Market Intelligence Research
Jul 07, 2025
Fusion could be the new 'next big thing' in energy as hyperscalers eye nuclear
Research — JULY 07, 2025 Fusion could be the new 'next big thing' in energy as hyperscalers eye nuclear Ellie Brown and Dan Thompson The current AI race has reached a bottleneck that can be relieved only by new sources of electrical generation. This scramble for power has garnered interest from hyperscale companies in previously resisted forms of energy, such as nuclear. While fission has been the exemplar of nuclear energy to date, the fusion sector has seen a recent surge in interest, with global funding exceeding $7.1 billion across 50 startups. S&P Global Market Intelligence 451 Research's Datacenter Market Monitor & Forecast reports show that global datacenter power demand will likely maintain a compound annual growth rate of 14% to 2029, with the US growing by 18% in the same time period. Alongside the current demand for power, governments around the world continue to emphasize the importance of energy transition, working to remove greenhouse-gas-intensive generation sources in favor of clean and renewable ones. In the wake of these and other considerations, conventional nuclear (fission) has accumulated considerable hype as of late for energy efficiency and the ability to provide 24/7 carbon-free power. As such, hyperscale companies have funneled unprecedented funds into these nuclear solutions as one of many options to ensure future energy availability for their operations. Context Meta Platforms Inc. signed a 20-year agreement with Constellation Energy Corp. in June to procure 1,121 MW of "emissions-free nuclear energy" from the Clinton Power Station nuclear plant. In 2024, Amazon Web Services Inc. invested $650 million for a 1,200-acre site next to the Susquehanna Nuclear facility for datacenter development. The partnership outlines an initial 300 MW of behind-the-meter power, with periodic increases thereafter. Microsoft Corp. signed a contract to restart Constellation Energy's facility at Crane Clean Energy Center Project (Three Mile Island), an estimated $1.6 billion project. Google LLC's partnership with Kairos Power LLC aims for initial deployment in 2030 with a total of 500 MW by 2035. Amazon.com Inc. has also made a $500 million investment in the X-energy LLC reactor company, with plans to bring 5 GW of power online by 2039. The aforementioned projects all involve nuclear fission. There is, however, a second approach to nuclear energy known as fusion, and while the outlook is distant, fusion reactions are touted as a more efficient and sustainable form of energy generation. While fission has been the exemplar of nuclear energy, the fusion sector has seen a recent surge in interest, with global funding exceeding $7.1 billion across 50 startups. Google and Microsoft have shown a particular interest in fusion through significant investments and partnerships with fusion companies Commonwealth Fusion Systems LLC, TAE Technologies Inc. and Helion Energy Inc. Fission reactors, however, have their own drawbacks, such as highly toxic waste and a currently energy-dependent nature for most nations. The hope of fusion, and the "why" behind heavy investments into the approach by hyperscalers, is that it looks to greatly reduce — or even completely eliminate — these drawbacks. Fusion companies offer a variety of approaches, all aimed at generating the cleanest and efficient source of energy to date. That said, the joke made about fusion is that it is "always a decade away," so the prospect of now having go-live dates on the calendar makes the space all the more interesting to watch. Before outlining fusion technologies, we must first place them in context with the more common fission reactions. Simply put, fission is a reaction where a neutron is fired at the nucleus of an atom, splitting it into at least two smaller nuclei. While there are various fission methodologies, Uranium-235 is the most common fuel source for fission reactors, i.e., the atom that is fissioned. Nuclear is often marketed today as a clean source of energy, but it comes with a unique set of issues. The waste created by fission is less abundant than that of fossil fuels, but it is difficult to draw parallels because it is of a different class. Fission reactors create what is classed as medium- to high-level radioactive waste, which is thermally hot, radioactive and must be shielded for storage. While this varies by element, high-level wastes can take thousands of years to decay to safe levels of radiation. A second issue, perhaps more pertinent for those concerned with relatively immediate gratification, is that 95.4% of US uranium must be imported from a small number of countries. While the US government is looking to ramp up uranium production, as it stands, an increased reliance on nuclear energy will likely march in lockstep with increased dependence on uranium-producing nations. Fusion, on the other hand, is when two nuclei are fused into a single heavier nucleus. These reactions require immense heat and pressure, akin to stars, where fusion occurs naturally. The most common isotopes studied for fusion reactors are variants of hydrogen gas known as deuterium and tritium, which have a comparatively low ignition temperature of 160 million degrees Celsius. Because the heat produced in fusion reactors is well beyond the melting point of any manufacturing material, the superhot plasma must be confined using a magnetic cage, barring it from touching the walls of the container. The most popular design is known as a tokamak or a doughnut-shaped magnetic container. Tokamak designs yield a high degree of control but suffer from a sizable and complex design, making it more challenging for potential commercialization. A second method gaining attention from a few companies is known as a field-reverse configuration. This produces a self-stable torus of plasma, often said to resemble a hollowed-out sausage. One benefit of the field-reverse-style reactor is a smaller physical footprint and less intricate design, potentially facilitating commercialization. Although a variety of isotopes can be fused to create energy, the following discussion will focus on those relevant to the players in the fusion space. As mentioned, the most well-studied method is deuterium-tritium fusion. While promising in terms of understanding and lower temperatures, it comes with a few issues. One is deuterium-tritium, which emits relatively high amounts of radioactive neutrons (80% of energy) that will melt and degrade the mechanical equipment around it, meaning the expensive and complex machinery will need replacement. The second is the scarcity of tritium. It is a rare isotope that must be "bred" by firing neutrons into a lithium blanket, which is often built into the reactor itself, so the neutrons being emitted then create more tritium. While this method is backed by the most research, one criticism levied against it is that it is a better method for neutron generation than power generation. There are also aneutronic or mostly aneutronic methods that emit low levels of neutrons. The first is deuterium and helium-3, which is thought to be a cleaner alternative that emits significantly fewer neutrons. Obversely, it has a higher temperature requirement of 200 million degrees Celsius and potentially undesired deuterium-deuterium and deuterium-tritium fusion do co-occur, which is not aneutronic and will reduce energy output. Helium-3 is also rare and will be expensive to produce; one method of production is the neutronic deuterium-deuterium fusion. The final method for our purposes is one that uses the abundant fuel sources hydrogen and boron. Beyond fuel abundance, this method also in theory boasts the least neutron release (<0.5 %). The downside of hydrogen-boron fusion is extremely high temperatures, upward of 1 billion degrees Celsius, significantly higher than what has been achieved by existing reactors. In terms of waste, fusion produces low-level radioactive waste, which has significantly shorter-lived radioactivity. The more aneutronic the fusion method, the less waste produced. For transparency's sake, it must be made clear that the longest stable fusion reaction is just over 22 minutes and produced negative energy. Only one lab has claimed a case of positive energy generation or Q>1, an efficiency metric with >1 indicating power generation greater than what it takes to run the reactor, also known as breakeven. This claim was made by the National Ignition Facility at the Lawrence Livermore National Laboratory, one of the US Energy Department's research labs under the National Nuclear Security Administration; it is worth noting that this claim is contested in the industry. Regardless, there are currently no examples of fusion power generation via any method at an appreciable scale. The race to fusion The top three companies by investment in the fusion space are Commonwealth Fusion Systems (CFS), TAE Technologies and Helion. Located in Cambridge, Mass., CFS has compiled over $2 billion in funding, the most in the space. This included backers such as Google, Temasek Holdings (Pvt.) Ltd., Eni and Bill Gates. CFS emerged from the Massachusetts Institute of Technology's Plasma Science and Fusion Center and continues collaborating with MIT, providing privileged access to top research institutions and national laboratories. CFS' approach is deuterium-tritium fusion using a compact tokamak reactor known as SPARC. The company aims to begin operations at the SPARC reactor in 2026. The ultimate goal of this reactor is to show proof of breakeven, which the company hopes to achieve in 2027. In 2024, CFS announced plans for the first grid-scale fusion plant in Chesterfield County, Va. The facility will be based on the SPARC design and is expected to produce 400 MW of output. The company plans for the plant to be operational in the early 2030s. CFS is pushing the boundaries of our most well-understood fusion design with the most well-studied fuel source. TAE Technologies, Inc., formerly Tri Alpha Energy, is a US company established in 1998 and based in Foothill Ranch, Calif. TAE's mission is to create the cleanest form of fusion by using the aneutronic hydrogen-boron fusing elements. This would, in theory, reduce radioactive waste. TAE uses a proprietary approach called advanced beam-driven FRC (field-reversed configuration). This allows for a smaller physical footprint and is purportedly more scalable and cost-effective. One major achievement for TAE involves the C-2W/Norman reactor, which has shown proof of concept for stable plasma at 70 million degrees Celsius. The company's next goal is the completion of the Copernicus reactor, which is tentatively expected to be operational by the mid-2020s. Similarly to CFS's SPARC reactor, the goal of the Copernicus reactor is to achieve breakeven or positive energy generation. Importantly, TAE's proprietary FRC has demonstrated comparable results to more common methods of magnetic caging in terms of equilibria as outlined in a recent publication in Nature Communications. Beyond technological innovation, TAE has secured over $1.2 billion in funding from companies such as Google, Venrock and Chevron Corp. TAE has also built partnerships with Google to use AI in process optimization and with universities such as UC Irvine and Princeton to collaborate on advancing fusion technologies. TAE seeks to produce the cleanest and most efficient form of fusion energy. Next is Helion, which has garnered over $1 billion in funding, including an unprecedented power purchase agreement with Microsoft for 50 MW of fusion energy by 2028 — seemingly an ambitious goal. Helion was founded in 2013 and is headquartered in Everett, Wash. Helion uses a deuterium-He3 fusion, which is mostly aneutronic but is thought to be slightly more neutronic than TAE's approach, at about 5% of energy release being in the form of neutrons. However, both deuterium-deuterium and deuterium-tritium fusion will also co-occur in the reactor. Like TAE, Helion uses a form of field-reversed configuration to trap plasma. Its Trenta prototype successfully achieved plasma temperatures of 100 million degrees Celsius, and it is currently developing the Polaris reactor. Polaris aims to operate at temperatures beyond 100 million degrees and achieve breakeven. As a company, Helion places a strong emphasis on the modularization of its fusion technologies up front, to foster commercialization upon successful energy generation. Other companies that have secured at least $100 million in funding include General Fusion, with nearly $400 million in funding. General Fusion was founded in 2002 and is based in Richmond, Canada. General Fusion uses a deuterium-tritium fusion with a spherical tokamak approach and hopes to achieve breakeven in 2026 with its LM26 fusion demonstration machine. Zap Energy, which spun off of the Fusion Z-pinch Experiment (FuZE) at the University of Washington, has attracted over $300 million in investments and uses a Z-pinch design that generates a magnetic field via an electric current in the plasma rather than using external magnetic caging. Tokamak Energy Ltd., an offshoot of Culham Centre for Fusion Energy in Oxfordshire, has also accumulated roughly $300 million in investments and uses a spherical tokamak design. The European company Marvel Energy recently passed the $100 million mark with its unique sodium-potassium-cooled microreactor. Rounding out the list is Denver's Xcimer Energy Inc., founded in 2022, which has received just over $100 million in funding and is harnessing the same laser-driven-inertial fusion that powered Lawrence Livermore Lab's purported breakeven. 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