our piece titled “Brillouin Energy – Is Cold Fusion or LENR Possible?” The article probed the controversial topic of cold fusion, attracting readers whose subject matter expertise far exceeded the mental horsepower we have laying around here. All these bright people were interested in discussing the merits of low energy nuclear reactions (LENR) or what’s also called “cold fusion.”
“Brillouin Energy’s unique form of LENR, the Controlled Electron Capture Reaction (CECR), generates excess thermal energy (heat) by using very small amounts of hydrogen, nickel and electricity for inputs,” says the company. This year, they announced their second paid commercial license “sold to a leading industrial group within the Asia-Pacific region.” Most recently, they were granted a patent for a “crucial component” of their reactor system. So, progress appears to be happening.
However, in our past article on Brillouin we noted some concerns about statements the CEO has made like:
…when we took it to Wall Street, they looked at the upside potential of this kind of technology and said it’s worth trillions, you’re only trying to raise 15-20 million dollars, it makes no sense, we can’t do that.
That statement makes little sense. There are plenty of investors out there looking to invest in moonshots. “To date, Brillouin Energy has financed its growth and development primarily through a series of private offerings of stock to accredited investors,” says the company. Until Brillouin is able to demonstrate net energy in a controlled experiment outside of their work with SRI, retail investors stay on the sidelines. Let some institutional money vet the technology first.
Hot or cold, fusion is a moonshot technology that always seems to be a decade away from commercialization. These days, everyone seems to be five years away from whatever milestone they hope to hit next, so checking in every four years seems to be about right. We also need to consider projects that are operating in stealth mode. Google was quietly working away on the problem for four years before publishing a paper this past May that could find “no evidence that cold fusion is possible.” Then there’s the Lockheed Martin Skunk Works approach to compact fusion which is to build a device that’s 10 times smaller than previous concepts, something that can fit on the back of a pickup truck. They’re not being very vocal about when they anticipate a net energy gain, but our guess is about five years from now.
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