Financing Fusion Energy
The case for investing in fusion energy has never been greater, given increasing global energy demand, high annual carbon dioxide output, and technological limitations for wind and solar power. Nevertheless, financing for fusion companies through traditional means has proven challenging.
While fusion startups have an unparalleled upside, their high upfront costs, lengthy delay in payoff, and high risk of commercial failure have historically restricted funding interest to a niche set of investors.
This research paper co-authored by Lazard Climate Center Director Zach Halem, Senior Advisor Andrew Lo, and several MIT collaborators, is the most substantial work to date exploring how the private sector can mobilize capital to finance fusion energy.
Drawing on insights from investor interviews and case studies, the paper proposes the creation of a fusion “megafund,” a financially engineered instrument that funds a large number of projects through various debt and equity tranches.
Through modeling and simulating fusion portfolios, the authors demonstrate that diversified funding can not only help develop and commercialize the “holy grail” of energy production, but also generate substantial investment returns in the process.
Click here to read Financing Fusion Energy.