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Fusion startups are giving the government shares in exchange for awards. Is it worth it?
Policy1 min read
Two fusion power startups, Helion and Commonwealth Fusion Systems (CFS), won $260 million in U.S. government awards. In return, they agreed to give the government non-voting shares in their companies.
The government is back in fusion
The U.S. Department of Commerce gave Helion $175 million and CFS $85 million. The money is meant to help develop advanced computer chips that power and control fusion reactors. Both companies agreed to give the government non-voting shares, which means the government gets part ownership but no say in company votes.
Key numbers
- Total awards: $260 million (Helion $175 million, CFS $85 million).
- CFS has raised about $4 billion in total. Helion has about $3.2 billion in committed capital.
- Helion's share to the government is about 1%, based on its $15.5 billion valuation.
- Private investors have bet more than $14 billion that fusion power plants can be built.
- The Fusion Industry Association asked for a one-time $10 billion boost for the sector.
Why this is different
In the past, government money for startups usually came with no strings. This is called non-dilutive capital, which means it does not lower existing owners' shares. Now the government is taking shares in return. Earlier fusion awards were also small. One program paid less than $50 million in its first couple of years.
Why it matters
The awards are small compared with what the companies have raised. But they show the U.S. government is again paying attention to fusion. Industry leaders say other countries, especially China, are spending heavily, so the U.S. needs to keep up. The equity deal also shows a new way the government may get a direct benefit when it funds a company.
What to watch
- Whether the government makes more awards with equity stakes.
- Whether Congress gives the fusion industry the larger $10 billion boost it has requested.
- How the Department of Energy's Milestone Based Fusion Development Program grows in the coming years.
- Whether Helion and CFS reach their technical goals and build power plants.
Glossary
- Fusion
- A way to make power by joining atoms together, the same process that powers the sun.
- Commonwealth Fusion Systems (CFS)
- A fusion company that is building fusion reactors and has raised about $4 billion.
- Fusion Industry Association
- The trade group for fusion companies that lobbies the government for support.
- Milestone Based Fusion Development Program
- A Department of Energy program that pays fusion companies when they reach technical goals.