ABINGDON, England — Harnessing fusion energy into something commercially viable — and maybe, ultimately, a clean source of power that replaces fossil fuels for centuries to come — has long been considered by some as the ultimate moonshot.
But investor interest in fusion energy continues to slowly rise and the number of start-ups in the field is multiplying, with an estimated 1,100 people in several countries making their living at these firms. An industry is taking shape, with a growing network of companies that supply highly specialized equipment, like the components of the powerful magnets that fusion devices require.
The British government even recently saw the need to issue regulations for fusion energy — a kind of milestone for a burgeoning industry.
No one knows when fusion energy will become commercially viable, but driving the private investments is a rising alarm about global warming.
“Nobody has a better plan to deal with the climate crisis,” said David Kingham, one of the three co-founders of a company called Tokamak Energy that has raised about $200 million, mostly from private sources.
At Tokamak Energy, a goal is to eventually heat isotopes of hydrogen hot enough so that their atoms combine in a reaction that releases enormous amounts of energy. This is the essence of fusion, often described as the energy behind the sun and stars.
At the company’s laboratory in a business park outside Oxford, there is a warning on the public address system every 15 to 20 minutes that a test is coming and everyone should stay out of the room with the fusion device, which is 14 feet high with thick steel walls. There is a whirring sound that lasts about a second. Then a monitor shows an eerie pulsing video of the inside of the device as a powerful beam blasts into superheated gas known as a plasma.
During the test, Tokamak’s prototype machine, which cost 50 million pounds to build, reached 11 million degrees Celsius. The scientists figure they need to reach 100 million degrees Celsius, or about seven times the temperature at the core of the sun. They expect to get there by year’s end.
One of the scientists in the Tokamak control room, Otto Asunta, 40, a senior physicist, said that since he joined the company six years ago the number of employees has grown by tenfold to 180, while the work has become increasingly sophisticated.
“It is world-class devices that we build,” he said.
The company’s name refers to a type of device first invented in the former Soviet Union and now the main focus in the field. Tokamaks attempt to achieve fusion by using powerful magnets to contain and compress superheated gas — creating a kind of lightning in a bottle.
The company was founded in 2009 by scientists who thought they could achieve more at a small, nimble company than by remaining at large institutional laboratories, like the British government’s fusion research center at Culham, or ITER in southern France, where a very large device — about 100 feet in diameter — is being built at a cost of $25 billion.
At the time the decision was a lonely one; now they have a lot of company.
Since the early 1990s, the number of fusion start-ups has been growing quickly. Andrew Holland, chief executive of the Fusion Industry Association, says that there are at least 35 companies in several countries, including the United States, Britain, France, Canada and China. They have raised a combined $1.9 billion, largely from private sources, according to a forthcoming study by the association and the British Atomic Energy Authority.
Oct. 16, 2021, 11:12 a.m. ET
Why put money into a far-out quest that has never made a nickel? Investors say they are attracted to the prospect of an early entry into a potentially game-changing technology: a fusion reactor that produces far more energy than goes into it. Such an achievement could have enormous commercial promise.
David Harding, the founder of two investment management firms who has holdings worth an estimated £27 million, is one of Tokamak Energy’s key backers. He said that he had long been attracted to the idea of “cheap unlimited energy through scientific wizardry” but that now the “whole impetus of global warming makes it seem even more of a no-brainer.”
Investors say they are already seeing gains. Mark White, investment director of the UK Science & Innovation Seed Fund, which gave the Tokamak founders their first £25,000, said that judging by prices paid during a capital-raising last year his fund’s total investments of £400,000 were now worth about £7.5 million. By that yardstick, Tokamak Energy’s overall value is around £317 million.
Another investor in fusion is Vinod Khosla, founder of Khosla Ventures, a venture capital firm based in Menlo Park, Calif., that is backing Commonwealth Fusion Systems, a spinoff from M.I.T.
In an interview, Mr. Khosla said the key to making a decades-long project like fusion palatable to investors was to break up the undertaking into milestones that investors can monitor before putting in more money.
“I don’t think we will have trouble funding it for the next round,” Mr. Khosla said.
Fusion’s backers say the advances in magnets and other areas have made the likelihood of success much greater. Contrary to its reputation as a long-shot industry, with the payoff decades away, “there has actually been tremendous progress,” said Phil Larochelle, an investment manager at Breakthrough Energy Ventures. Breakthrough, a venture capital firm that has Bill Gates as its chairman, has also invested in Commonwealth.
Scientists in the field said the influx of private money and the pursuit of diverse approaches to the problem were positive.
“Which one of them wins out in the end is hard to predict, but there will be lots of good R&D,” said Jonathan E. Menard, deputy director for research at the Princeton Plasma Physics Laboratory.
The coming years, though, will require big increases in spending, fusion executives say. Tokamak Energy wants to build a pilot fusion machine at a cost of $1 billion using the powerful magnets it has developed that provide many thousands of times the pull of earth’s gravity. The device could be the basis for the core of electric power plants or for other commercial uses.
Persuading investors to make the leap from single-digit million dollar commitments to the $50 million to $100 million chunks needed for another generation of prototypes is not easy.
“People are still measuring investment returns with the usual metrics,” like how much revenue a company is producing, said Michl Binderbauer, chief of executive of California-based TAE Technologies, which has raised about $900 million, the largest publicly identified amount of money raised by fusion start-ups.
These pressures have led Mr. Binderbauer to try to make a business of some of the technologies that TAE has developed on the road to fusion. A TAE subsidiary is developing treatments for cancer using particle beams. The ventures, he said, are an easier sell for investors.
Fusion’s backers, though, say a tipping point may come when big investors rush to participate. “Once the money starts getting behind things, the sky is the limit,” said Mr. Harding, the hedge fund founder. “There aren’t many fusion projects in the world, but there are many investors.”