Fusion Energy – Can It Be Cheap Enough?

Fusion energy stands as the proverbial holy grail of power generation, promising virtually limitless clean energy with minimal waste and zero greenhouse gas emissions. After decades of scientific pursuit, recent breakthroughs have reignited optimism that commercial fusion power may finally be within reach. While challenges remain to be overcome in the technology of fusion energy, the following economic questions are key to fusion’s viability as a commercial source for grid-scale electricity:

• Can fusion energy compete economically with existing sources of electricity?
• What would a fusion plant cost to build?
• What would the ongoing costs be (fuel, operations, maintenance, etc.)?
• What would the resulting cost per megawatt be?

The Cost Basis for Electrical Power Plants

Before we jump into the cost of electricity for a fusion electrical plant, let’s look at what factors drive electricity costs in general, regardless of the fuel type. These costs include the following:

• Operating Cost: This is the cost of the people that run the plant, plus any other ongoing costs not related to fuel or maintenance.
• Fuel Cost: This is the average cost to provide the fuel for the plant, including transporting the fuel to the power plant.
• Maintenance Cost: This is the average cost per year to maintain the power plant, including overhaul labor and equipment costs, and the costs of any non-fuel consumables that wear out over time

  

The table above, from the US Energy Information Agency (US-EIA), has the average costs for these metrics from 2023. All of these costs are typically expressed as a cost per megawatt-hour (MWh).  These costs add up to the “total operational expense” of the powerplant, while the construction cost is typically seen as a capital cost, and is amortized over the life of the plant (see below).

As can be seen, the average cost of a 1 gigawatt (GW) fossil fuel power plant (liquid fuels, natural gas, and coal) is slightly over $1B ($1.162 billion), while for renewable power plants (Hydro, wind, geothermal, solar, and other renewables) is roughly double that ($2.16 billion). Conversely, the total operating expense for fossil fuel plants is $42.6 per MWh ($42.6 million/year for a 1GW plant), while the total operating expense for a renewable plant is $0.2 per MWh ($1.6 million for a 1GW plant). The one “outlier” is nuclear power, which has the highest cost to build ($6.8 billion for a 1GW plant), but has a lower total operating expense of $22 per MWh.

So What Does it Take for Fusion Energy to be Competitive? $50/MWh

Bob Mumgaard, CEO of Commonwealth Fusion Systems (CFS), put a stake in the ground on the reality of fusion energy in his Open Letter to the fusion industry:

• If fusion energy can get to $100/MWh, you can at least enter the commercial market.
• If fusion energy can get to $50/MWh, you win in the commercial market.

This is the cost per megawatt of power that fusion energy would have to meet to be competitive. While this is significantly higher than fossil fuel costs, it is important to note that when factoring in inflation it would be about the same. More importantly, if energy demand continues as expected and production stays flat, energy prices will go up significantly, making $50/MW competitive.

What Would It Cost to Build and Operate A Fusion Power Plant?

Estimating construction costs for fusion plants involves considerable uncertainty, as no commercial fusion plant has yet been built, and numerous designs are competing to achieve this goal. Current projections are based on experimental facilities, theoretical models, and analogies to similar technologies.

Current capital costs for fusion plants are estimated to range from $2,700 to $9,700 per kilowatt of capacity. For context, a typical fusion plant is expected to have a capacity between 1,000 and 1,500 megawatts. Using these figures, a 1,000 MW fusion power plant would cost between $2.7 billion and $9.7 billion to construct. Our own estimates are that building a fusion power plant will be somewhat less expensive than a nuclear power plant, with the cost of a 1GW fusion plant coming in at around $6 billion.

From an operational perspective, Ignition Research/The Fusion Report also expects that operational costs for a fusion plant will be similar to those for a nuclear power plant. Specifically, fuel costs will be significantly less than those for nuclear power (assuming that fusion companies can successfully master the production of tritium), but the maintenance costs will make up this difference, primarily in the cost of replacement items such as first walls, thermal blankets, and the extremely large capacitors in fusion machine pulsed power systems.

What Does AI Say About Achieving $50/MWhr?

If we consider Bob Mumgaard’s competitive target price of $50/MWh for a 1 GW fusion power plant, what would it take to achieve it? Current estimates indicate that achieving $50/MWh would require capital costs that are well below current projections for first-generation fusion plants, but that advanced fusion energy designs could in fact reach these numbers. Critical to achieving these numbers is breakthroughs in the remaining challenges for fusion technology, plant standardization, and regulatory streamlining.

Summary: Cost is King in Determining Fusion Energy’s Success

Fusion energy represents one of humanity’s most ambitious technological pursuits, promising clean, abundant energy with minimal environmental impact. The $50/MWh target is ambitious, and the model presented here will undoubtedly garner many criticisms; however, if it is close to accurate, it will fundamentally change geopolitics, industries, economic growth, and advancements in AI, and hundreds of other fields. Our hope is that those reading this article share our optimistic view that we can overcome the challenges and make fusion energy a key factor in driving civilization’s growth and advancement.