Over the past several decades, nuclear fusion energy has attained legendary (some might say mythical) status in the minds of the general public. On one hand, it may offer the potential to solve many of our energy needs, providing electricity via a clean, relatively safe process that neither requires imported fuel, nor produces any undesirable waste. On the other hand, its seemingly endless development process has led some observers to declare that commercial fusion energy is 20 years away — and has been for the last 50 years.
Nevertheless, fusion energy’s eternal promise has attracted a number of individuals and companies interested in exploring its commercial opportunities. Do any such opportunities actually exist?
Fusion Energy: The Promise
To be sure, nuclear fusion does offer significant potential as a future source of commercial energy. Attempts to create a sustained fusion reaction for the purposes of generating energy have been conducted since the 1950’s. Although a great deal of progress has been made in this area, most experts predict that it still may be decades before large-scale fusion-produced energy is commercially available to consumers.
To help expedite this process, an international consortium has launched the ITER (International Thermonuclear Experimental Reactor) project. According to its web site, ITER is “a joint international research and development project that aims to demonstrate the scientific and technical feasibility of fusion power.” ITER members include the European Union, Japan, China, India, Korea, Russia, and the U.S. The goal of ITER is to show that fusion can be achieved on a sustained large scale, using the “tokamak” reactor design. Other large scale fusion research experiments exist, for instance NIF and the Sustained Spheromak Physics Experiment, based on various other reactor designs.
If any of these efforts succeed, the potential benefits of commercial fusion power seem almost too good to be true. For example, the fuel of choice is tritium. Although tritium is very rare in nature, it can be produced in abundance within the reactor itself, by surrounding the plasma in a so-called “breeder blanket” of lithium (or some other material) with which neutrons react. This creates tritium, which can then be captured and reused as fuel — in fact, the reactor can produce more tritium than it consumes, thus creating all the fuel it needs on site. The waste produce of the fusion reaction is helium, which is chemically inert and essentially harmless. And unlike nuclear reactors, there’s no danger of radioactive meltdown; if anything goes wrong with the reaction, the plasma instantly disappears, theoretically stopping any danger of radiation leakage. An energy source that is clean, renewable, self-sustaining, and relatively safe — it’s little wonder so much effort has been devoted to its advancement.
Unfortunately, fusion presents some technical and scientific challenges that have proved very difficult to overcome, particularly in creating, sustaining, and handling the plasma (which is far too hot for traditional materials to withstand easily). As a result, for the last several decades the fusion industry has been in more or less perpetual research mode (although it must be noted that this research has produced a number of important advancements). Many different researchers are currently exploring multiple facets of the challenges facing fusion energy. There are competing suggestions and theories concerning the best designs for various components, with different countries often developing and promoting their own designs. All will likely need to be tried and tested multiple times before a general consensus is established within the fusion research community. In addition, the design of the reactor itself is still highly subject to change; radical redesign of the reactor could affect components and materials built for it. Therefore, it may be many years before formal or de facto standards are established for the fusion industry.
In addition, the progress of fusion energy will likely be significantly affected by non-technical issues such as funding, politics, public interest and support, economic conditions, the state of other forms of energy production, and so on. For example, the current high costs and environmental concerns of fossil fuel generation could help drive the development of fusion energy, especially if this were to result in a large-scale financial and technological commitment. Conversely, a breakthrough in alternate energy production such as solar or geothermal, or a decline in energy consumption due to increased energy efficiency and conservation, could cause interest in fusion to wane. In addition, an international effort such as ITER could encounter problems if political conflicts occur between its member nations. And funding for fusion has traditionally been relatively modest (approximately $250 million annually in the U.S.) compared to other government expenditures. ITER represents a significant long-term financial commitment to fusion. However, funding for other facilities remains an issue and can impede the overall progress of research.
Perhaps the biggest challenge of all is the fact that by all indications, commercially available fusion energy is not likely to be available before the 2040’s at the earliest. Small companies breaking into this market may be at a disadvantage compared to larger companies with multiple revenue streams, who can afford to research and develop a product that may not accrue significant revenues for many years.
..and the Opportunities
Therefore, in many ways the fusion industry represents an anomalous, even unique market: currently dominated by research, and not likely to produce any truly commercial revenues (in the form of fusion-generated electricity) for at least 30 years or more. What possible opportunities could such a market offer?
To answer that question, we can consider two possible market strategies. The first is to take the long-term approach, with an eye towards accruing revenue when commercial fusion generated power becomes a reality. The second is to look at fusion research itself as a market, and seek opportunities within that niche.
The first approach is obviously best suited for the well-funded and patient-minded. For example, General Fusion is a private company, initially funded by $22 million in venture capital, that is developing a proprietary design for a fusion reactor. Despite the long term (and seemingly unpredictable) nature of their core business, General Fusion was named one of Venture Capital Journal’s “20 Most Promising Startups” in 2010.
A less ambitious strategy (although a potentially more immediately remunerative one) is to target the fusion research community as a commercial market. As we’ve mentioned, this arena is still fairly wide open, with a broad spectrum of ideas being considered, everything from the overall design of the reactor itself, to components such as the heat exchanger and breeder blanket, to the development of materials that can withstand the unprecedented harsh conditions inside the reactor. Governments are allocating billions of dollars towards this research, which could present attractive revenue opportunities for smaller companies.
Of course, this market is probably not subject to the same dynamics as more established markets. For example, suppose you have developed a plasma-facing material you consider ideal for fusion reactors. Even if your material is superior, there could still be a significant amount of testing done on other materials before a final choice is made. And when/if an ideal material is identified and widely adopted in the fusion community, there is no guarantee that annual spending on it will remain at the same level as when new materials were being constantly tested. This makes fusion research a potentially tricky market, especially for technologies designed for this specific purpose that cannot be leveraged into other applications and markets.
Another avenue into the research market may be through modeling and simulation software. The expensive, highly difficult, and potentially dangerous nature of plasma research has resulted in only a relatively limited number of high-end fusion experiments. Access to these experiments can be difficult to gain. Therefore, other facilities interested in performing fusion research can use computer modeling and simulation for their early designs. This can help researchers develop ideas rather cheaply, while compiling a body of simulation data with which to judge the merits of these new concepts.
In conclusion, it may not be necessary to mount a General Fusion style effort to break into the fusion market; smaller niche opportunities may exist within the research arena as well. In the end, however, the largest reward available to those who participate in the fusion community may not be measureable so much in terms of the amount of revenue to be accrued, but rather in the satisfaction of advancing the science and helping to bring the fusion energy, with all its long-promised advantages, a bit closer to reality.
ITER web site, http://www.iter.org/.
Fusion and the World Energy Scene web site, http://fire.pppl.gov/fpa05_llewellyn_smith.ppt#34.
General Fusion web site, http://www.generalfusion.com/.
“2010 Buyout and VCJ Awards Yearbook Winners,” Venture Capital Journal web site, http://www.vcjnews.com/hybrid.asp?typeCode=64&pubCode=2,
Dick McCarrick is an analyst with Foresight Science & Technology.