Microsoft Bets That Fusion Power Is Closer Than Many Think
Startup backed by OpenAI founder Sam Altman agrees to provide tech giant with electricity by 2028
Many experts believe fusion power remains decades away. Microsoft MSFT -0.53%decrease; red down pointing triangle thinks it could be just around the corner.
In a deal that is believed to be the first commercial agreement for fusion power, the tech giant has agreed to purchase electricity from startup Helion Energy within about five years.
Helion, which is backed by OpenAI founder Sam Altman, committed to start producing electricity through fusion by 2028 and target power generation for Microsoft of at least 50 megawatts after a year or pay financial penalties.
The commitment is a bold one given that neither Helion nor anyone else in the world has yet produced electricity from fusion.
“We wouldn’t enter into this agreement if we were not optimistic that engineering advances are gaining momentum,” said Microsoft President Brad Smith.
Fusion powers the sun and stars, and has the potential to provide nearly limitless amounts of carbon-free power if someone can harness it on earth. The International Atomic Energy Agency expects electricity from fusion in the second half of the century.
Helion is building a prototype that it says will demonstrate the ability to produce electricity through fusion next year.
“The goal is not to make the world’s coolest technology demo,” Mr. Altman said in an interview. “The goal is to power the world and to do it extremely cheaply.”
Mr. Altman, the chief executive officer of OpenAI—the artificial-intelligence startup behind the viral chatbot ChatGPT—said having a first customer is critical for keeping Helion grounded in the realities of business, including working with clients, utilities and electric-grid operators.
Microsoft earlier this year struck a multibillion-dollar partnership with OpenAI to expand the use of artificial intelligence in its products.
Constellation Energy, which has among its power-generation assets the nation’s largest fleet of nuclear plants, would be the power marketer and manage transmission for the project.
Mr. Altman said he is hopeful that Helion can deliver electricity to the grid even earlier than 2028. He has put $375 million into Helion and said he visits the company once a month, helping executives figure out what to work on and how to be as efficient as possible, as well as recruiting and assessing talent.
“I had this belief that the two things that would matter most to making the future and raising the quality of life a lot were making intelligence and energy cheap and abundant, and that if we could do that, it would transform the world in a really positive way,” Mr. Altman said.
A number of prominent investors from Mr. Altman to Bill Gates have put money into fusion firms, which have raised more than $5 billion, according to the Washington, D.C.-based Fusion Industry Association.
The process of splitting atoms in nuclear-fission power plants provides nearly 20% of U.S. electricity. But nuclear fusion systems would generate electricity from the energy released when hydrogen atoms are combined to form helium.
The industry got a boost in December when the U.S. Energy Department announced a research breakthrough by scientists after a fusion reaction at the Lawrence Livermore National Laboratory produced more energy than was used to create it by firing lasers at a target.
To be a practical source of power, the entire facility would need to net produce rather than consume energy, and at a price that competes in the broader electricity market.
The agreement for 50 megawatts is a small one for Microsoft. The company is among the world’s largest buyers of power-purchase agreements, which allow customers to lock in electricity supplies for a period of years. Last year, Microsoft announced deals for 1.2 gigawatts of clean power, according to BloombergNEF.
Mr. Smith said Microsoft believes that the biggest innovations of this decade could come in fusion power, artificial intelligence and quantum computing, “that all could intersect with each other.” Both AI and quantum computing would require huge amounts of electricity, which fusion could provide.
“As a purchaser when we lean in at the right moment in the right way we can help make new markets,” Mr. Smith said.
David Kirtley, CEO at Helion, said that like a wind- or solar-power developer—the more typical energy firms involved in power purchase agreements—Helion would pay Microsoft financial penalties if it doesn’t deliver power on time. The companies declined to specify the amount.
“There’s some flexibility, but it is really important that there are significant financial penalties for Helion if we don’t deliver,” Mr. Kirtley said. “We think the physics of this is ready for us to signal the commercialization of fusion is ready.”
Helion and Microsoft are both based in Washington state, and the agreement calls for the fusion company to deliver the power to some of the tech giant’s facilities there.