Date: November 19, 2024

With all the talk of nuclear and Small modular reactors (SMRs), is the next show to drop nuclear fusion?

I’ve been on “a journey” with fusion. I wrote a few years ago:

“Best case scenarios from private companies are “within a decade”. But these timelines are at odds with publicly-funded projects from the EU, China and the UK coming in between 2035 and 2050. The reality is there will be a long lag between “net gain” and commercial electricity supply despite the huge demand. Even if net gain was achieved tomorrow, it will still take the best part of a decade to make a material impact on grid supply. For our purposes we do not need to distinguish between 2030 or 2040. We can put nuclear fusion on the 2030+ timeframe making it hard to see a pathway for VC funding.”

This was the one I got most pushback on, other than Bitcoin, because of course:

“Bitcoin will grow into large alternative asset but alternative networks with greater functionality will serve computing-based web3 applications while stablecoins and CBDCs make the existing payments infrastructure more competitive and efficient. This scenario sees the Lightning network fail as Bitcoin fails to gain traction and legitimacy as a payments network.“

I’ll still out here calling shots, thanks.

To be clear, I was bullish on fusion generally, but specifically I thought the 15 year timeline for a electricity producing facility was sad for VCs. Especially for early-stage VCs.

It holds up well despite recent new funding by Pacific Fusion and Proxima Fusion and net gain at LLNL. But I read somewhere that the top decile performers change their mind three times a year, so let’s have a little dance shall we?

My assessment relied on two main assumptions:

1. The first wall problem “protecting the reactor from neuron damage” was 1/ unsolved and 2/ when/if solved required a separate testing facility would be required which itself would take 5 years to build
2. Cost. ITER was estimated at $20-25B per GW, even private companies aiming for $2-5B per 100-500MW plant with LCOE of $50-100/MWh, which would need to compete for baseload with advanced nuclear SMRs at $60-100/MWh (likely lower with SMRs), gas with carbon capture at $70-120/MWh, and wind paired with storage trending toward $40-80/MWh.

So in theory, if we could find a way to solve the first wall problem and reduce costs, maybe we could speed up deployment time and the impact of fusion? Maybe…

The hope with all my work has always been that I would build sufficient epistemic infrastructure to make unusual connections between seemingly disparate technologies to uncover novel investment opportunities. What’s striking recently, is how similar the analysis of market dynamics is for SMRs, quantum and now fusion. And how there is no “ground truth”. Just the same trade-offs with proponents arguing that their particular trade-off with win. I will never interview someone who will give me the “truth”. I will just continue to find different scientists making different trade-offs. Getting to market first is most important because of path dependency. No, we need a scalable system to win long-term. No, the only thing that matters is cost for adoption, we need to focus on lower capex and opex to win long-term. Chosen your rider…

• Multiple Technical Approaches:
  • Fusion: Tokamaks, stellarators, magnetic mirrors, z-pinch, inertial, magnetized target
  • SMRs: Light water, molten salt, high temperature gas, liquid metal, microreactors
  • Quantum: Superconducting, ion trap, photonic, neutral atom, topological, silicon spin
• Trade-off Dimensions:
  • Performance vs Complexity
  • Time to Market vs Ultimate Potential
  • Operating Costs vs Capital Costs
  • Scalability vs Initial Capability
  • Material Requirements vs Technical Maturity
• Market Dynamics:
  • Early leaders might not be long-term winners
  • Different approaches might serve different market niches
  • Technical breakthroughs could suddenly shift viability
  • Supply chain and manufacturing capabilities matter as much as core technology

The key insight is that, like in quantum computing, we might see different fusion/SMR approaches winning in different timeframes:

• Short-term (2025-2035):
  • SMRs: Light water designs like NuScale and BWRX-300, leveraging decades of PWR/BWR experience
  • Fusion: Simpler magnetic configurations like Helion's field-reversed configuration or Commonwealth's compact tokamak, which prioritize speed to market over ultimate performance
  • Quantum: Superconducting qubits and trapped ions, which are more mature but face scaling challenges