Is Virginia's fusion energy startup, Commonwealth Fusion Systems, getting a little bit too big for its britches? The company has already been in talks with Google about providing power for the tech company's data centers, while Commonwealth's more optimistic estimates indicate they won't have a grid-level fusion reactor running until the early years of the next decade.
Now, Commonwealth has signed a deal with an Italian energy company, Eni, to sell a billion dollars' worth of their new fusion reactor's power output to the Italian company... someday.
Commonwealth Fusion Systems has agreed to sell Italian energy company Eni more than $1 billion worth of power from its first fusion reactor.
The power plant will be built outside of Richmond, Virginia, close to some of the highest densities of data centers in the country. The 400-megawatt fusion reactor, called Arc, is expected to open in the early 2030s, CEO Bob Mumgaard said.
The Eni agreement is the second such deal for Commonwealth Fusion Systems (CFS). In June, Google said that it would buy half the reactor’s output. When asked, neither CFS nor Eni would say how much power the deal covers or its timeline.
Eni is, as mentioned, an Italian energy company. While their oil and gas operations are multinational, all of their electrical generation plants are in Italy at the moment. Are they looking to sell electricity in the United States? I can't think of any really effective way to take electricity from the American east cost to Europe.
And all this is based on a reactor design that hasn't yet had a proof-of-concept test.
CFS is widely regarded as a leader in the fusion industry. It’s reactor design is based on the tokamak, a widely studied system in which D-shaped superconducting magnets confine and compress superheated plasma. In that plasma, particles collide, forming new atoms and releasing energy in the process. The company frequently updates scientists on its progress, and it has run extensive simulations to uncover any potential hurdles.
CFS expects that Sparc will be able to generate more power than is required to sustain the fusion reactions. But at the same time, the company won’t know for sure if it all works until Sparc is complete. That’s likely to exhaust a significant fraction of the nearly $3 billion it has raised to date, including an $863 million Series B2 round announced three weeks ago. That round included checks from a wide range of investors, including Nvidia, Google, Breakthrough Energy Ventures, and Eni.
This makes the whole deal look questionable.
Read More: Daring or Dumb? Google Makes a Deal for Fusion Power.
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And here's the other angle: Any electricity produced by this first grid-scale fusion reactor, assuming it works, won't be cheap. Not this first installation.
But any electricity generated by Arc, a first-of-its-kind reactor, is going to be expensive. Eni is more likely to lose money trading that power on the grid than it is to profit.
Instead, this agreement is likely intended to help establish a price for fusion power and rustle up more money to build Arc.
Mumgaard admitted as much. The power purchase agreement, he said, “gives us the certainty of where the power is going to go, what the price is going to be, etc. And that allows us to then take that package to more financial investors in project finance and other areas and start having conversations about what it’s going to be like to actually finance this plant.”
Fusion power, of course, like any new technology, would become cheaper over time. Assuming any reactor works, it won't be economically viable immediately. That will take many reactors, and may be (hah) forty years away, at minimum.
Fusion energy has great potential. Practical fusion reactors on scale would be game-changing. But while work goes on, aiming to produce a practical reactor in the next 20 to 40 years, as they have been aiming to do for the last 50 years, we should keep working on advanced fission reactors.
It's fission, not fusion, that we can rely on now.
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