As of 2020, more than 73% of greenhouse gas emissions resulted from energy production. There is an escalating demand for alternate, renewable forms of energy. Policy changes are contributing to increased urgency in this space. For instance, in 2015, 175 countries signed the Paris Agreement, which aimed to limit global warming to below 2 degrees Celsius relative to pre-industrial temperatures. Global temperatures have risen over 1° C since the beginning of the industrial revolution.

In 2021, the largest sources of renewable energy included hydropower, nuclear reactors, wind, solar, and biofuels. Each of these has various drawbacks and trade-offs, such as low availability, variability in output, low energy yield, waste production, safety, and high costs of production. The promise of nuclear fusion, if it is able to be successfully harnessed, is that it would enable the production of cheap, abundant, renewable energy without these drawbacks. Though fusion is not yet viable at scale, there have been significant breakthroughs in recent years, culminating in the first demonstration of quantifiable energy production from a fusion reactor by a lab in California in December 2022.

Achieving commercial viability is the next challenge for fusion technology. Helion Energy, a Washington-based fusion research company that aims to be the “first to fusion,” is among the companies leading the charge. In 2021, Helion Energy CEO Dr. David Kirtley proclaimed that Helion’s mission would be “to build and deploy low-cost energy for the whole world. The rest of the universe is powered on fusion, and I believe we can do it too.”

Having created seven prototypes in less than 10 years, Helion Energy is one of the fastest-moving companies in the space. The company uses a different fusion technique than competitors, which it believes will reduce the risk of radiation and increase efficiency. The unique molecular composition utilized by its reactor is purported to enable the direct capture of energy through the charged particles of the fusion reaction, as opposed to relying on the cycle of using heat to turn water into steam, which can power a turbine.

Before embarking on a quest to build commercially viable fusion reactors, Helion Energy co-founders Dr. David Kirtley, Chris Pihl, Dr. George Votroubek, and John Slough met while working at MSNW in Redmond, Washington.

The mandate of MSNW, an organization with ties to the University of Washington, is to research the feasibility of using plasma physics to commercialize hardware in aerospace and power generation, namely rocket propulsion. Prior to founding Helion Energy, the four co-founders had accumulated 30 combined years of fusion experience, and various masters and PhDs in aeronautical, astronautical engineering, and astrophysics. The idea for Helion started in their minds around 2010, but the company was officially founded in 2013.

Source: Power Technology - Chris Pihl, CTO (left) and Dr. David Kirtley, CEO (right)

Soon after launching, the team gained the scientific community's attention, becoming a finalist in the 2013 National CleanTech Open Energy Generation competition. Helion Energy would later be awarded the 2015 ARPA-E ALPHA contract, "Staged Magnetic Compression of FRC Targets to Fusion Conditions,” receiving just under $4 million. In 2014, as former YC president Sam Altman stated his intent to use YC funding to invest more heavily in hard tech and energy companies (namely nuclear), Helion Energy was accepted into Y Combinator’s 2014 cohort.

Helion Energy’s goal after YC was to create net energy gain from nuclear fusion within three years, something most engineers at the time thought was decades away. Unlike most fusion power station experiments, such as ITER in France, which cost upwards of $50 billion, Helion Energy’s reactors are much smaller and should only cost somewhere in the low tens of millions. According to CEO David Kirtley, these relatively small reactors should produce 50 megawatts of electricity, enough to power ~40,000 US homes.

Source: Helion Energy - shipping container sized fusion reactor

Background on Nuclear Fusion

Nuclear fusion is a process that naturally occurs inside the Sun’s core, creating the light and heat that all life on earth depends on. Fusion happens when two light nuclei merge to form a single nucleus with a lower mass than the two nuclei. This decrease in weight creates energy, based on Einstein’s equation showing that energy is equivalent to the square of mass times the speed of light. The amount of energy released when two nuclei merge is known as binding energy.

Fission, the opposite of fusion, occurs when a single nucleus is broken into two separate nuclei, creating energy in the form of heat. This heat is then used to boil water and create steam to power a turbine, resulting in commercial electricity. There are two primary advantages to fusion when compared to fission: (1) combining light atoms produces much more energy than separating large atoms, and (2) fusion is inherently much safer than fission which produces highly radioactive waste.

Source: Nuclear Fusion Explained

Fusion is more difficult to engineer on Earth than fission. For fusion to occur, it requires an extreme amount of force to be placed on the two nuclei. The center of the Sun is 15 million degrees celsius, with a gravitational force more than 28x stronger than the Earth’s surface. Strong gravity plus intense heat, which causes atoms to speed up and collide, produces uncontrolled fusion in the Sun. On Earth, temperatures need to reach at least 100 million degrees for fusion because the Sun’s gravitational force can’t be replicated.

There are two common types of fusion reactors.

• Laser fusion fires intense lasers simultaneously at a small capsule to heat it.

• Tokamaks, the more common system, produce a single plasma in a donut-shaped reactor which is heated and pressurized.

Source: NewScientst - Tokamak fusion reactor (ITER)

Most fusion labs combine deuterium (hydrogen-2) and Tritium (hydrogen-3) and which releases energy in the form of neutrons (accounting for 80% of energy production). The heat that results is then used to steam water and power a turbine. However, steam turbines lose 10-20% of the reaction's energy and require additional space. Additionally, Tritium is both radioactive and rare, mostly produced by nuclear reactors.

Helion Energy’s Approach to Fusion

Source: Helion Energy

Helion Energy has achieved aneutronic fusion by fusing deuterium (hydrogen-2) and helium (helium-3) to produce helium-4 (the common isotope of He) and a single proton: 2H + 3He → 4He + 1p. Aneutronic fusion is preferable because it releases the same amount of energy without creating radioactive byproducts. As opposed to Tritium, 3He is neither radioactive nor the proton released after fusion. The proton's momentum energy interacts with the reactor's containing magnetic field, resulting in direct electricity capture at 85-95% efficiency. No steam turbine is necessary.

Helion describes how its reactor works as follows: two heated, donut-shaped plasmas made of 2H and 3He are launched at one another at 1 million mph by way of magnets on the outside of the reactor. Upon collision, they combine into plasma, compressed by the same magnets. The pressure causes the plasma to reach 100 million degrees Celsius, fusing atoms within the plasma and generating energy. All of this occurs in 1 millisecond.

Source: Helion Energy

Commercial Viability

Helion Energy's goal is to create enough energy to power entire cities. As CEO David Kirtley puts it:

In terms of inputs, most fusion reactors use deuterium or “heavy water” because it is naturally abundant on Earth and easily extracted from oceans. There is enough deuterium on the Earth to power the planet for 8.33 billion years. One gallon of seawater contains enough deuterium to produce the equivalent energy of 300 gallons of gasoline. Thus, 0.5 liters of deuterium can power a home for 800 years.

Helium, like tritium, is not abundant on Earth. The moon has 1.1 million metric tons of Helium-3, all within several meters of the lunar surface. The US only needs 25 metric tons to create enough electricity through fusion for an entire year. The gas giants of our solar system have enough helium-3 to power the world effectively.

Customer

Supplying energy directly to the grid requires the build-up of infrastructure, among other complications; Helion Energy believes their first customers will most likely be data centers. These large buildings consume massive amounts of energy, have the infrastructure to accept backup generators, and are often far from populated areas. Kirtley believes that they will be able to provide energy to data centers at less than $0.01 per kilowatt-hour (kWh), becoming their primary power source.

The Helion Energy reactor is not meant to power a single home as it is much too large and powerful. Once its reactors can consistently produce energy, it plans to partner with organizations in the US that manage grid activity to replace fossil fuel consumption and start powering homes, factories, businesses, and more. The average home pays $0.15 per kWh in the US for electricity. Solar power is only $0.06 per kWh in some areas and $0.11 per kWh in others. Assuming that Helion could consistently supply electricity at $0.01 per kWh, the energy produced by fusion reactors would represent a 93.3% energy cost reduction when it reaches scale.

Market Size

Global Energy Market

The global population grows ~0.84% annually, down from over 2% in the 1960s. Growth in population, coupled with an ever-increasing demand for more electricity, has caused energy consumption to increase by 2% on average every year since 2000. As humanity becomes more dependent on technology, energy consumption will continue to rise.

The global electric power generation, transmission, and distribution market is growing at a CAGR of 8.3%, and is slated to grow from a $4.1 trillion market in 2021 to a $4.4 trillion market in 2022. By 2026 the electric power market could approach $6 trillion.

Renewable Energy Market

The 2015 Paris Agreement is a policy catalyst intended to effect changes in global energy production, carbon removal efforts, and wildlife preservation. Such policy catalysts, consumer demand for lower emissions, and investor interest in climate tech companies have created significant tailwinds for the renewable energy market.

The global renewable energy market was valued at $910.5 billion in 2021 and is projected to reach $1.5 trillion by 2028, growing at a CAGR of 8.8%. This is largely dependent on nations living up to their commitments to reduce the consumption of non-renewable fuels. Additionally, current renewable energy sources need to reach global scalability, or our grid will crash without coal and oil. While renewables have grown over the past 40 years, non-renewable fuels have grown much more quickly.

Source: Our World In Data

While the renewable energy market continues to grow, the viability of other forms of alternative energy also represents a risk to Helion. If solar and wind become more viable energy options at scale, consumer preferences for nuclear reactors could go down. Overall, the market for fusion is difficult to predict, given that it has not yet achieved commercial production. Some estimate the nuclear fusion market will grow to $472 billion by 2030, but there are no reliable predictions about when fusion will become commercially viable.

Competing Nuclear Fusion Labs

General Fusion, founded in 2002 in Vancouver, British Columbia, utilizes magnetized target fusion. In this fusion process, plasma is injected into spinning liquid metal, where fusion occurs. The heat from the fusion is used to create steam and power a turbine. The company’s newest fusion reactor is expected to be operational by 2027, and General Fusion hopes to reach the 100 million degree Celsius threshold, which Helion Energy did in 2021. General Fusion has raised $322 million as of May 2022 and will be working with the United Kingdom Atomic Energy Authority (UKAEA) to experiment in their facility in 2027.

Commonwealth Fusion Systems (CFS) was founded in 2018 in Cambridge, Massachusetts, having spun off from MIT’s Plasma Science and Fusion Center. Commonwealth’s SPARC Tokamak reactor uses high-powered magnetic fields to control a single, donut-shaped plasma and is scheduled to be completed in 2025. Once SPARC demonstrates net energy production, the company will move on to building ARC, its commercially viable fusion power plant. Though it is still years away from injecting SPARC with plasma to produce energy, it is one of the fastest-moving companies in the space. Since 2018, it has raised $2 billion in funding. With its technology progressing at a similar pace to Helion Energy, CFS is positioned to become its closest rival.

Source: Commonwealth Fusion Systems - SPARC

All of these fusion reactors and many others worldwide use tritium within a tokamak reactor. Their technology is different from Helion Energy’s, and direct energy capture is impossible since the fusion energy product takes the form of heat.

Competing Renewable Energy Sources

Nearly 90% of global carbon dioxide emissions are due to fossil fuel consumption, primarily coal, oil, and gasoline. A meaningful shift to clean energy had already started long before nuclear fusion became a viable solution. Today, 29% of electricity comes from renewable sources. While energy consumption is only rising by a couple of percentage points annually, renewable energy is growing at 12-15% annually.

Countries are emphasizing a shift to renewables in part due to increasing demand for energy independence, lower costs, climate awareness, and job creation. Driven by these motivators, as nations continue to invest more in renewable energy sources that are available now, they may not be interested in reconfiguring infrastructure and spending trillions on replacing with fusion reactors down the line.

Source: US Energy Information Administration

Enough energy from the sun’s fusion hits the Earth’s surface to cover 10,000x what humans need, which is why solar energy is one of the fastest-growing alternative energy sources as of 2023. Other sources of energy receiving large investments include wind energy, hydroelectric and tidal energy, geothermal energy, and biomass.

Helion Energy is still in research and developmental phases, but is hopeful that this will change by 2030. Its future business model will primarily depend on selling energy to the grid for residential, commercial, and industrial use. In the US, more than 80% of energy infrastructure is privately owned, although four organizations control most of the national grid — which generates nearly $500 billion annually. Helion Energy will likely have to sell to entities individually, and the state-owned grids in most other nations.

Because fusion is not yet powering homes, the business model of solar farms is an existing analog that may illuminate how Helion Energy’s business will most likely operate. Solar farms often operate on purchase power agreements where energy is sold to a customer at a low cost for a predetermined period. This customer often receives a tax credit to subsidize the cost further.

As customers (often grid operators) need more energy, they scale up demand from the solar farm. When energy requirements decrease, they lower the amount taken from the farm. The principle is the same with fossil fuel plants which scale up and down with consumer demand because the grid cannot store mass amounts of electricity in most areas.

If it follows a similar model, Helion Energy would (1) set up large nuclear fusion power plants to supply energy to the grid, and (2) partner with customers such as data centers, and factories to provide direct electricity from an onsite reactor.

There are three reasons why grid operators may turn to Helion Energy’s product. First, fusion electricity production can be quickly scaled up and down with consumer demand by simply changing the number of pulses sent through the reactor. Second, fusion does not depend on sunlight, wind patterns, tidal waves, or any other uncontrollable environmental factor to create electricity. Lastly, Helion Energy believes it will be able to provide energy at $10 per megawatt hour (mWh), 50% cheaper than even the cheapest renewable energy source available today.

Source: US Energy Information Administration (see page 9)

Helion Energy has released an improved prototype almost every year since 2014. Its most recent prototype, Trenta, was its sixth-generation system. In 2022, Trenta became the first private company reactor to reach the all-important 100 million-degree threshold necessary for nuclear fusion on earth. Throughout the 16 months of testing, Trenta produced nearly 10,000 plasma pulses, not only achieving bulk deuterium-helium-3 fusion but demonstrating direct energy capture to be possible and recovering electricity without the need for a steam turbine.

According to EquityZen, the leading pre-IPO secondary platform, investor interest in Helion Energy spiked considerably in Q2 2023.

Source: EquityZen

As of January 2023, Helion Energy is in the process of building its seventh-generation Polaris system. Polaris is projected to achieve a slight increase in the amount of energy entering the reactor, increasing the fusion output for net energy gain by 2024. Construction for Polaris started in July 2021, and the company has shared some details of the project’s progress. The company is simultaneously designing its eighth-generation system, a commercial-grade reactor, which it believes will be providing power to the grid by the end of the decade.

In July 2022, Helion Energy announced that its team had reached 100 employees, most of which are engineers. Three of the four original founders - David, Chris, and George - are still with the company.

Source: Helion Energy

Helion Energy made headlines in 2021 after raising one of the largest funding rounds, even in a year that witnessed record-breaking venture funding. After a $40 million Series D in September 2020, with total funding at the time reaching $77 million, Helion Energy raised its Series E worth a total of $2.2 billion in November 2021 from Sam Altman (lead investor and founder/CEO of OpenAI), Dustin Moskovitz (co-founder of Meta), Mithril Capital (led by Peter Thiel), and Capricorn Investment Group (a leader in sustainable energy investing). Because the money was raised to fund the construction of the eighth-generation Polaris reactor, $500 million of the $2.2 billion was closed, with the remaining $1.7 billion committed to being unlocked when Helion Energy reaches key milestones. At the time of the investment, Helion Energy was valued at $2.5 billion pre-money.

Government Tailwinds

Governments are providing large grants to clean energy companies that show promise. If Helion Energy can be the first private company to demonstrate net energy gain from nuclear fusion by 2024, it will position itself as the frontrunner for significant funding from the government and philanthropic grants.

The US Department of Energy invests ~$700 million annually in fusion research and has been investing in this technology since the 1950s. In September 2022, an additional $50 million was committed specifically for funding for-profit fusion companies in the private sector. Since the Lawrence Livermore NIF achieved net energy gain in December 2022, fusion has entered the public consciousness in a way it hasn’t for a long time. This may increase the government’s willingness to fund the technology, which could benefit Helion Energy as a leader in the space.

Strategic Partnerships

Using Helium-3 to create fusion, Helion Energy is a unique player in the industry. Helium-3 is rare on Earth but found in abundance on the lunar surface. Lead investor Sam Altman, who founded OpenAI, thanks to a large investment from Elon Musk, may be able to open important doors to make lunar mining possible. Altman, who was named the executive chairman of Helion Energy in 2021, has been a friend of Elon Musk for some time. Elon, the founder of Tesla and SpaceX, has dedicated much of his career to products fighting climate change. As SpaceX pursues the establishment of a lunar base, Helion Energy could benefit from a partnership that allows for the transmission of Helium-3 through SpaceX reusable rockets.

Uncertain Timeline of Commercial Viability

Nuclear fusion has a long history of over-promising and under-delivering. The timeline of fusion contains many prototypes, experiments, and breakthroughs, but it took 90 years of research to reach net energy gain, and commercial viability is unlikely to be reached in the near term. This makes any projection about reaching commercial viability uncertain. For comparison, solar energy also took over 100 years to reach usage at scale.

When Helion Energy raised its $1.5 million seed round in 2014, the team was convinced they would achieve net energy gain within only three years. Just under 10 years later, we are yet to see Helion Energy cross this threshold. When asked about this, CEO David Kirtley said:

Limited Availability of Necessary Inputs

Apart from rare naturally-occurring instances, there are two main ways to source Helium-3: (1) as a by-product of the maintenance of nuclear weapons (which the US is constantly decommissioning), or (2) from the sun’s solar winds, which land on a planet’s surface. SpaceX and others have seen success in recent years as they have built networks of satellites, but the last attempted moon landing was in 1972. If mining Helium-3 from other planets does not become viable, it is likely to limit Helion Energy’s production ceiling.

Alternative Energy Sources

Not only is Helion Energy betting that fusion is the best source of energy creation, but it is also betting that its formula for fusion will trump others. Multiple types of fusion reactors range widely in their use of magnets, pressure, and more. Helion Energy's technology may become obsolete if a different type of reactor reaches commercial viability first. Most competitors are using Tritium instead of Helium-3, which means a lot more investment is going into the long-term availability of Tritium. The first fusion technology to achieve commercial viability will likely see many imitators and could gain an insurmountable advantage over technologies that take longer to market.

Climate change is an increasing priority for governments and consumers, and clean energy effectively reduces carbon emissions. Each source of clean energy comes with its pros and cons. Helion Energy believes fusion shows the most promise long-term since it requires no variable intake, can easily be scaled up and down, and should be able to produce almost unlimited energy.

Helion Energy has raised billions of dollars in funding as investors are betting on its novel approach of firing two plasmas at one another in a relatively small reactor and using magnetic force to compress the resulting plasma and create fusion. Because of the unique molecular composition of the plasmas involved, not only is the company’s reactor purported to be less dangerous than other fusion reactors, but it should also be able to efficiently produce electricity directly instead of having to rely on heat to create steam and spin a turbine, which results in lost energy.

The Helion Energy team believes that their shipping contained-sized reactor will be powering homes before the end of the decade, but this could be overly optimistic — many scientists in the 1900s believed fusion would be viable before the end of the 20th century, which did not occur. However, with a track record of rapid iteration and continuous improvement, Helion Energy may soon achieve its mission of creating “an energy source that is clean, reliable, and abundant.”