Feds commit $50 million to for-profit nuclear fusion companies, chasing the ‘holy grail’ of clean energy

The United States government is pouring a significant amount of money into private-sector fusion companies for the first time in the latest sign of how momentum is building behind the “holy grail” of clean energy.

At the Global Clean Energy Action Forum in Pittsburgh on Thursday, the Department of Energy officially announced that $50 million will go to private fusion companies in public-private partnerships.

“This money means the U.S. government is getting serious about building a fusion program that will have commercial significance in an accelerated time frame,” Andrew Holland, CEO of the Fusion Industry Association, an industrial trade group.

“If the U.S. government puts its full weight behind accelerating fusion power to the grid, it could bring a transformational new source of energy to the U.S.,” Holland told CNBC.

Conventional nuclear reactors are based on nuclear fission, a process in which a neutron hits a large atom and splits it apart, releasing energy. Nuclear fusion happens when two heavier atoms collide to form a heavier atom – the way stars are powered. It is often seen as the holy grail of clean energy because it offers virtually unlimited energy, emits no greenhouse gases, and generates no long-lasting nuclear waste. But it has proven very difficult to safely duplicate the process in a way that can be scaled and commercialized.

The US government has been pouring federal money into fusion research since the 1950s and today invests about $700 million a year. Holland told CNBC. But that money has gone mostly to national laboratories and universities and to France’s main international research project, ITER.

But the $50 million announced in Pittsburgh for private fusion companies “is the first significant investment by the U.S. government in fusion energy companies in the private sector,” Holland told CNBC.

“This is not about pure science. It’s a commercial development and deployment program,” Holland told CNBC.

The $50 million will help companies draw up detailed plans, but is not enough money to build expensive fusion power plants. Regardless, it will help strengthen and give credibility to American fusion companies.

“This is critical because fusion power is such a bold but vital technology for the United States and our collective fight against climate change.” We want an American company to be the first to reach net power,” Matthew Moynihan, a nuclear fusion consultant, told CNBC.

“Net power” refers to a key threshold in the fusion industry where more power is generated than is needed to catalyze the reaction. “It’s also more than just a paycheck: winning this funding will give the firms the government’s approval, something investors will want to see as they consider adding more money to the industry,” Moynihan told CNBC.

The private fusion industry has attracted nearly $5 billion in venture capital and other financing, according to the Fusion Industry Association.

Notable recent raises include a $1.8 billion funding round from Commonwealth Fusion Systems, an MIT research spinoff, from a host of high-profile investors including Bill Gates, John Doerr, Salesforce co-CEO Marc Benioff’s Time Ventures and Google. Another private fusion company, Helion, announced a $500 million raise led by Silicon Valley insider Sam Altman that includes the potential for another $1.7 billion in funding depending on whether Helion meets certain funding goals.

While the program is currently funded at $50 million over the next 18 months, Congress has authorized spending as much as $415 million in future budgets. The public-private financing program was first authorized in the Energy Act of 2020.