Race for fusion intensifies as UK opens flagship project to investors
Government-backed venture moves on to commercial footing to tap surging interest in unproved energy source
The UK government plans to attract private investors to the national nuclear fusion developer to which it has pledged £1.3bn in backing, as it seeks to tap surging investor interest in a technology that holds the prospect of eventually delivering abundant clean energy.
Under a new national fusion strategy announced on Monday, UK Industrial Fusion Solutions, the government’s fusion development arm, will be renamed UK Fusion Energy and restructured to operate “more fully as a commercially oriented entity”.
The company “will provide the foundation for the UK to develop first of a kind fusion power plants and directly stimulate the growth of the UK supply chain”, the fusion strategy said. “Working with industrial partners, UKIFS will develop world-leading capabilities as a fusion power plant integrator that can design and deploy fusion power plants globally, with the capability to raise external investment in future.”
The move marks a shift in the UK’s approach to the commercially unproven technology, which has historically relied heavily on public funding.
Private investors have poured billions of dollars into US fusion start-ups in recent years, with China rapidly catching up, betting the technology could one day supply vast amounts of carbon-free electricity.
Tech sector investors have voiced hopes that fusion could help meet the heavy power demand fuelled by the AI boom, which requires huge amounts of electricity for its calculations. Sceptics, however, argue that commercial fusion is decades away.
UKIFS is currently a wholly owned subsidiary of the UK Atomic Energy Authority, the Oxfordshire-based national fusion laboratory, and is responsible for developing the prototype Spherical Tokamak for Energy Production (Step) reactor planned at the site of a former coal-fired power station in Nottinghamshire.
The fusion industry aims to replicate the reaction that powers the Sun by forcing atomic nuclei to combine in a superheated plasma, unlike nuclear fission, which harnesses energy created when atoms are split.
The Step project aims to demonstrate commercial viability by delivering electricity to the grid by 2040, a milestone no fusion reactor has yet achieved anywhere in the world.
According to a government tender notice issued in 2024, the project could cost up to £20bn.
The government did not say when private investors would be brought into the renamed UK Fusion Energy or how much funding the company would seek.
However, progress on the Step programme could help reduce engineering risks and generate technologies that the company could “exploit commercially”, it said.
The UK’s move comes as global competition to develop fusion power intensifies. US fusion start-ups raised $1.6bn in private funding last year, according to PitchBook.
Meanwhile, China has invested between $6.5bn and $10bn in fusion research since 2022, according to estimates by the Special Competitive Studies Project, a US think-tank chaired by former Google chief executive Eric Schmidt.