The UK government has invested £20 million into a UK nuclear fusion investment fund, which is expected to leverage up to £100m of private investment.
Energy secretary Ed Miliband said: “This government is taking back control of Britain’s energy by driving for clean homegrown power through our Plan for Change.
“Fusion has the potential to provide us with energy security, whilst attracting the best technologies to our shores and training up the next generation of British scientists and engineers. We are backing both nuclear and fusion power, and today we take a step forward in growing this exciting industry.”
The Department for Energy Security and Net Zero (DESNZ) said on Thursday that it is investing capital to unlock private sector investment and help the nascent sector scale up. It said government will receive a share of any returns made by the partnership.
The department argued that successful deployment of nuclear fusion energy would be “globally transformative” and would allow the UK to export the technology to a global market that is expected to be worth trillions of pounds.
It said the funding was allocated from the government’s existing research and development budget for the year 2024 to 2025.
The government’s cornerstone investment in nuclear fusion will effectively “kickstart” the Starmaker One investment fund, a private vehicle set up to enable start-ups and businesses to commercialise and grow.
It is the first early-stage fusion energy venture capital fund to be formed outside the US and the first of its kind to partner with the government as an investor.
The energy department said it has invested £410m, unveiled in January, into UK nuclear fusion research to spur collaboration with other countries to drive economic growth through developing clean and “unlimited” power.
The fusion fund is structured as a limited partnership, in which the UK government is a cornerstone investor.
It has the potential to raise between £100m and £150m in total capital, including the kick-starter investment, to invest in fusion-related technology, the government claimed.
East X Ventures, the venture arm of London-based quantitative systematic research and investment firm East X, is the manager of the fund.
The latest pot of funding will help nuclear fusion companies to train their workforce in disciplines such as physics, engineering and chemistry.
It is designed to help them develop technologies to enable British companies to compete in industries such as industrial artificial intelligence, robotics, healthcare, transport and energy storage.
Independent research from London Economics indicated that every £1 invested in nuclear fusion benefits the economy by nearly £4.
Nuclear fusion uses the same process that effectively powers the sun, by combining two forms of hydrogen and heating them at extreme temperatures to release vast quantities of energy.
UK companies have identified a lack of access to capital as a barrier to scaling up and commercialising their businesses. But this could be set to change.
Tokamak Energy became one of the first companies in the UK to secure $125m of funding in November to scale and commercialise its prototype nuclear fusion technology.
Nuclear fusion is already pitched as an established but still fledgling industry in the chancellor’s Oxford-Cambridge Growth Corridor, a research-focused industrial cluster that she hopes will rival Silicon Valley.
“Fusion energy is a technology with enormous potential, and an industry in which the UK is already well established,” said science minister and Oxford-Cambridge Growth Corridor Champion, Patrick Vallance.
“This investment will help to unlock the funding the fusion industry needs to grow, which will boost regions across the UK such as Nottinghamshire and South Yorkshire, and in Culham in Oxfordshire, the epicentre of UK fusion.”
