In 2025, we have seen significant progress in Chinese Fusion, strategic changes from the US DoE, acceleration of private fusion investments, pushing which is ~$10B USD in total, and continued public funding from Japan, Germany, Korea, Canada, the UK, the EU, and China, which have significantly advanced their fusion developments. The US government also has a wide range of legislation in process regarding energy, power grid, and fusion energy:

  • Electricity Supply Chain Act H.R. 363
  • The SPEED ACT H.R.4776, 
  • PERMIT Act Reforming Section 401 H.R. 3898
  • Advancing Grid-Enhancing Technologies S.3918 
  • Fusion Advanced Manufacturing Parity Act H.R. 5441 / S. 3088

Hopefully, we will also see a significant commitment to fusion energy via appropriations in the 2026 and 2027 fiscal budgets, which will fund US fusion development for years to come. The Fusion Industry Association published its recommendations in a letter to the DoE. One clear point is that the pace and race for fusion will only accelerate in 2026.

First, Our Thanks for Your Support in 2025

As we wrap up 2025 (this will be our last article for the year). We want to thank our subscribers and sponsors for their ideas, comments, and readership. We want to thank all the fusion industry players who took the time to participate in the interviews, provide company profiles, and correct any errors. When we started The Fusion Report, we did not know whether anyone would read our musings and reporting in this space because we were new to the segment, and we are grateful to all who have helped make this a better publication.

The Fusion Reports Top 10 Substack Articles for 2025

  1. Is the Chinese "Great Fusion Dragon" Real?
  2. TAE and Trump Media Deal - A Landmark Day for Fusion Energy
  3. Inside the Fusion Factory: A Tour of Commonwealth Fusion Systems
  4. Anthony Pancotti of Helion Energy
  5. Christofer Mowry of Type One Energy
  6. Helion’s Direct Drive Energy Recovery System
  7. Xcimer Energy: NIF-Style Inertial Confinement is Alive and Well in Denver!
  8. Pacific Fusion on Goals for their Inertial Confinement Demonstrator System
  9. Trump 2.0  Admin (House, Cabinet, Senate)
  10. Interview with EMC2 Fusion: A Different Approach to Fusion

10 Predictions for Fusion in 2026

  1. Fusion via US Sovereign Fund Model - We may not have an official US sovereign fund, but our government is acting as if it does in the Trump 2.0 administration, so we are going to roll with it. China will force the US to allocate significant funding to Fusion energy. Hopefully, the US Congress will follow the $10B recommendation from the Fusion Industry Association. It will likely do so through a sovereign fund model in which technology developed by national labs is licensed, and royalties are collected. The US government will be one of the major players, but will require an equity stake. I believe that this administration will “show us the money,” but it comes with strings attached.

  2. Fusion Keeps Going Public - TAE is just the first; we will see up to 5 fusion companies go public in 2026. Cash is king as we strive towards commercial fusion and development, and talent is not cheap. SPACs and other vehicles will be used to create capital. We have seen this with early quantum computing companies, and Fusion is next in line.

  3. Fusion Machine Company Consolidation - We expect to see the consolidation of fusion companies with similar designs. There are too many players for everyone to make it, and we will see an increase in M&A activities to drive development, aggregate talent, and scale resources.

  4. Derivatives Become Viable Business - the trend toward directive products (magnets, vessels, power systems, etc.) is emerging as a larger market for many fusion players than as a market for fusion power plant companies. Investors, market demand, and serendipity will motivate initial fusion machine companies to become players in markets that use derivative products they excelled in, and we will see pivots to other markets accelerate. As we have seen with every significant advancement in technology, from the space program to the internet, to mobility, many companies start wanting to be the “platform player” but end up being far more successful as a “components player.”

  5. Power Plant Companies' Buy-In - E Vernova, Hitachi, Siemens, and Schneider will start placing bets on fusion M&A to build out their product portfolios. They are experts on scale, manufacturing, installation, and operations. They will need to start moving beyond placing multiple start-up investments, to choosing designs to go to market with in the future.

  6. Vertical Integration of Supply Chains - as the haves, which are those who have raised $1B+ USD (CFS, TAE, Helion, Pacific, etc.), drive toward the commercial finish line, they will start to absorb smaller supply chain players to drive vertical integration and time-to-market.

  7. SPACs, sovereign funds, and the fight for compute fuel - As we have seen various executive orders and new leadership at the NRC beginning to change policies, permitting, and to drive testing and early deployments of fission-based SMRs (Small Modular Reactors), we will see similar programs for early fusion machines on federal properties to accelerate time to market.

  8. China Triples Down - this may be the easiest prediction for 2026. China always takes a longer-term approach; its government can dictate resource allocation, supply chains, and the allocation of critical minerals, and can forgo regulatory issues Western fusion companies must contend with in development and deployment. This does not guarantee victory, but it is an advantage on many fronts. We all know the strategic and economic upside of success in fusion energy, and China will accelerate and compete vociferously in this market.

  9. Private Investment Continues to Ramp to $5B or More - More cash will be needed to bring Fusion to commercial operational levels and build grid-scale plants. TAE is pioneering the public markets route; traditional VC will probably continue to invest at about the same rate in 2026, and tech giants and hyperscalers will step up as progress is more evident.

  10. Fusion as "AI-Energy" and “Compute Fuel” - The TAE/TMTG deal explicitly linked fusion to AI dominance. The hyperscalers (Microsoft, Google, Amazon, Meta) are currently severely power-constrained. Fusion will stop being marketed as "Green Energy" and transition into ‘AI Energy” to provide the  "Compute Fuel" our data centers need to win the AI race. By the end of 2026, we will see a flurry of PPAs in which a major tech giant prebuys fusion power not as a pilot but as a core baseload strategy for a specific new data center campus (likely in the Pacific Northwest or Northern Virginia).

Again, we would like to thank everyone who helped make this a great year in fusion energy, as well as our industry friends who provided interviews, ideas, and feedback. We hope everyone has a great holiday season and looks forward to a bigger and better 2026.