Investors hold the key to fusion and our clean energy future
Recently, I’ve had a lot of interesting conversations with fusion power investors.
It’s because I’m hosting a merger investment event in London on May 18th. FusionXInvest will be the first major event entirely dedicated to stimulating investment in fusion, which is essential to its commercialization.
Fusion energy will be transformative for society, delivering nearly limitless clean energy when and where we need it, complementing renewables for reliable power grids, and decarbonizing industrial sectors such as steel, cement, mining or desalination. Fusion is the energy of stars, and you can learn more about how scientists are working to harness it in a previous piece.
While scientific developments are inspiring and engineering challenges daunting, often dominating the conversation, it is essential to recognize the importance of securing the right funding when it comes to complex engineering projects and technology developments. new technologies.
Why investors are essential
Investors are in an interesting position. They have the potential to be an important part of the solution to our climate/energy problems by enabling the accelerated development of fusion.
Legal & General Group, one of the UK’s leading financial services groups and a major global investor, is candid about the power of investors to tackle climate change through investment, influence and leadership. operations.
The Group’s alternative asset platform, Legal & General Capital (LGC), plays an important role in the development and deployment of technologies that help tackle climate change, such as electric charging infrastructure in the UK, super efficient solar panels, offshore wind farms and also fusion energywhere they have been investing for several years in Tokamak Energy.
John Bromley, Managing Director of Clean Energy Strategy and Investments at Legal & General Capital, said: “The climate is not only the most pressing issue, but also the greatest investment opportunity of our lifetime. Investors focused on the challenges of decarbonizing our economy, and capable of having a long-term vision, have a crucial role to play in the accelerated development of fusion energy.
He continues, “As an investor in the energy transition, Legal & General Capital supports the growth of a new generation of clean energy technology and infrastructure providers, and innovative companies whose work will support the transition. towards net zero.
Some consider funding risk to be the biggest risk to mergers, so investors are key to success.
Get in on the action
Investors also have the chance to win big on merger, a market that Bloomberg predicted it could hit $40 trillion.
Why is the merger so attractive? As John Bromley puts it, “Renewable energy will certainly be an important and important part of a decarbonized economy, but we will also need dispatchable carbon-free energy sources to end dependence on fossil fuels. Fusion energy has the potential to achieve and sustain a significant reduction in global emissions.
There is no doubt that financing the merger is a challenge, involving high upfront costs, long lead times and great uncertainty. Still, investment in smelting has increased.
Last month, Breakthrough Energy Ventures (Bill Gates’ investment firm seeking to fund, launch and grow companies that will eliminate greenhouse gas emissions across the global economy – an investor in Commonwealth Fusion Systems and Zap Energy) invested in another merger company, Type One Energy.
Behind the scenes, more conventional investors, such as pension funds, insurance companies and sovereign wealth funds, quietly invested in the merger. Merger integration among capital providers has begun.
What investors need
Yet getting started in merger investing requires a steep learning curve. Merger is a vast and complex subject.
More and more investors, investment banks or other financial players are asking to learn about mergers, thus taking the first step towards a new industry.
Fusion funding is so mission critical that merger proponents should ask themselves how we can accelerate this integration of fusion and bring new capital to the table.
Investors need access to opportunities, they need knowledge from industry insiders and existing investors, they need community and connections. That’s why events that bring all of these things together can be so important.
But investors also need government support and certainty. This is one of the reasons the UK is currently in a strong position for the development of fusion energy, as they have presented their plans for a regulatory framework for fusion as other countries are still under discussion.
However, this goes further than technological regulation. Policies and incentives will be needed in the financial services sector to encourage efficient reallocation of capital.
Michelle Scrimgeour, Managing Director of Legal & General Investment Management, gave evidence to a 2022 UK Parliamentary Inquiry titled “The Financial Sector and the UK’s Net Zero Transition”.
Scrimgeour said: “A successful transition to a low-carbon economy, consistent with warming below 1.5 degrees, will require a substantial shift in capital allocation. Several trillions of dollars per year of additional capital will need to be invested in low-carbon energy, energy infrastructure and energy efficiency. For this capital allocation to happen, a financial services sector aligned to zero net results will be crucial. Likewise, it requires global political action at the international governmental level, particularly on an effective regulatory structure to price carbon and other greenhouse gases.
So if investors hold the key to the success of fusion and our clean energy future, it’s not just investors – government policy will be crucial in enabling investors to drive change.