There are many markets for fusion energy that don’t even involve electricity, let alone achieving $50/MWh on the wholesale market
The Fusion Report has covered a plethora of requirements for fusion energy to succeed in the commercial market, whether from science or engineering, and whether real or desired requirements. One of these “requirements” is the idea that for fusion to be successful, it needs to be able to support the sale of energy at a price of $50 per megawatt hour (MWh). Because this requirement was stated by none other than Bob Mumgaard, CEO of Commonwealth Fusion Systems (CFS), arguably the best-financed fusion startup on the planet with nearly $3B in funds, the figure has been taken as gospel. But the US electricity market is only one potential market for fusion energy, and almost certainly not the one most friendly to new power sources. Pricing electricity is a complex matter, and the generation source is just one piece of it. So let’s look at how the mechanism actually works.
How Wholesale Electricity is Priced and Sold
There are two market structures in the US: regulated areas and deregulated areas. In regulated areas, vertically integrated utilities handle both generation and distribution; they set the price of electricity, subject to approval by public utilities commissions (PUCs). In deregulated regions, electricity suppliers (metro grid operators) negotiate long-term contracts for their baseload needs, which have quantity guarantees for the electricity generators.
For the remaining peak needs, independent system operators (ISOs) or regional transmission organizations (RTOs), who manage the regional grid, facilitate competitive bidding for short-term contracts. These wholesale prices are typically set by a market-clearing price, where the last, most expensive generator needed to meet demand sets the price for all generators. These prices (known as spot prices) can be 2x or 3x the price of the long-term contracts.
Wholesale Baseload Electricity Prices in Different Regions of the US
Even though the idea behind wholesale baseload prices is to get some level of consistency, they vary wildly between different parts of the country and at different times of year. By far and away, the most expensive regions are in New England (ISO-NE), New York City (NYISO), and the Mid-Atlantic region (PJM). There, monthly wholesale prices swing between $24/MWh and $260/MWh, with the New York ISO 2025 annual average at $74.40/MWh and trending higher in 2026. The lowest-price regions tend to be the Southwest (Arizona, New Mexico, Nevada, and Utah; Palo Verde ISO) and the Pacific Northwest (Mid-C), with Southern California, Northern California (Cal-ISO), and Texas (ERCOT) running slightly higher.
In comparison, western countries such as Europe and Japan have significantly higher wholesale electricity prices than in the US. EU prices are heavily influenced by EU-ETS carbon prices and natural gas (TTF), while Japan’s are driven by liquefied natural gas (LNG) import costs. Average wholesale electricity prices in Europe rose ~10% in 2025 to ~USD 95/MWh, a trend continuing into 2026 due to colder weather and high gas prices. Regional differences are stark: Italy and Germany often see higher prices (€75–110/MWh) compared to France and Spain, where nuclear and renewables, respectively, limit the impact of gas prices, according to IEEFA.
In Japan, wholesale electricity prices surged in early 2025 by ~15% to an average of USD 76/MWh, largely driven by LNG price spikes. Spot prices on the Japan Electric Power Exchange can be volatile, sometimes doubling during high-demand periods like winter. Japan’s wholesale prices are also under upward pressure from natural gas costs, in much the same way as Europe’s. Both regions are hit by the war with Iran, which has curtailed natural gas outflow through the Strait of Hormuz from the region to both Europe and Japan. The forecasted result is even higher wholesale electricity prices, likely exceeding $100/MWh through most of 2026, as well as supply shortages.
Wholesale Electricity Price Trends From Different Fuel Sources
Of course, one of the variables in the equation for the cost of electricity is the source of the electricity itself. In most cases, the cost of electricity is computed by a combination of capital expenditure (CapEx) for the amortized equipment to generate the electricity, plus the variable costs which are based on the fuel costs, operational costs, and maintenance costs. CapEx costs vary widely: natural gas-fired plants have CapEx with cost for a 1GW capacity power plant as low as under $1B, while fission nuclear plants have the highest CapEx of electricity generating options today, typically running between $8B and $14B for a 1GW power plant. In general, power plant capex costs rise with the cost of inflation, though long lead times for items like turbine systems have made the prices of natural gas plants go up significantly faster than those other plants. The one exception to this is the cost of solar energy plus battery electric storage system (BESS) capex costs. Specifically, the cost of utility-scale battery systems has dropped significantly; in 2025 alone they went down by nearly 30%. The price of utility-scale solar cells has similarly dropped over the past several years.
In general, the maintenance and operational costs of power plants are roughly the same regardless of fuel source, with two exceptions: nuclear power plant operational costs tend to run about 50% higher than those of fossil fuel power plants, while renewables (not including hydro) tend to run significantly lower than every other type of power plant.
In contrast, the fuel prices for a fission nuclear plant are some of the lowest per megawatt-hour of any fuel source, excluding renewables, which have no fuel cost. The average cost of fuel for nuclear power plants was $0.612/kWh in 2022. Uranium prices have been climbing since 2008, but the impact on electricity prices has been minimal. Fossil-fuel plants sit at the other end: 2022 fuel costs were nearly 5x what nuclear fission plants paid, and those prices remain highly volatile. The chart below shows construction and operating prices across all power sources as of 2022.
AI Data Centers, “Behind the Meter” Pricing, and Fusion Energy
Cost projections for a 1 gigawatt capacity AI data center are in the range of between $35 billion to $80 billion, depending on how much of the equipment and power infrastructure is included. The gap between the price estimates comes from what is counted: land and buildings are only part of the bill, while GPUs, networking, cooling, substations, and grid connection can dominate total spending. Operating costs are also large at that scale, with one estimate putting electricity alone at about $1.3B/year for a 1 GW site at $150/MWh, but that cost is region-dependent. Data centers in California, like other industrial and commercial customers, pay significantly higher rates than in Texas and Virginia, averaging over $300/MWh, nearly 2X the price in Virginia or Texas.
On top of that, data centers are often required to pay for transmission network upgrades. Many are also “hitting a brick wall”, as the lack of electrical capacity and delays in acquiring grid interconnect equipment often take years to address. Even in “energy-friendly” areas like Virginia and Texas, these problems are becoming more common for data centers. That is one of the reasons why “behind-the-meter” (or “bring your own power”) is becoming a more popular approach for the powering of data centers. Calculating the cost of behind-the-meter power for an AI data center, however, is complex. While the physical facility may have a life of 20 to 30 years, the infrastructure typically has a life no more than 10 to 15 years before it needs to be replaced. Moreover, the AI IT equipment servers and GPUs typically only have a life of 1 to 3 years due to technological obsolescence, requiring regular “forklift” retrofits. This is why 10 to 15 years is used as a data center lifetime.
If we look at a 1 GWe capacity nuclear fission power plant for a behind-the-meter application with a 15-year operating life, there are two primary component costs: construction costs, which typically run between $8B and $15B in the US for a 1GW plant; and total operating costs, which includes operation, maintenance, and fuel costs, and typically runs $287M/year. The per-year total cost of ownership (TCO) would then be between $820M/year and $1.3B/year, at or below the $1.3B/year for electricity if bought on the retail market at $150/MWh (the price in Virginia and Texas), and well below the $2.6B/year for retail electricity at $300/MWh in California. Effectively, if fusion can match the price of nuclear fission, it could easily be competitive as a behind-the-meter power source. It could be super-competitive in Western countries such as Europe and Japan, even if costs ran 50% higher than those of nuclear fission.
Conclusion: $50/MWh is a Goal, Not a Requirement
$50/MWh is a good goal, but it is just that: a goal. For California and New York City, the goal could just as easily be $75/MWh, and in Europe and Japan it could run up to $100/MWh. Given the incessant demand for electricity on our planet, especially for AI data centers, that pricing pressure will only continue to climb. The real challenge is achieving a facility Q>10, which is what makes that price feasible. Now all we have to do is get fusion to work 😊.
