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Can You Invest in Nuclear Fusion Stocks?

The Fusion Industry Association says that nuclear fusion companies have attracted US$6.21 billion in funding.

Nuclear fusion promises the world an inexhaustible form of energy not dependent on climate-changing fossil fuels. That’s if the world’s scientists can determine a commercially viable route to harnessing it to power the global economy.

While nuclear fusion has been researched for nearly a century, recent advances alongside the push for a zero-carbon economy have led to an explosion of interest from companies seeking to develop reliable alternative energy sources.

Governments are making moves to develop nuclear fusion technology too — in 2022, the US Department of Energy (DOE) released a 10 year strategy for the development of commercial fusion energy with a goal of achieving pilot-scale demonstration of fusion within a decade. As a part of that strategy, in May 2023 the DOE announced US$46 million in funding to several companies working on fusion power plant designs, as well as research and development.

What is nuclear fusion?

Nuclear fusion is a form of nuclear energy that the International Atomic Energy Association (IAEA) defines as, “the process by which two light atomic nuclei combine to form a single heavier one while releasing massive amounts of energy.’ This is the same process that powers the sun, and in fact makes life on Earth possible.

According to the IAEA, nuclear fusion has the potential to produce four times the amount of energy (per kilogram of fuel) generated by nuclear fission power plants, and nearly 4 million times the amount created by burning oil or coal. “In theory, with just a few grams of these reactants, it is possible to produce a terajoule of energy, which is approximately the energy one person in a developed country needs over sixty years,” states the association.

Today’s fusion reactor concepts use a mixture of the hydrogen atoms deuterium and tritium, both of which are “plentiful and easily accessible.’ The former can be obtained from seawater, the latter from lithium. “Importantly, nuclear fusion — just like fission — does not emit carbon dioxide or other greenhouse gases into the atmosphere, so it could be a long-term source of low-carbon electricity from the second half of this century onwards,” notes the IAEA.

The main reason experts don’t see nuclear fusion becoming a viable option for industrial-scale power generation until after 2050 is that there are many engineering challenges that need to be overcome. Those include the requirement to heat fuel to temperatures of more than 100 million degrees Celsius, as well as the need for proper infrastructure and necessary oversight frameworks. However, technological breakthroughs in recent years have left market watchers hoping that readily accessible nuclear fusion energy will become a reality much sooner than 2050.

In December 2022, scientists at the Lawrence Livermore National Laboratory in California achieved the first-ever demonstration of fusion energy. US DOE Secretary Jennifer M. Granholm called it “one of the most impressive scientific feats of the 21st century.” As of December 2023, the scientists had successfully replicated ignition three more times.

The Global Fusion Industry in 2023 report reveals that 25 out of 43 nuclear fusion companies believe that the first fusion plant will deliver electricity to the grid before 2035.

Private nuclear fusion companies

Let’s take a brief look at some of the highest-funded and most advanced companies developing nuclear fusion power plants, according to the Fusion Industry Association. While these companies are not publicly listed stocks, accredited investors may be able to take part in private equity raises.

1. Commonwealth Fusion Systems (CFS)

This Massachusetts Institute of Technology spinout is focused on leveraging high-temperature superconducting magnet technology to bring a commercial fusion power plant to market by the early 2030s.

CFS has garnered more than US$2 billion in funding and is planning to have its SPARC demonstration fusion plant operational in 2025. The company is also a recipient of the aforementioned DOE funding.

2. TAE Technologies

California-based TAE Technologies is developing nuclear applications in the life science, energy storage, electric mobility and fast-charging industries. With US$1.2 billion in funding and key collaborators that include Google and energy and defense company General Atomics, TAE is targeting the early 2030s for Da Vinci, its first prototype hydrogen-boron fusion power plant, to deliver electricity to the grid.

3. Shine Technologies

Last year’s Global Fusion Industry report pegs Shine Technologies’ total funding at US$700 million.

However, the estimate was released before the company completed a US$70 million funding raise in October 2023, which it says will “complete the commercialization and scale-up of the company’s near-term applications of fusion technology, which are used in the industrial, defense, and healthcare markets.”

4. Helion Energy

Backed by OpenAI’s Sam Altman, Helion Energy claims it is “building the world’s first fusion power plant to enable a future with unlimited clean electricity.” According to the Fusion Industry Association, the company has attracted US$577 million in funding. It’s targeting 2028 to bring its pilot plant online, and has inked a power purchase agreement with Microsoft (NASDAQ:MSFT) to deliver fusion electricity. Helion is working with Constellation Energy Group (NASDAQ:CEG), an energy provider, to manage its future electricity transmission.

5. General Fusion

With US$300 million in funding, this Canadian company is looking to bring its proprietary Magnetized Target Fusion technology to the market with its first commercial fusion power plant in the UK by the 2030s.

General Fusion has also partnered with Canadian Nuclear Laboratories for a number of projects aimed at accelerating the deployment of commercial fusion power in Canada.

Publicly traded nuclear fusion stocks

While the market awaits pure-play nuclear fusion stocks, there are a number of publicly traded companies that have investments in private fusion technology companies.

1. Chevron (NYSE:CVX)

One of the world’s largest oil and gas companies, Chevron is investing in the transition to renewable energy. As part of that strategy, the company has made investments in nuclear fusion companies, including US$250 million in TAE Technologies and an undisclosed amount in Zap Energy.

2. Alphabet (NASDAQ:GOOGL)

The world’s third largest technology company, Alphabet, has contributed funds and its machine-learning know-how to the emerging field of nuclear fusion. The tech giant has collaborated with TAE Technologies since 2014, and joined Chevron in 2022 with its own US$250 million investment.

3. Cenovus Energy (TSX:CVE,NYSE:CVE)

Canadian firm Cenovus Energy is another oil and gas company working to diversify its business model into clean energy. The company has backed General Fusion since 2014, including a US$4 million investment in 2021.

4. Eni (NYSE:E)

Italy’s Eni is another major global oil and gas company diversifying into renewable energy projects and nuclear fusion generation. An early investor in Commonwealth Fusion Systems, last year Eni signed a deal with the startup that will help accelerate its path to commercialization and the launch of a nuclear fusion power facility by the early 2030s.

Securities Disclosure: I, Melissa Pistilli, hold no direct investment interest in any company mentioned in this article.

This post appeared first on investingnews.com

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