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【Twilight in the Nuclear Fusion Industry: Rise of Private Companies】
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There has been a well-known joke about the nuclear fusion industry that starts with people asking “How many years away is fusion energy?” Interestingly, the answer to this question differs in the Western version and the Chinese version, which are “always 30 years away (western)” and “always 50 years away (Chinese).” We don’t need to get to the bottom of which phrase is more scientifically correct. Rather, some scientists nowadays are making fun of this, correcting it into “now it should be said always 20 years away.” Indeed, on the both scientific breakthrough side and the social/private investment side, controlled nuclear fusion technology now seems one step closer to our daily life (but the remaining pathway may still be 999 steps).
Brief History of Nuclear Fusion
Compared to other Western countries, China entered the nuclear fusion industry at a very late stage, approximately 40 years later than developed countries. When the Western countries first started fusion R&D, the scientists held a highly positive attitude toward the future outlook. Witnessing the fast-paced development of nuclear fission power plants, the scientists were hoping that fusion technology may follow a similar speed of advancement as fission technology – that is after 50 years, nuclear fusion power plants would be commercialized everywhere in the country. However, due to various technology bottlenecks and historical reasons (such as the Cold War and financial crisis), the progress of fusion R&D has entered a frozen stage for the past decades. (The details can be found in Pic 2.)
After having an obvious bottleneck in enlarging the triple product (the parameter that indicates the performance of a tokamak) with the existing devices, due to the limitation on the engineering parameters, scientists from different countries have reached a consensus that if the scaling law of energy confinement is correct, building a larger-sized device will be crucial. As a result, an international collaboration project on building a 28-meter diameter, 30-meter height Tokamak was initiated in 1985. ITER is designed to reach a Q>10 (a parameter measuring the feasibility of commercialization). If this target can be met, it will make a historical breakthrough and each country will specify the relative targets in the next stage. Unfortunately, ITER has just finished its bottom part of installation in 2023. The remaining part may still take 15 years to finish manufacturing and installation (from an optimistic point of view).
Pic 1: Triple products of the Major Fusion Devices in the World
Source: Integral’s graph plotted based on 聚变点火原理概述, 谢华生，”文献中给出的各实验装饰所达到的参数 (Wurzel, 2022)”
China started its R&D with the heritage device from the Soviet Union, which is also the country that invented Tokamak. In the beginning, the prototype Tokamaks in China were simply the modifications of the gifted tokamak from the Soviet Union and Germany. After developing a few upgraded generations, ASIPP (Institute of Plasma Physics under Chinese Academy Of Sciences) independently developed the first domestic tokamak EAST (short for Experimental and Advanced Superconducting Tokamak). The first EAST plasma was generated in 2006, marking the first milestone of the Chinese fusion R&D progress. By 2023, EAST has made several world records including the most eminent one over 4-minute operation under H-mode.
In recent years, several eminent Chinese scientists who previously worked in foreign national fusion laboratories or foreign private fusion companies have decided to return to China. Many of them joined the start-up private fusion companies in China, leading a second wave of nuclear fusion R&D. As the concept of decarbonization has been attracting a large amount of private investment, the development of the nuclear fusion industry may finally witness an acceleration.
Pic 2: Timeline of global and domestic nuclear fusion history
Source: Public information summarized by Integral
There are 3 main technical problems hinder D-T fusion reaction from commercialization, which apply to both compact and conventional tokamak - first wall material, tritium breeding, and industrialization of superconducting material. These areas can also create the potential investment opportunities rising in the near future.(For details for the D-T tokamak bottlenecks and the solution suppliers, see our coming reports.)
While the national laboratories all choose to focus on the conventional Tokamak route, the private companies tend to concentrate on developing the compact Tokamak. The current small-scale tokamak is not aimed at commercialization, but to verify the feasibility of this technical route (having a spherical structure that narrows the space of the central coil). Once the feasibility is verified, a large amount of social capital will inevitably flow in, and then commercial development can be quickly promoted. Currently, 2 start-up fusion companies in China have been receiving recognition from the public, which we will introduce later.
A Global Upsurge in Fusion Industry Investment
In recent years, there have been more fusion activities than ever, and not just in the government/national research labs. There is also an emerging private fusion industry that attracted billions of dollars in capital. Investment in the global fusion industry has reached a cumulative 6.21 billion dollars, up from 4.8 billion dollars in 2022.
Pic 3: US private fusion investment vs China fusion investment
Source: Integral’s graph plotted based on DOE public data (US part) and Integral’s summary (China part)
That 2021 surge may be a precursor for investments to come if mainstream investors decide to jump into fusion. Several milestones happened this year. MIT developed the YBCO superconducting coil that can reach a magnetic strength of about 20T, which is almost triple the current strength. Meanwhile, NIF announced that the inertial confinement project made a historic breakthrough of Q>1, which has been the first time in the world that the output energy is greater than the input energy. Lastly, the amount of private investment has been fluctuating much, while the amount of public investment has been staying the same. After focusing on wind and solar energy, many investors are now interested in nuclear fusion as the next promising opportunity.
Private Chinese Fusion Companies Coming into Public View
In 2022, the public was struck with a piece of news that Mihoyo (one of the most well-known Chinese gaming companies in the overseas market) invested in a nuclear fusion start-up company named Energy Singularity. By that time, merely no one knew what Energy Singularity was nor the exact details of what they did on nuclear fusion. As people recognize nuclear fusion as the always 50-year joke (still as of today for many people), many started to guess why Mihoyo decided to invest in this industry, which seems to have no crossing whatsoever with mobile games. Later on, there was a leaked WeChat history online showing that the CEO Mr. Liu Wei invested in Energy Singularity purely from his interests to foster the independent development of the domestic fusion industry. Here, we don’t discuss the authenticity of that chat history, rather it represents a rising trend that besides the private investment companies, billionaires are starting to invest in this industry (Bill Gates, Jeff Bezos, Sam Altman, etc.). Like Liu Wei, some of them have no common ground with clean energy whatsoever. However, they all believe in the future of fusion energy, despite that it may take a long time to actualize the future.
Besides the famous individuals, venture capital companies are the major forces to foster these start-up companies. According to the Fusion Industry Association, the amount of private investment has greatly exceeded the amount of public investment from the government, especially since 2021. Besides the fusion energy companies themselves, some upstream suppliers (like the superconducting material company and structural material company) are now attracting new investors as well.
American Department of Energy and the White House have started to encourage public-private partnerships, to expedite the commercialization of compacted devices instead of holding off till ITER's uncertain development. This trend has also been observed in China in 2021 with two cases – the partnership between ENN (a clean energy solution provider) and SWIP (another national fusion laboratory) and the establishment of Neo Fusion with the investment from the municipal government and NIO (a leading NEV OEM).
Company 1: Startorus (星环聚能)
Pic 4: Sunist-2 Tokamak
Source: Startorus official website
Startorus Fusion was established in 2021, and incubated from Tsinghua University. Tsinghua University has over 20 years of R&D in fusion energy and the top university decided to do fusion research in China.
Sunist-2 is a high-temperature superconducting spherical tokamak with high confinement performance, which uses magnetic reconnection to heat the plasma until fusion reactions occur, which allows the device to be more compact, smaller, and less expensive. It was a technology transfer from Tsinghua University.
Company 2: Energy Singularity (能量奇点)
Pic 5: Honghuang-60 Tokamak Components
Source: Startorus official website
Energy Singularity was established in 2021, by a group of doctors who came back to China after working/studying overseas. Currently, there are 80 employees with 30% PhD and 28% masters; 20% employees with international education/working background.
Energy Singularity holds a similar view to Commonwealth Fusion Systems, which hopes to test for the 20T coils, using the same YBCO superconducting coil materials. The current CTO of Energy Singularity was a Fellow of the American Physical Society and the director of DIII-D. In addition, he was the Chief Experimental Strategist of TAE Technologies.
Besides these two, there are other new companies such as ENN (focusing on p-B reaction, a different mechanism that in theory has high efficiency but also higher temperature) and NEO fusion (only at the concept stage, no public information so far). Despite the uncertainty, a sizable amount of capital is flowing into both businesses from the public and private sectors. The chart below summarizes the recent investment activities in the Chinese fusion industry.
Pic 6: Chinese Fusion Investment Summary
Source: public information summarized by Integral
Conclusion
Spherical Tokamak will remain the mainstream for private fusion companies due to its compact size and lower engineering cost. It is more suitable for the demonstration of distributed power generation projects. As a result, while the large-scale projects (power generation plants, etc.) are relying on the result of ITER, the smaller-scaled projects may be commercialized sooner, as what the investors are hoping for.
There has not been a clear mechanism to calculate the TCO of a fusion power plant (or a simple device for distributed power generation). So many people have been debating on the actual economic return of it. However, this does not hinder the enthusiasm in the investment market, as the current investments are aiming at faster technology iteration.
In addition to fusion technology companies, other upstream companies have also started to extend their business into the fusion field. Namely, the superconducting material companies that develop fusion magnets based on the ultra-high current-carrying capacity of second-generation high-temperature superconducting materials at low temperatures and high fields. The technological breakthrough of such upstream companies directly influences the speed of commercialization of nuclear fusion. We also expect to see more collaboration between the fusion companies and such material companies shortly.
If you like this article, please also refer to our comprehensive analysis report "Survey on Nuclear Fusion Industry in China"
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