Fusion Finance Conversation:  An Invitation

Posted by Rezwan Razani on Apr 14, 2012 at 04:00 PM
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Fusion, the energy that powers the sun, has the potential to supply abundant, safe, clean, sustainable baseline power for all mankind, for a billion years. 

We are blocked from fusion’s transformative upside, however, by the technical challenges involved in attaining it. Yet, instead of rolling up our sleeves and giving the problem the appropriate resources it deserves, the fusion program is on the chopping block  and many innovative approaches have already been eliminated. 

How can we make the correct asset allocation decisions to bring about success in fusion?  How can creative financing accelerate the development of fusion?

Conversation Starters

On March 19-21 I attended the Bloomberg New Energy Finance (“BNEF”) Summit and was struck by how:

  • The fusion research community is not very familiar with financing beyond government sources. 
  • The new energy finance community is not very familiar with the fusion situation.
  • The time is ripe for a series of fusion finance conversations.


Convening Conversations:
There are many ways to have fusion finance conversations.  One on one, in groups, in strategic sessions.  Please .(JavaScript must be enabled to view this email address) if you would like to engage in, host, convene or moderate such conversations. Note:  ASP fusion planning event in June.

Rapid Immersion:  Tour Your Nearest Fusion Facility
Given the learning curve, the most engaging way to start the conversation is to head over to your nearest fusion facility, check out the experiments in progress, and discuss the state of fusion research and financing with folks on the ground.  Fusion is happening all around you.  There is more vitality, passion and diversity in the field than is commonly recognized.  .(JavaScript must be enabled to view this email address)


We want to create a sustainable, prosperous energy future.  Harnessing fusion energy would effectively enable such a future, but at present, we have not allocated the necessary resources to the task.

Our strategic goal is thus to bring members of the New Energy Finance community together with members of the Fusion R&D community to hold conversations to determine best ways to finance the fusion solution.

Desired outcomes include:

  • to put fusion financing in perspective – to normalize it;
  • to provide fusion researchers with the broadest possible funding base;
  • to provide funding for a diversified, “multi-target” approach to fusion;
  • to develop financial instruments needed to make it happen;
  • to provide a broader range of people and organizations the opportunity to make a difference in creating our fusion future – to bring a broader range of talents to bear on the challenge and the rewards.

State of Fusion Research

What is Fusion?

Fusion is the process that powers the sun and the stars.  It is the reaction in which the nuclei of light particles (such as hydrogen, deuterium, tritium, lithium, boron) combine together, or fuse, to form different nuclei. In the process, the protons that fuse lose some mass.  And because E=mc2, that is, energy (E) equals mass (m) times a constant (c2: the speed of light squared), when you lose mass, you gain energy.

A lot of energy. 

The power of fusion is much greater than that of chemical energy (such as burning oil or coal) because in chemical reactions, it is electrons that change states, thus it is a fraction of the mass of electrons that is converted to energy.  The mass of electrons is much less than that of the protons and neutrons in nuclei.

If we do the math of E=mc2, one liter of water burned via fusion has the same energy as 2 million gallons of gasoline burned chemically. 

Fusion is different from fission in that fission involves the nuclei of a heavy particle that is split into smaller particles and has chain reactions.  Fusion does NOT involve chain reactions or meltdowns or enrichment risks.  Fusion reactions release more energy than fission and have far less, and in some cases no radiation. 

And best of all, Fusion is green house gas free.

What are the Technical Challenges?

Fusion is more difficult to pull off than fission. To make fusion happen, the atoms of the light particles (such as hydrogen) must be heated to very high temperatures (100 million degrees, or a billion in the case of advanced fuels) so they are ionized (forming a plasma) and have sufficient energy to fuse.  They must then be held together (“confined”), long enough for fusion to occur.

The sun and stars do this via gravity.  On earth, we are developing other forms of “star simulating plasma ovens”.  These include various magnetic confinement systems, in which a strong magnetic field holds the ionized atoms together while they are heated by microwaves or other energy sources; and inertial confinement systems, where a tiny pellet of frozen hydrogen is compressed and heated by an intense energy beam, such as a laser, so quickly that fusion occurs before the atoms can fly apart.  Other approaches exist as well.  See Fusion Divisions .

Can you have a ski slope without the mass of a mountain? Yes

Can you have fusion without the mass of a star?  Yes.  We’ve succeeded in getting fusion to happen on earth.  Now we’re working on how to make it sufficient (surplus energy) and affordable. 

Have we allocated the appropriate resources to this task?  Not yet.

Fusion Spending in Perspective

Oddly, some people seem to think we’ve spent too much on the fusion task.

Modest Requirements:
Good news!  The financing needs for fusion are surprisingly modest. Since 1953, when the fusion program started, the total spent on fusion energy in the US, both Magnetic and Inertial is $24.1 Billion dollars, or about $500M a year (adjusted). [Note:  International fusion spending data pending.]

The finance platform has never been stable. Projects tend to be underfunded.  Many projects were started, facilities built, only to be abruptly abandoned with a change in budget by a new administration, and so forth. 

Despite the inconsistencies and inadequacies, the field has been making impressive gains, advancing faster than Moore’s law

Future Spending Projection. The American Security Project (“ASP”) recommends spending $30-40Bn over the next 15 years (4.6x increase) to accelerate the achievement of fusion, i.e., over $2Bn per year in the US. [Note: more detailed budget breakdowns pending]. 

Is this a lot of money?

That depends on what you compare it to.

Fusion does not rate a square on the billion dollar gram.

Fusion expenditures are a few thousandths of US oil subsidies: US Oil subsidies:  $409Bn a year.  Fusion less than $1Bn.  Note also that the BP oil spill is estimated to have cost ~ $40BN.  One oil spill, one summer, dwarfs the entire fusion program to date.  And yet BP does not fund fusion.  (Not yet.  Come on BP!)

Fusion expenditures are a few thousandths of rest of the new energy sector:
Comparisons that include international fusion expenditure might take that up to at most 1%. As noted in several BNEF speeches, seven years ago, spending in the Clean Energy Sector was $50 Billion/year. By 2011 it had increased to $260Bn, for a total of a Trillion over the past 7 years.  (Granted, $146Bn of this is asset finance.)

Going forward, BNEF attendees were unanimous about the need to increase that amount.  As Michael Leibreich noted (channeling “Social Network”),  “A billion dollars isn’t cool.  You know what is?  A trillion dollars.”  We heartily concur, especially if fusion is part of the energy portfolio being funded.

Fusion Budget Crisis

FY2013 Budget Flat Line:  Announced in February, the US FY2013 Federal Budget is a disaster for the fusion program.

The budget cuts $48M (~16%) from the domestic fusion budget while adding $45M to ITER contributions (to $150M). The US is bound by treaty (per executive order) to support ITER.  ITER costs have been rising faster than expected.  Rather than raising additional funds to meet ITER treaty obligations, the domestic fusion program is being gutted to maintain a “flat line” budget.  This is not good for the fusion program, for the country, or for the planet. 

Save the Alcator C-MOD, MIT.  The largest casualty of the FY2013 budget is the Alcator C-MOD at MIT which is being cut.  In response, students, professors and staff at MIT have put together http://Fusionfuture.org  to inform people of the issues. 

ACTION: Visit FusionFuture.org’s legislative action center and sign the petitions to save the C-Mod.  Government action is vital at this point to reverse the damage.  Make sure your congresspeople know where you stand! 

Alternatives Budget Crisis

The cuts to the Alcator C-MOD came as a shock to the fusion community.  The C-MOD is a key part of the mainline fusion research effort involving tokamaks (a type of fusion device) and to date, projects that were supportive of tokamak efforts have been largely protected.  In contrast, projects that attempted to pursue fusion using a different experimental approach or device have been steadily squeezed from the budget.  See also:  Fusion Research Program Narrows.

These projects tend to have modest budgetary requirements.  For example, MIT’s Levitated Dipole project (“LDX”), defunded in 2010 requires $1.2M per year.

ACTION:  LDX is dormant but the machine has not yet been dismantled.  It could still be revived and the researchers are still attempting to raise funds for it.  Would you like to revive it?  Let us know.  Also, make sure to visit both the Alcator C-MOD and LDX when you stop by MIT.

There are many other projects in the alternatives category which offer the possibility of pleasant physics surprises that will accelerate the fusion program and may ultimately result in cheaper energy from fusion.  In a tight fiscal environment, such untested options are considered too risky and remain stuck in a catch-22 (untested, so don’t test).  The fusion endeavor needs to expand to embrace a multi-target approach, including advanced fuel fusion.

Government Action

Historically, government support of fusion has been erratic. 

In the wake of the FY2013 budget crisis the Fusion Community has pulled together more effectively than before.  We’ve witnessed a robust Fusion Day, effective involvement from the American Security Project and increasing support from members in Congress:

ACTION: Join these efforts!  Sign the Alcator C-Mod Petitions.  Write letters to your Congress members in support of the Fusion Program and the Holt/Bilbray letter.  Get involved with the American Security Project.

We applaud the heroes on the hill for all the work they are doing.  We are nevertheless concerned because:

  • The budget process has many steps and opportunities for disruption and creates a state of uncertainty around the fusion program.
  • The climate of austerity on the hill seems to weigh against success.
  • The “Dear Colleague” letter hints at the need for fusion expansion, but doesn’t go far enough in promoting it, saying:  “The United States would be wise to make a much larger investment in fusion, but at least with level funding for the domestic program and continued contribution to ITER, the United States can maintain its position as a world leader in fusion research, avoid layoffs, and help make commercial fusion a reality.”  We need more.
  • This process is missing a detailed plan and budget which needs to be determined by the fusion community. Musings: The USA has no Plan for Fusion Energy (pdf) - Talk given by Glen Wurden at the FPA starts at Slide 27 of this pdf.

Private Sector Inroads

Historically, the fusion program has received practically all of its funding from government sources. Frustration with government sources and funding options combined with a steady contraction of support for alternatives has inspired some scientists to turn to the private sector for finance, including:

  • General Fusion (32 M$)  –Thick Liquid Liner Magnetized Target Fusion
  • Tri Alpha Energy (120 M$) –Fast ions stabilized colliding FRC
  • Helion –Compressed Colliding FRC
  • Woodruff Scientific –Compact toroid plasmas
  • Lawrenceville Plasma Physics (2M$) –Dense Plasma Focus
  • MIFTI –Staged Z-Pinch for Magneto Inertial Fusion
  • EMC2 (~5M$) –Polywell Inertial Electrostatic Confinement
  • Fusion Power Corporation –Heavy Ion Fusion

Many other projects seek funding but face barriers connecting with the private sector.  Issues include:

  • Lack of experience and connections with private sector.
  • Lack of support from mainline fusion, OFES.  See “Fast Track Peer Review
  • Many science issues still need to be worked on in parallel but are avoided by VC’s (See Google rationale for not funding fusion (yet).)
  • Many fusion projects don’t fit normal commercialization paths - see Compact Modular Fusion Systems Approach (pdf) – Per Simon Woodruff
  • Uncomfortably short time-lines for most in fusion, long for most VC’s,
  • Fears of a “black eye” and “oversold” reputation for fusion if projects don’t work.
  • VC funded projects tend to operate in a climate of secrecy, which slows down the rate of innovation and exchange of information with other fusion projects (stochastic and isolating).

Fusion Financing Challenges

The path to market for fusion requires broad organizational and institutional support.  While stochastic efforts are applauded and inspirational, given the challenges, coordinated efforts would be more likely to pay off in the long run.

Actors to be coordinated include:

  • Fusion researchers, labs and companies,
  • Fusion outreach organizations,
  • OFES (more discussion on paths to market, support for alternatives),
  • ARPA-E and other Government Applied Offices,
  • Strategic investors, VCs, Angels
  • New Energy Financial Analysts (to help develop investment impact guidelines, perhaps modified GIIRS, intangible asset finance, etc.),
  • A diverse Fusion Financing Partnership Council to provide technical, financial and leadership support.

In addition to the topics already covered, the following themes are key to developing effective pathways to fusion.

Make Fusion Boring

Dan Doctoroff gave a keynote speech at the BNEF Summit entitled “The Virtues of Boring.” The goal, he said, is to make new energy finance boring.  New energy should no longer be a political football.  In fact, drop the “new”.  It’s just energy. Our job is to reveal that.  Bring about maturity and normalization, show how rational and secure energy portfolio diversification is. 

Boring?!  The idea of achieving fusion is very exciting.  Likewise, creative finance holds a certain fascination. 

Yet Doctoroff’s speech made me reflect that there is a time to emphasize excitement, and a time to reassure people with the boring.

We invite folks in the finance community to leverage their analysis and creative finance skills to make fusion boring. 

We look forward to the day when fusion financing is normalized and integrated into a broader, coherent, energy investment strategy.

Make the Case for Parallel Fusion Financing

In his TED talk on fission (not fusion), Bill Gates makes an excellent case for a broad based, multi-target approach to advancing fission technology. 

We would like to see a similar case made for fusion. 

At present, the bulk of the ever-shrinking fusion budget is channeled into the two mainline approaches to fusion, ITER and NIF. At the same time, the wide array of alternative approaches, including advanced fuel fusion, have been starved for funds, so have been slowed in revealing their true potential.

A key task of a “make fusion boring” committee is to look at ways to change this trend, to work through tensions this might raise, to normalize the inclusion of alternatives as part of a broad, diversified fusion program.  Rather than neglect or gloss over them in policy discussions, alternatives can be leveraged to increase interest in fusion and raise the credibility of the program. 

One of the key reasons that alternatives are downplayed is that the fusion community is under pressure to claim certainty about results without sufficient experiment or resources. The Charles Seife book “Sun in a Bottle” is a classic example of the anti-experiment bias fusion is subject to. 

Unfortunately this need for premature certainty has led to a cautious program at a time when the field needs to be bold and expansive.  In order to succeed, the endeavor needs permission to fail. As part of “making fusion boring” we need to look at ways to factor in the upside of uncertainty together with the risks.  To that end, some inspiration:

A Marketing Bonus

I suspect that marketing studies will show the idea of multiple approaches to fusion is more compelling than a narrow approach. A main criticism of the mainline approach is that it will be too expensive to make a difference (Gates makes this argument).  The mainline community doesn’t have a good answer to this.  By introducing (and emphasizing) alternatives, we open up the possibility for innovations and improvements of the mainline processes, and of entirely new processes. Fusion is invigorated.

Alternatives increase the chances for rapid breakthroughs and only “threaten” the mainline projects if they actually succeed.  In the meantime, work should progress on all fronts.  This is a straightforward argument, but in a zero-sum funding environment the tendency is to see an either-or situation.

Establish a Fusion Fund

In conversation with attendees at the BNEF Summit, several points were repeatedly raised:

  1. Most investors don’t have much expertise in fusion.
  2. If there is more than one project, how do you pick a winner?
  3. The uncertainty is inescapable.  Even though it’s an important investment that needs to be made, from a financial perspective, it’s gambling. 
  4. You need a billionaire to put aside some money he doesn’t mind losing.
  5. You’ll never crowd-fund fusion.
  6. If fusion is successful, the rest of us are out of business.
  7. There’s a zero sum, special interest effect at work, limiting innovation within the fusion field, and across energy sectors.  The question is, how do we put in place a system that elicits innovation most effecitvely?

These sentiments all point to the value of establishing a fusion fund to pool multiple projects and allow for multiple private and public sector investors.  In light of the above, this fund would need to be structured to:

  1. provide easily comparable information on various fusion projects, (See fusion experiment tracker)
  2. pool multiple projects together to offset the risk, but allow for choice and distribution among projects if an investor so desires,
  3. Factor in the uncertainty of fusion in context with the broader uncertainties of energy, war, global warming, housing bubbles, etc.  Set up/ promote fund as part of a portfolio approach to energy and clarify (make boring) the reasons for including a portion of your investment therein (not just a gamble, the future needs this);
  4. Be open to billionaires and all manner of accredited investors;
  5. Be open to non-accredited investors so that anyone can invest with however small a portion of their income that they are comfortable risking. (This may require some policy changes.) Micro-financing is of particular importance to the Fusion Energy League.  Fusion is about bringing light particles together to release a vast amount of energy.  It would be fitting for a fusion financing vehicle to likewise enable contributions by many more actors.  Unleash the long tail for fusion.
  6. Structure the fund so that people can protect their investments in other energy sectors by hedging (shorting?  Going long?) with fusion. This should be part of a broader energy strategy that everyone follows.  No matter which innovations succeed, we should all succeed.
  7. Incentivize innovation.  Set up the fund to promote the most rapid innovation possible.  Peer review would be involved to vet the projects for inclusion in the fund.  To avoid politicized decision-making and enable market forces to bring about best outcomes, some have suggested a cap and trade approach, in which, within the fund, one can exhaust gains from trade.  Scientists working on one project who notice that another group is more likely to be successful may sell their research shares to that group along with a useful patent or two, such that market forces will bring about the most rapid results.  Transparency would be required.  Other mechanisms may also work. Plenty to discuss!

Time is of the Essence

Global catastrophe looms.  Fusion is in crisis.  How quickly can we turn things around? 

I am inspired by Chad Holliday of Bank of America.  In his BNEF speech, he talked of the “Dupont Bill,” passed in 9 days.  We think that if we get a great mix of people together and host a series of focused, productive conversations about fusion financing, we can come up with effective strategies and financial instruments and get them in play quickly and with suitable policy support.  The intellectual capital is in the room.

Our vision is that by the next BNEF Summit, we’ll have a breakout session to discuss the launch and progress of some of the initiatives that come out of these conversations. Please .(JavaScript must be enabled to view this email address) if you would like to engage in, host, convene or moderate fusion finance conversations.  And come tour a fusion lab!  There is no time like the present.

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