FusionEnergyThekeytothefutureenergyarchitectureKeytakeawaysGlobalproblemandradicalsolutionThecurrentrateofglobalrenewableenergiesdevelopmentmakesemission-freeenergysupplyby2050unlikely.Withoutradicalnewapproaches,theParisclimatetargetswillbemissed.Fusionenergymaybethemissingkeytoachievingasustainableenergyarchitectureintime.Thecombinationofrapidcommercializationoffusionenergyandthefastestpossiblerenewablesbuild-outmightmaketheParisgoalofNetZeroby2050finallyachievableDecisiveadvantageAsthefirstclimate-neutralenergysource,fusionisalsobase-loadcapableandreadilyscalable.Therawmaterialsrequiredforoperationareavailableworldwideandaresufficientforsecureandaffordableelectricityoversupply.Inthelongterm,theenergycostsfromfusionareexpectedtobebelowthoseoftoday'srenewablesWhyonlynowNewbreakthroughsinmaterials,computingandlaserresearcharemakingtheremainingchallengesincreasinglymanageableandbringingthe"HolyGrail"ofenergygenerationwithinreach.Progressisreflectedinrapidlyincreasingprivateinvestmentincommercialfusionstartups.Withmodernapproachesandfasterinnovationanddecisioncycles,theyareaimingforamuchearlierbreakthroughthangovernmentresearch:Theirambitionistorealizefusionenergyinthe2030sStrategyCountriesarenowpositioningthemselvesfortheracetothefirstcommercialuseoffusion.InGermany,theFederalMinistryofEducationandResearch(BMBF)publishedastrategypaperonfusionenergyinJune2023.Germany'spositioninthisregardis(time-)criticalrightnow.Inacademicresearch,thecountryholdsaleadingposition-butinentrepreneurialterms,itisabouttobeleftbehind.Therefore,boldactionisneedednow.AnationalfusionenergystrategycanturnthispositionintoanagendaforsuccessandcoulddevelopfusionintoanenginefortheGermaneconomyFusionEnergySource:Strategy&analysis16.August2023Strategy&2Forecastsshow:Theglobalexpansioninrenewableenergyisnotsufficientforemission-freepowergenerationby2050Therenewablesexpansiononlycoversadditionaldemand–societyremainsdependentonfossilpowersourcesGlobaldemandforelectricenergyinPWhandtheexpectedcoveragebysource:STEPS:Stated80•2050:ElectricityPoliciesScenario1demandincreasebyNOW+85%overtoday–6050•RenewablesexpansionConservativescenarioof+300%required("Realisticpath")43Aninconvenienttruth:•FossilpowersourcesoftheInternationalEnergy4035remainatcurrentToday'sglobalrenewableenergyexpansionAgencylevelsrateof~3.3PWhofenergyperdecade22127152432makesanet-zero-emissionenergysupplyby2050(netzeroscenario)unlikely2048Withoutradicallynewapproachestothe0transformationoftheglobalenergyarchitecture,20102020203020402050theParisclimatetargetswillbemissedbyasignificantmarginAPS:Announced8061•2050:ElectricityPledgesScenario1NOW49demandincreaseby+130%overtoday–60•RenewablesexpansionModeratescenario402736344921of+550%required("Statementofintent")18208•FossilpowersourcesoftheInternationalEnergy4at50%oftoday'sAgencylevels020102020203020402050NZE:NetZero8073•2050:ElectricityEmissionsby20501NOW58demandincreaseby+190%overtoday–60•RenewablesexpansionAmbitiousscenario403865of+750%required("Desiredtarget")202412872350•AlmostnomorefossiloftheInternationalEnergyfuelpowersourcesAgency020102020203020402050FromfossilfuelsElectricityfromrenewablesFromhydrogenetc.FromnuclearenergyFusionEnergySource:1)IEAWorldEnergyOutlook2022:GECGlobalEnergyandClimateModel;2)IEAGECGlobalRenewablesdevelopmentovertheperiodfrom2010to2020;Strategy&Strategy&analysis3Fusionenergymaybethemissingkeytoasustainable,sufficientandaffordableenergysupplyGlobaldemandforelectricenergyinPWhandtheexpectedcoveragebysource:STEPS:Stated80•ConservativeSTEPSscenario:"realisticPoliciesScenario1NOWrenewablesexpansionrate"and"therefore–highdependencyonelectricityfromfossilPotentialsolution:Conservativescenariosources".Fusionenergymaybethemissingkeytotimely("Realisticpath")•Ramp-upoffusionatrealizationofasustainableenergyarchitectureequivalentrateasoftheInternationalEnergy60nuclearenergyintheThecombinationofrapidcommercializationofAgency20thcentury,fromfusionenergyandthefastestpossiblecommissioningoffirstexpansioninrenewablesmakestheNetZero50powerplantin2030sby2050goaloftheParisClimateAgreementfinallyachievable43•2050:40Fusionenergycanendresidualdepen-35denceon13PWhofelectricityfromfossil32sourcesby2050.27241521819204131020102020203020402050ElectricityfromfusionenergyFromhydrogenetc.FromnuclearenergyFromfossilfuelsElectricityfromrenewablesFusionEnergyStrategy&Source:1)IEAWorldEnergyOutlook2022:GECGlobalEnergy&ClimateModel;Strategy&analysis4Fusionenergy:Whatisthat?–Theprinciple,simplyexplainedThe“fusion”oftherawmaterialslithiumandwaterproducesalotofgreenelectricityandheliumLithiumGreenpowerRecycledlithiumfromFusionenergygeneratesoldbatteriescanbealotofheat,whichisusedasarawmaterialconvertedviasteamintoinfusionenergy.largeamountsofelectricitytopowerFusionnumeroushomes.WaterThereactionisinherentlyHeliumsafe–anydisruptionsinThesecondrawmaterialtheprocesssimplyleadHeliumisthedirectproductrequiredcomesfromtothefusionstopping.ofthefusionreaction.Thisconventionalseawater,anwouldmakefusionthefirstomnipresentcomponent.sustainablewaytoproduceheliumwithouttheuseoffossilfuels.FusionEnergyStrategy&Source:Strategy&analysis5Whyonlynow:Newtechnologiesmightbringthe“HolyGrail”withinreachBreakthroughsinmaterials,computing,andlaserresearchTechnologicalandsocialmegatrendsdriveprogress:Scientificknow-howmeetssociety'sneedforanon-restrictivesupplyofsustainableandaffordableenergy.High-temperatureHigh-performancesuperconductingmagnetsandquantumcomputers•Newgenerationofhigh-performancemagnets:Most•Too-complex-to-handlecontroloffusionreactorsimportantmechanicalreactorcomponenthasbeenadeal-breakersofar•Superconductingatmuchhighertemperaturesandthus•Computingpowerincreasinglyreachesrequiredforthefirsttimebothsignificantlymorepowerfullevelsandmoreefficientinoperation•QuantumcomputerscanenableunprecedentedparallelizationofcontroltasksArtificialintelligenceHigh-powerlasers•InR&D,AIsignificantlyacceleratesinnovationcycles•Significantincreaseinlaserpeakpower(byafactoroffordesigningnewmaterialsandprocesses20inadecade1,2)inamorecompactpackageenablesnewdesignsforinertialfusion•Inoperation,forthefirsttimeAIenablescomplexoptimizationandcontrolof•Simultaneously,laserpowercostshavereducedrapidlyparametersinrealtime(byafactorof200perPWpowerinadecade1,2)FusionEnergySource:1)LawrenceLivermoreNationalLaboratory,NationalIgnitionFacility,UnitedStates2009;2)ExtremeLightInfrastructure-NuclearPhysics(ELI-NP),Romania,Strategy&2019;Strategy&analysis66Thus,countriesareincreasinglypositioningthemselvesfortheracetothefirstcommercialuseoffusionenergyUK,USA,Japan,andmostrecentlyGermanytoo,havepublishedinitialstrategypapersonfusionenergyUnitedKingdomJapan1October,2021114April,20233StrategyonbuildingdomesticfusionCommercializationthroughstrategicandindustry,commercialdemonstration,financialpromotionofdomestichigh-techcreationofalegalframework,andindustries,creationofalegalframework,andpromotionofpublic-privatepartnerships.promotionofpublic-privatepartnerships.UnitedStatesGermany19April,2022223June,20234Acceleratedcommercialimplementation,Buildinga“fusionecosystem”andcollaborationofgovernmentandprivate“technologyhubs”,creationofalegalinnovation,coordinationbyUSDept.offramework,andpromotionofpublic-Energy,increasedfinancialsubsidies.privatepartnerships.FusionEnergySource:1)Towardsfusionenergy:theUKgovernment’sfusionstrategy;2)WhiteHouseSummitonDevelopingaBoldDecadalVisionforCommercialFusionEnergy;Strategy&3)JapaneseFusionEnergyInnovationStrategy;4)BMBFpositionpaperonfusionresearch;Strategy&analysis7Thedecisiveadvantageoverexistingrenewables:Fusionenergyissimultaneouslybase-loadcapableandeasilyscalableToday,onlyfossilenergyisbase-loadcapable,onlyrenewablesareemission-free.FusionisthefirsttomanagethebalancingactCoalNaturalgasHydroWindSolarFusionEnvironmentalimpactResourcerequirements(construction)Resourcerequirements(operation)Dependency(onoutsideEU)ScalabilityBase-loadcapabilityLowMediumHighNogreenhousegasOnlybase-loadcapableAvailabilityindependentFusionfuelcanbeemissionsrenewablestechnologyofweatherandtimeofdayobtaineddomesticallyFusionEnergySource:Strategy&analysis8Strategy&TheamountofenergyfromrawmaterialsforfusionavailableworldwideissufficientforsecureandcheapenergyoversupplyThesmallestquantitiesaresufficienttocoverourentireelectricitydemand:Resourcerequirementsfora“typical”1,000MWpowerplantCoal=Naturalgas=Wind=Solar=Fusion3.2milliontons1.3milliontons250turbines34millionm²250kgfuelannuallyannuallyannually(4MWonshoreclass)ofphotovoltaics...orafreighttrainas...orafreighttrainas...orasmuchas...orthetotalsurface...orasinglelongasHamburgtolongasHamburgtoGermanycurrentlyareafromBerlin’stransportNantesIstanbulbuildsinfourmonthsMittedistrictloadtothepowerplant1,100kmlength1,900kmlengthFusionEnergyStrategy&Source:Strategy&analysis9Economiesofscalecanmakeitpossible:Pricesforelectricityfromfusionatthelevelofrenewableenergies–orevenlowerDevelopmentandconstructioncompriseover70%offusion’slifetimecosts3–withexpansion,thesewilldecreasesignificantlyLevelizedcostofelectricity1-5in€cents/kWh(lifetimecostsofelectricityingeneration)Currentstudies2expectfusionenergytoachieveelectricitypricescomparabletothoseoftoday’srenewables.CoalNaturalHydroWindSolarFusionSmallcommercialfusiondesigns–andthuslowerinitialinvestmentvolumes–mayevengasOn-shoreOff-shoreRoofPVRoofPVAreaPVAreaPVenableelectricitypricesbelowtoday’srenewables.30andBatteryandBattery2520Astechnologymatures,fusion(likeallothersourcesofenergytechnologywith15lowoperatingcosts)willdecreaseincostaftertheinitialinvestment.10Forcomparison,costsforelectricenergyfromwindhavefallenby70%andfromPV5by90%inrecentyears4.0FusionEnergySource:1)FraunhoferISE;2)ThomasGriffithsetal.2022Prog.Energy4042008;3)AnEnergyTechnologyDistillatefromtheAndlingerCenterforEnergyandtheStrategy&EnvironmentatPrincetonUniversity;4)Lazard’slevelizedcostofenergyanalysis–Version15.0;5)GermanBundestag;Strategy&analysis10Theremainingchallengesuntilfusion’scommercialmaturityareexpectedtobemanageablewithtechnologyavailabletodayEngineeringEconomyPoliticsSocietyTherearestillanumberofchallengestobesolvedbeforethefirsthigh-performancefusionpowerplantcanIncreasingenergyefficiencyIncreasingefficiencyinDevelopmentofanationalManaginghighinitialbebuilt–thesemostlyincludeengineeringtasks.ofdesignsoperationstrategyforfusionenergyinvestmentlevelsThecurrentfocusisonbuildingareactorthatgeneratesmoreelectricityoutputthanitconsumesincontinuousControlsystemscapabilitiesSecuringthesupplyofDevelopmentofregulatoryCreatingawarenessandoperation(“demonstrationreactor”).criticalrawmaterialsframeworksunderstandingoffusionenergyAswithpreviousmajortechnologybreakthroughsHeatandradiation-resistant–mankind’sfirstflight,firstnuclearpower–thematerialsIntegrationoffusionenergyPromotionofinvestmentsDevelopmentofknow-howdemonstrationcanradicallyacceleratefurtherintothenationalenergymixandsubsidyfinancingandtrainingofspecialistsdevelopmentslikeaspark.DesignofspecialmachinecomponentsLong-terminvestmentsPromotionofinternationalForinterestedreaders,allthedetailsataglancecooperationThefusionenergyskillstree:skillsonthepathtocarbon-neutral,FusionfuelprocessingKnow-howcooperationandsecure&affordableenergyforeverybodyIPmanagementPubliclawdiscussionswithCompactandscalablepowerstatebodiesavailableonrequestplantdesignStakeholdermarketpositioningChallengesininitial11OptimizedreactionheatimplementationtransferintoelectricenergyChallengesinFusionEnergyfurthercommercialStrategy&establishmentSource:Strategy&analysisProgresstowardscommercializationisreflectedintherecentsignificantincreaseinthenumberofprivatefusionstartupsTheinternationalracetocommercialfusionenergyhasbegun:StartdateofvariousfusionprojectsNationalprojects11991199620002005201020152020•ASDEXUpgrade•PegasusToroidal•CDX-U•SST-1•KTM•ST25-HTS•MAST-U(selection)•AlcatorC-Mod•MAST20062014•WEST•HL-2M1992Experiment•HeliotronJ•EAST•HIDRA•ST402021•ISTTOK1999•CNT2007•UST_2•Wendelstein7-X•JT-60SA•TCV•NationalSphericalTorus2002•J-TEXT•T-15MD1993•HL-2A20082025•HBT-EPExperiment•KSTAR•ITER•GlobeM•LTX•ElectricTokamak•QUEST•TCAB1990199520002005201020152020NOW1992Commercialprojects2(selection)Massiveincreaseinprivatefusionresearchinthe20152020•PrincetonFusionlast10years•CTFusionInc.•ElectricFusionSystems,2017Systems1998200220062011•HB11EnergyInc.FusionEnergy•TAETechnologies(USA)•GeneralFusion•ENN•FirstLightFusion•HyperJetFusion•RenaissanceFusionStrategy&2003200820132021•LPPFusion,Inc.•HorneTechnologies•HelionEnergyCorporation•EX-Fusion•NKLabs,LLC•ZapEnergy•FocusedEnergy2009•CompactFusion•HelicalFusion•Magneto-InertialFusion•NearStarFusionInc.Systems,Inc.2022TechnologyInc.(MIFTI)2018•Deutelio•TokamakEnergy•AvalancheEnergy•PrincetonStellarators•CommonwealthFusionInc.Systems•RealtaFusion•HelicitySpace•XcimerEnergyInc.2023Corporation•ProximaFusion2019•GaussFusion•CrossfieldFusionLtd•MarvelFusion•N.T.Tao•TypeOneEnergyGroupSource:1)Wikipedia;2)FusionIndustryAssociation;Strategy&analysis12Privatecompaniesaimforamuchearlierbreakthroughthantheirgovernmentresearchcounterparts:Realizationin2030sAccelerationthroughmoremodern,scalableapproachesandfasterinnovationanddecisioncyclesNationalprojects1ITERStartofITERtestsStartofdeuterium-tritiumfusiontestsDemoConstructiontestreactorcompleted(selection)ChinaFusionEngineeringPilotpowerplantreadyforoperationSTEPSTEPfeedselectricityintothenationalgridNOW202520302035204020452050Commercialprojects2(selection)HelionEnergyHelionPolarisproducesfirstelectricityNationalprojectsprioritizeresearch:Theyhavelong-runningschedulesthatareGeneralFusionDemonstrationplantreadyforoperationPowerplantreadyforcommercializationnoticeablylimitedinbudgetandsloweddownbyelaborateconsultationandadministrationTAETechnologiesPowerplantsreadyforcommercializationprocedures.FirstnetpositiveenergyCommonwealthPrivatecompaniesprioritizefastandFusionSystemscommerciallyviableinnovation:Theyactivelyseekanduseriskcapital,reactTokamakEnergyPilotpowerplantreadyforoperationtochangesrapidly,andinvestquicklyinthelatesttechnologies.MarvelFusionProof-of-conceptdemonstrationfacilityconstructedFusionEnergySource:1)Wikipedia;2)FusionIndustryAssociation;Strategy&analysis13Strategy&Inthisracetofirstcommercialfusionenergy,Germany’spositionis(time-)criticalrightnowGermanyisaleaderinacademicresearch–butabouttobeleftbehindinentrepreneurialeffortsTop9academicinstitutionsbyrecentpublications1:Top9fusionenergystartupsbycapitalization2,3,5,6:GermanyisintoppositionGermanyisbarelyrepresented424237CommonwealthTAESHINEHelionFusionSystemsTechnologiesTechnologiesEnergyMPPMaxPlanckPrincetonPlasmaInstituteforPlasmaInstituteforPlasmaPhysicsLaboratoryResearch€1.83€1.16€641€529Physicsbillionmillionmillionbillion353130ENNGeneralTokamakMarvelZapFusionEnergyFusionEnergySouthwesternInstituteNationalInstituteforCEACommissariatà€366ofPhysicsFusionSciencel'énergieatomiqueetmillion€358€229€210€191auxénergiesalternativesmillionmillionmillionmillion252321Annualnationalfusionenergyresearchbudgets4,5:NationalInstituteofUKAtomicEnergyComparedinternationally,GermanyisunderfundedQuantum&RadiologicalAuthorityKoreaInstituteofFusionScienceandTechnologyEnergy€1.27billion€250million€225millionFusionEnergy~€3.8m.per1millioncitizens~€3.7m.per1millioncitizens~€2.7m.per1millioncitizensStrategy&Source:1)IAEAInternationalAtomicEnergyAgencyFusionEnergyConference2020;2)FinancialTimes;3)Pitchbook;4)Bundestag;5)FIAFusionIndustryAssociation;6)Corporateself-disclosuresforselectedstartups;Strategy&analysis14Whatneedstobedonenow?ANationalFusionEnergyStrategycanturnGermany’scurrentpositionintoanagendaforsuccessThisstrategyisthebackboneoftherequiredclosecoordinationbetweengovernmentandeconomyNationalprioritiesforacarbon-neutral,secureGovernmentClarificationofmarketroleinaneconomywithandaffordableenergysupply.Economyfusionenergy.GuidelinesfordevelopmentanddeploymentofAssetmanagementinpreparationforthefusionenergy,enablementthroughregulationandintegrationoffusionpowerplantsintoexistingreductionofbureaucratichurdlesinlicensinginfrastructure.proceduresandfinancingprocesses.DevelopmentoftransparentfinancingstrategiesCoordinationandpromotionofcollaborationincludingrequirementsforinvestors,scenariobetweengovernmentagenciesandindustrypartners.investmentforriskminimizationof“strandedassets”.GovernmentsubsidiesandfinancingprogramsOrganizationalstructuringonthegrowthpathatnationalandEuropeanlevel.fromstartuptooperatorofcriticalassetinfrastructure.GovernmentalreinsuranceforprivateventureStrategicpartneringandM&Aforcross-sectorcapitalasabreeding-groundforstartupsandprivate-technologyutilizationandnon-naturalbusinessgrowth.sectorinnovation.TalentmanagementinordertoacquireanddevelopFormationofadecision-makingroleatthefederalthebesttalentsworldwide.levelforcoordinationofnationalenergytopicsinordertomakestrategicfuturetechnologiesreadyforInnovationstrategyandIPmanagementforthemarketmorequickly–USDepartmentofEnergyoptimizedbalancingofknowledgeexchange,aspotentialblueprint.result-orienteduseoffundsandsafeguardingcriticalknow-how.Strategicsupplychainenablementandprotectionforcriticalrawmaterials,technologies,componentsMarketingandcommunicationstrategytoandtalents.politicaldecision-makersandthegeneralpublic(publicrelations).FusionEnergySource:Strategy&analysisStrategy&15IfGermanyactsintime,fusionenergyhasthepotentialtobecomeanewenginefortheGermannationaleconomyCallsforaction:ourrecommendationsStrategy:Implementationofthefusionenergyroadmapwithsuccess-basedincentivizationtoimplementthefirstpowerplantsasquicklyaspossibleCoordination:Establishmentofanationaldecision-makingroleforenergytopicsatthefederallevel,foreffectivecoordinationofR&DandfundingSimplifiedfunding:Establishmentofeffectiveandnon-bureaucraticfundingandsupportmechanismsforprivate-sectorinnovationEconomicdevelopment:ImplementationofanenablinglegalframeworkfordevelopmentofastrongfusionindustryintheGermanyeconomyTraining:Developmentofrequiredknow-howinGermanythroughincentives,broadpublicrelations,andtargetedtalentacquisitionFusionEnergyStrategy&Source:Strategy&analysis16FusionEnergy:YourlinktoStrategy&ChristianvonTschirschkyArturKorinskiPartnerManagerEnergy,UtilitiesandResourcesEnergy,UtilitiesandResources+491752081327+4915155808989christian.von.tschirschky@pwc.comartur.korinski@pwc.comFusionEnergy17Strategy&Thankyoustrategyand.pwc.com©2023PwC.Allrightsreserved.PwCreferstothePwCnetworkand/oroneormoreofitsmemberfirms,eachofwhichisaseparatelegalentity.Pleaseseepwc.com/structureforfurtherdetails.Disclaimer:Thiscontentisgeneralinformationpurposesonly,andshouldnotbeusedasasubstituteforconsultationwithprofessionaladvisors.FusionEnergy18
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