Feds commit $50 million to for-profit nuclear fusion companies, chasing the ‘holy grail’ of clean energy

A picture shows the winding facility for the construction of poloidal field coils which will be part of the magnetic system that will contribute to confine and model plasma during the launch of the assembly stage of nuclear fusion machine “Tokamak” of the International Thermonuclear Experimental Reactor (ITER) in Saint-Paul-les-Durance, southeastern France, on July 28, 2020. - Thirty-five nations are collaborating in the ITER energy project aimed at mastering energy production from hydrogen fusion, as in the heart of the sun, a potential new source of carbon-free and non-polluting energy.

The United States government is giving money for the first time to private-sector nuclear fusion companies.

$50 million will go towards private fusion companies in public-private partnerships according to the Department of Energy.

Andrew Holland, the CEO of the Fusion Industry Association, told CNBC that the money shows that the U.S. government is serious about building a fusion program.

Holland told CNBC that a transformational new energy source could be brought to the US if the U.S. government puts its full weight behind it.

Nuclear reactor are based on nuclear fission, in which a large atom is split into smaller ones by a neutron. Nuclear fusion is when two heavier atoms collide to form a heavier atom. It is seen as the holy grail of clean energy because it offers unlimited energy, no greenhouse gasses, and no long- lasting nuclear waste. It is difficult to duplicate the process safely in a way that can be scaled and commercially viable.

Since the 1950's, the U.S. government has put money into fusion research. Holland spoke to CNBC. Holland told CNBC that the $50 million for private fusion companies is the first substantial investment by the U.S. government into private-sector fusion energy companies.

This is not for scientific research. Holland said that the program was a commercial development and deployment program.

The full construction of fusion power plants will be much more expensive due to the fact that there isn't enough money for detailed plans. It will help strengthen U.S fusion companies.

Matthew Moynihan, a nuclear fusion consultant, told CNBC that they want a US firm to be the first to achieve net power. Moynihan is talking about a key threshold in the fusion industry where more power is generated than it takes to make a reaction. According to Moynihan, winning this funding will give firms the government's stamp of approval, something investors will want to see as they consider adding more money to the industry.

According to the fusion industry association, the private sector has attracted $5 billion in funding.

Notable recent raises include a $1.8 billion raise from Commonwealth Fusion Systems, a spin out from Massachusetts Institute of Technology research, from a slew of heavy-hitting investors, including Bill Gates, John Doerr, and Time Venture. Another private fusion company, Helion, announced a $500 million raise led by a Silicon Valley insider and which includes the potential for another $1.7 billion in funding depending on Helion meeting specific funding goals.

Congress has authorized spending as much as $415 million in future budgets, even though the program is currently funded at $50 million. The Energy Act of 2020 authorized the program.