The combination of increasing electricity demand and the need to decarbonise power generation is leading to a growing supply gap as baseload fossil fuelled power sources are decommissioned. Intermittent renewables alone cannot bridge this energy-supply gap. The total capacity of announced renewable projects is below predicted electricity demand, which the International Energy Agency (IEA) predicts will expand by around 4% per annum. By their nature, intermittent renewables are also unable to deliver the consistent, baseload power required in an always-on world, even with the addition of battery storage. While nuclear fission is a candidate to step up, large cost and time overruns on recent projects, coupled with safety concerns are major challenges to its adoption. Small modular reactors (SMRs) are promising, but, as yet, are unproven, with no deployments in Western countries to date.
All of this is leading to a reassessment of fusion energy as a future option for the supply of clean, safe and sustainable energy. Previously seen as a technology perpetually at least 30 years away from reality, the combination of recent scientific breakthroughs and growing market need are attracting increased investment and interest from both governments and the private sector. The first commercial grid-connected fusion power plants are now expected to come online in the 2040s.
Unlike nuclear fission, which splits atoms to release energy, fusion energy combines light atomic nuclei (usually hydrogen isotopes of deuterium and tritium) under extreme conditions to form heavier nuclei. The gas becomes a plasma (a hot, charged gas made of positive ions and free-moving electrons with unique properties compared to solids, liquids, or gases), and the nuclei combine to form a helium nucleus and a neutron. The process releases energy as high-energy particles, as shown in Figure 1.
As envisioned in future power plants, fusion is similar to the physical process that occurs in stars like our sun. However, it requires extremely high temperatures (more than 100 million degrees Celsius) to overcome particle repulsion and generate fusion plasma. The plasma must be kept at high temperatures and maintained in a stable state. In addition to ignition and plasma control, the efficiency of the energy cycle is crucial in order to ultimately generate more energy than the entire system consumes (called the “breakeven point”).
When commercialised, fusion energy offers the ability to supply scalable, limitless green power with minimal waste and high safety levels. It can be deployed anywhere and delivers constant, baseload energy with a minimal environmental impact.
The fusion technology landscape
There are essentially five technology approaches to successfully achieving fusion:
1. magnetic confinement fusion energy (MFE);
2. inertial confinement fusion energy (IFE);
3. magneto-inertial confinement fusion energy;
4. hybrid magnetic/electrostatic fusion energy;
5. muon-catalysed fusion energy.
Of these, MFE and IFE are the most advanced in terms of energy gain, leading to the creation of a number of well-funded start-ups building on the work and investment of public research projects. In our analysis, half of the 47 fusion start-ups currently operating are focused on MFE, with 20% following an IFE path.
MFE is the most researched fusion energy technology, with scientific projects stretching back to the 1980s, including the Joint European Torus (JET) project and its successor, ITER, which is scheduled to be completed in 2034. MFE confines high temperature plasma using magnetic fields, with the aim of retaining it for long enough to achieve a scientific energy gain, expressed as having a fusion energy gain factor (Qsci) of greater than one, and ultimately Qeng> 1.
IFE takes a different approach. Typically, fuel is confined through focused, high-energy lasers which implode small quantities of fuel pellets injected into the chamber. This produces plasma, which is the medium where fusion reactions occur, releasing energy. Using IFE, the US National Ignition Facility (NIF) at the Lawrence Livermore National Laboratory first successfully achieved scientific energy gain (Qsci > 1), in 2022. Further experiments improved this to a Qsci figure of 2.4, generating 2.4x more energy than used to power the process, despite relying on low-efficiency lasers.
These breakthrough results demonstrated the viability of fusion energy and sparked global interest and investment from governments and the private sector. Reflecting the commercial potential, Bloomberg in 2021 estimated that the fusion energy market could achieve a $40 trillion valuation by 2050.
Further scientific advances have followed. In January 2025, China’s EAST (“artificial sun”) reactor sustained plasma at over 100 million°C for 1066 seconds, setting a new record for high temperature plasma confinement. This milestone stood for just a month, with France’s WEST tokamak, operated by CEA, sustaining plasma for 1337 seconds in February 2025.
Public sector support for fusion
While governments have funded fusion programmes for many decades, their focus has now changed, from early-stage research to activities that seek to commercialise the technology, as part of efforts to decarbonise national electricity generation and ensure long term energy security. Japan published a national fusion strategy in 2023, followed by Germany, South Korea, the UK, and the US in 2024. China and Canada have not announced formal strategies but have created consortia to focus national efforts and activities. The German government’s March 2025 coalition contract included a commitment to further research on fusion technology, aiming to build the world’s first fusion reactor in Germany.
Governments are working closely with the private sector to accelerate progress towards commercial fusion plants, including leveraging of public–private collaborations, establishing technology hubs, funding fusion infrastructure (demonstration plants and laser technology), developing and educating the workforce, and creating new supply chains. The US Department of Energy provided $46 million to eight private fusion firms in 2024, while in January 2025 the UK government pledged $500 million to support the development of UK fusion over the next two years.
In Germany, the state of Hesse signed a memorandum of understanding in March 2025 with Focused Energy and partners including RWE and Arthur D. Little to create a potential consortium. As part of this it has committed €20 million in public funding this year to support the initial stages of creating a pre-commercial laser fusion power plant on the former Biblis nuclear site.
The growth of private sector fusion
Figure 2 provides an overview of fusion funding, by technology.
In 2024 private fusion companies closed successful funding rounds totalling more than $1 billion, including investments raised by Xcimer Energy, EX-Fusion, Focused Energy, and Marvel Fusion. In total, the sector saw more than $7.1 billion in investments by the middle of 2024, with a CAGR growth of 21% since 2022.
Investments are continuing. So far in 2025 Marvel Fusion has secured a €113 million Series B funding round, from backers including EQT, EIC and power industry player Siemens Energy. In January 2025 Helion Energy closed a $425 million funding led by SoftBank Vision Fund 2, giving it a valuation of $5.4 billion. Type One Energy has announced plans for a 350 MW pilot plant in partnership with the Tennessee Valley Authority (TVA), while Italian energy company Eni is working with Commonwealth Fusion Systems to commercialise its technology.
Multiple companies and national governments have announced timelines for the commercial grid connection of fusion energy power plants, as shown in Figure 3. While these may prove overly optimistic, they do demonstrate the accelerated progress within the field.
Alongside governments, the sector has attracted investment from a range of major companies and high-profile individuals, such as Jeff Bezos, the founder of Amazon and Sam Altman of OpenAI. Some investors, such as venture capital funds, are typically early-stage funders of start-ups, but a number of others are more strategic. Cloud data centre operators such as Google and Amazon, who have committed to relying on clean energy 24/7 have invested in fusion start-ups to guarantee future energy security. Global energy companies, such as Equinor, Eni and Chevron have also made strategic investments as part of their wider strategies.
The four challenges to commercialisation
Translating energy gains proven in the lab to a commercial scale is a complex, long-term programme. Success means overcoming four major challenges:
1. Technological readiness: scaling all components to ensure they are mature and proven at scale.
2. High circulating power requirements: achieving a high enough energy gain to power the plant’s systems while generating energy.
3. Power plant scaling/building costs: fusion plants will require the creation of often new, resilient and specialised components that are suitable for commercial use.
4. Regulatory frameworks/public acceptance: currently fusion regulations are not fully formulated, while the industry needs to convince the public around fusion’s safety and cost benefits.
None of these challenges can be solved in isolation and success requires companies and governments to take a gradual approach. They must build capabilities and technology readiness over time, scale manufacturing capacities from one-off to batch mode, and engage with regulators and the general public. This requires the development of an entire fusion ecosystem, with technology vendors, research/academic institutions, manufacturers, energy companies, industrial players/customers, investors, governments, and regulators all working together.
Embracing the fusion opportunity
An increasingly electrified world requires clean sources of baseload power as fossil fuel generation is switched off. Thanks to recent scientific breakthroughs, increased investment and government support, fusion energy has the potential to step up to provide this cost-effective, green, always-on power. Momentum is accelerating and while there are challenges to be overcome, a concerted, ecosystem approach should mean that the first fusion energy power plant is likely to connect to the grid within 20 years, providing a route to potentially limitless, safe and clean power.
