Fusion energy had a new debut in December, when the theoretical became possible for a fraction of a second. At the National Ignition Facility in Livermore California, scientists created 3.15 megajoules of energy from 2.05 megajoules, which effectively means, more energy was created than infused into the process. Fusion is a cleaner version of atom interaction than fission, and, according to scientists, does not create highly radioactive waste. It combines atoms instead of splitting them, in a very similar process to the way the sun makes energy. Now, experts in artificial intelligence are scoring grants to help distill the data and perhaps make the process less dependent on lasers. Some believe fusion energy will fuel the electric grid by the 2030s, clean up global warming and supply clean energy.
Enter Bill Coaker, the former chief investment officer of San Francisco, who is now the chief investment officer of TAE Technologies, (a fusion-centered technology platform). We thought we'd catch up with him to help explain the terrain, tell us what is ahead, and what is still needed for fusion energy to become commercial. What follows below is an edited version of the interview.
(Editor’s note: please excuse blunders; I had COVID when I did the interview.)
Christine Giordano: Hi Bill, can you start us from the top and tell us exactly what fusion is?
Bill Coaker: Sure. Fusion combines atoms to create energy. If TAE’s fusion were to work, it would create a whole new energy source that is totally clean, low cost, very reliable, and its supply would be in abundance for tens of thousands of years.
Importantly, Fusion is the opposite of
fission. Fission splits atoms to create a mass explosion and emits a mass
amount of radiation. Thus, it needs to be captured and stored for thousands of
years and were it to be released, it represents a massive human hazard risk.
Fusion has no meltdown risk. It has only trace amounts of radiation, which are non-concerning and non-long-lived. Both fission and fusion could be used to create and deliver a new energy source that is free of carbon emissions, but TAE’s fusion creates energy that is totally clean, totally safe, and has no meltdown risk.
CG: OK. And of course, it is in nascent stages right now, correct?
BC: I would say fusion is much further along than that.
CG: Can you tell us about the news about the Department of Energy that recently broke and why it is important?
BC: The announcement by U.S. Energy Secretary Jennifer Granholm and other officials can be found here: https://www.rev.com/blog/transcripts/u-s-officials-announce-major-nuclear-fusion-breakthrough-transcript. It is a worthwhile read.
The announcement in December 2022 was breakthrough moment for the fusion industry. For more than 60 years the fusion industry has been attempting to get more energy out of a fusion test than the energy that went into it, a result called net positive energy. This announcement by the National Ignition Facility and the Department of Energy was the first time that we achieved net positive energy: more energy out than went in. It was a Kitty Hawk moment.
In addition, for every one unit of energy that went into their fusion test, they got 1.5 units out. So, they cleared the 1.0 hurdle by a significant sum.
Also noteworthy was the scale and the pace of improvement. Just 16 months earlier, the NIF announced a test where they had 0.7 units of energy out for every one unit of energy that went in. Fusion needs to clear the 1.0 hurdle to deliver energy economically. The pace and the scale are incredibly encouraging.
The test measured the amount of energy produced relative to the amount of energy the laser used to hit its target. It did not account for the energy used to charge up and fire the laser. That said, we would point out that the lasers used were built on 1980s technology, and the test shows that scientists are on the right track and making rapid and substantial progress. A few quotes are noteworthy:
Anne White, a plasma physicist at MIT, I think her exact quote was: “This is extremely exciting. This is a major breakthrough.”
Steven Ross, a plasma physicist at the Imperial College of London, said “What was achieved was a [heck] of a lot of energy. It shows that something is working.”
Secretary Graholm stated
“This is one of the most impressive scientific feats of the 21st
century.” Later she added “If we can
advance fusion energy, we could use it to produce clean electricity,
transportation fuels, power heavy industry, (and) so much more.”
Our data is also very encouraging, that the industry is closer than consensus understands to delivering fusion energy to the human experience.
CG: That begs the question, Bill, what is the significance of achieving fusion energy?
BC: When energy is priced high and it is scarce, it leads to economic upset and it leads to political and social division. And when energy is abundant and priced low, it creates the conditions for economic prosperity as well as political and social stability.
The cost of energy and the supply of energy underpins all economic activity. Oil is used to make 6,000 goods that we all use every day. Fossil fuels are obviously used in automobiles and aircraft, but they are also used to produce shampoo, conditioners, soap, toothpaste, the clothes we wear, pharmaceuticals, the drugs that we use, fertilizer and pesticides, pens, paper, mobile phones, computers, insulation, air conditioners, and much more. There are thousands of everyday uses.
To create a new energy source that is totally clean, TAE fusion is highly affordable, in mass abundance for tens of thousands of years, reduces climate risk and can lift the human experience to a whole new level, akin to the significant gap up in the human experience from the agriculture era to our current way of life.
Fossil fuels freed humanity from being tethered to the land, hard labor, minimal transportation and communications, and without safe food, water or medicine. But the improvements in our quality of life have come with urgent negative consequences to the environment and our future.
Fusion would enable humanity to achieve its next great plateau, by delivering energy that is totally clean, lower cost, reliable, in massive abundance for hundreds of thousands of years.
CG: There's a lot we can dive into there, but I'd kind of love to know: After you left San Francisco Employee Retirement after posting top ranked returns and receiving a number of accolades, why did you leave San Francisco to join TAE?
BC: To start SFERS was great. I loved SFERS. We built a great team. They do terrific research. They are really, really good at what they do. They are very granular in their research. We had a saint of a CEO in Jay Huish, and it was an honor and a privilege to provide retirements security to approximately 70,000 workers across utility workers, daycare providers, fire, and police. I spent most of my life in the Bay Area, and saw it become the tech capital of the world. But to have a well-functioning community, everyone’s work is important. Every task, every job is important. To contribute to providing retirement security across such a wide array of workers was an incredible privilege.
I began researching TAE in 2014, and at the time I thought fusion had a really, long, long way to go. But I also thought, well if it did work, it would be the greatest invention ever. I will come back to that later. I also thought to keep informed and learn more.
By 2019 I had seen the scientific improvements that were taking place where TAE was achieving ever higher temperatures and improving the stability of plasma as they push temperatures higher. By that time, I was directionally very constructive on the improving science. Less than two years later, in 2021 that arc of pushing temperatures higher and simultaneously improving the stability of plasma - the two core obstacles to achieving fusion as well as doing so economically - was bending higher. By mid-2021 I thought that TAE's approach to commercializing fusion is more likely to succeed than not if it is adequately capitalized. Since then, TAE’s performance arc has continued to demonstrate significant improvement.
I left SFERS because of the immense positive contribution TAE can bring to all of humanity. A new energy source that is totally clean, low cost, reliable, and in abundance for tens of thousands of years would be the greatest invention ever. That is because all of the great inventions of the past 150 years – the automobile, radio, film, television, the assembly line, aircraft, landlines, modern medicines, modern farming techniques and water systems, mobile phones, computers, the internet, and machine learning – all require an immense and fast-growing amount of energy. Fusion can create new levels of economic prosperity for all humankind, and bring political and social unity, to the human experience.
Bloomberg ran an article shortly after the NIF test saying fusion is a $40 trillion market. It is a huge market. As we touched upon earlier, energy is an output of all human activity. The combination of TAE’s mission plus the scale and size of the impact fusion energy would bring to the human experience is what drew me to TAE.
In addition, as I got to know the team, I thought these are the people who are going to get it done.
CG: What is so unique about TAE in the fusion space?
BC: The CEO of one of our largest investors made the following comment to me in 2021: “They know the science, and they know all the nuances required for commercialization.” This person is the CEO of a large, prominent venture capital firm and has followed TAE for a long time. He then added “What remains is an engineering problem. And they have really smart engineers.” After the NIF announced their recent test, Bloomberg ran an article and the headline of it is: “Fusion Solved, What Remains Is a Complex Engineering Problem.” That is exactly right, and that is exactly what was told to me a year and a half before.
As far as what makes TAE unique, there are several features.
First is we have built five reactors (tae.com/about-us/history/), so we are very experienced at this. And the data readouts keep improving, and the arc of improvement has trended higher. We are very enthusiastic about the direction of the improvement.
The second is the uniqueness of the design of our machine, and the uniqueness of our ultimate fuel source. The traditional approach to pursuing fusion energy has been a design of machine called a tokamak. And the fuel sources are deuterium and tritium. Both represent challenges.
There is plenty of deuterium in the world for thousands of years, but tritium is in only trace amounts in the upper echelons of the atmosphere, so it lacks supply, which means it needs to be bred. But there is a catch: to breed tritium, you need a working fusion reactor. Breeding tritium in a fusion reactor is needed, but it may not succeed. Further, ongoing tests may consume all the world’s supply before a commercial reactor is ready. Also, tritium causes intense neutron damage to the tokamak, requiring long down times and higher costs for maintenance. Mohamed Abdou, a nuclear engineer at the University of California Los Angeles, stated, “This makes deuterium-tritium fusion reactors impossible.” (www.science.org/content/article/fusion-power-may-run-fuel-even-gets-started)
Our machine is an advanced-beam field reverse configuration (FRC) and does not have the issues related to reliability and therefore maintenance, so it is much more reliable. Also, our ultimate fuel source is hydrogen-boron, also known as p-B11. Hydrogen-boron is in mass abundance in the oceans and in the crust of the earth for hundreds of thousands of years. It is in mass abundance, whereas tritium is in trace amounts. Because hydrogen-boron is in mass abundance, the price point would be lower. We think our approach to both the design of the machine and the fuel source results in a much more elegant complete solution, which goes beyond producing net positive energy to a commercial solution on a global scale.
Our existing fusion machine operates 24/7, 365 days a year with flawless performance. And we did that through a combination of our own clever engineers and what is now an 8-year relationship with Google’s machine learning team. Google is a top five investor in in TAE.
The third thing that is unique about TAE is our adjacent businesses.
Along our path to develop fusion energy, we had to solve some immense
engineering problems, one of which was how to run a 750 MW lab test from a
utility feed that provides 2 MW of power. And we have successfully done that,
that and became very, very, very good at battery power and energy efficiency
and storage, with technology that reduces charging times from an hour to 15
minutes, improving energy efficiency and storage by 20 to 30% and other
economic value-add metrics.
We asked a large consulting firm to document for us what the size of the addressable market. They came back and said there is at $1.2 trillion addressable market by the end of the decade and documented each segment of the market. Hence, we developed an adjacent business, called TAE Power Solutions, to commercialize this technology. Since then, we have constructed an extraordinary team for TAE Power Solutions. We expect to be onboarding revenues in 2024 and then meaningfully at scale thereafter. Success in TAE Power Solutions changes the risk return paradigm of TAE: an investment would no longer be binary. The left tail return would be truncated to the green while fusion provide a right tail return opportunity which is immensely high.
developed technology for another large, adjacent market. Michl Binderbauer, our CEO, was speaking on
our high-powered beams for fusion and the CEO of a large hospital in Southern
California listened to Michl and asked, “What you are doing with these
high-powered, very precise beams is very interesting. Can you adapt that to
treat my patients with glioblastoma? Their survival rate is in five years is
5%.” The answer to that is decidedly yes.
CG: Just to interject, to be clear, glioblastoma is a type of brain cancer, correct?
BC: Yes, glioblastoma is an extremely serious brain cancer. It is usually fatal within a few years, and 5-year survival rates, very, very low, in the single digits.
our first patient, a
canine and there is a beautiful video of the treatment and recover[AG2] . The dog’s body was near lifeless,
cancer was just ravaging this poor dog's body. We treated the dog with our
high-powered beams in combination with an approved drug. A day later, this dog was up and eating.
And within three days later, it is like a totally healthy puppy running around, playing very energetic, and that has been sustained.
We also just recently treated our first 12 human patients with head and neck cancer. Data thus far indicates we will be able to report very encouraging results.
Those are some features that make TAE unique.
CG: That is quite unique.
BC: In addition to that, this is what we think makes fusion energy is so interesting. We think fusion energy will produce dozens of additional breakthroughs that will further improve the human experience.
We think the adjacent discoveries from fusion energy will be akin to the inventions that came from NASA’s quest to go to the moon, which led to discoveries that included air purifiers, freeze dried food, de-icing for airplanes - and how many lives that has saved. Mobile phones came out of going to the moon. Lasik came out of going to the moon. There are about 60 or 70 inventions. We are confident that there are going to be whole new discoveries out of fusion energy.
CG: And you mentioned that Google was one of your top five investors. Who are the others?
BC: Google has been an investor and a great partner since 2014. NEA, a top venture capital firm, is a prominent investor in TAE. Others include Chevron in the energy space, Sumitomo in the utilities sector, The Investment Fund for Foundation in the foundations space, a large Western-based public pension plan, and a very large Western-based asset manager. Also, numerous family offices, including several who serve on our Board, including the Art Samberg family, the Charles Schwab family, the Michael Buchanan family, and Addison Fischer, the co-founder of Duquesne Capital Management with Stanley Druckenmiller.
CG: Fascinating. And what has been accomplished in the fusion space and what remains to be done?
BC: As we noted earlier, the recent achievements are a breakthrough moment, a Kitty Hawk moment, for the fusion industry. What remains is to demonstrate net positive energy then to bring electrons onto the grid. At TAE, we expect to demonstrate the viability of net positive energy by the middle of this decade, deliver electrons to the grid by the early 2030s and then scale globally from there.
We think that the industry brings fusion energy to the human experience, sooner than consensus thinks, if it is adequately capitalized. We are very, very encouraged by the improving science.
CG: And what do you think would need to be done in order to provide transitional infrastructure to scale it as an energy source on an industrial or commercial scale?
BC: That's a great question, because what is needed is commercialization, use cases, and implementation of a new energy source. There are three components of the infrastructure that will be needed to commercialize fusion.
One is regulatory. Importantly, fusion is completely different than fission. There is a substantial regulatory framework, education, and acceptance that will be needed to commercialize fusion.
The second is public sentiment. The public also is unaware. They often hear the word nuclear and they think of fission. They think of radioactive waste meltdowns, human hazard risk, etc. Fusion has none of those risks. Efforts will be required to gain the public’s acceptance.
We have operated in the heart of Orange County for 25 years, and as I indicated, we have built five machines. Orange County has 3.5 million people. We operate right in people's backyard, with total safety for the community. The public needs to feel confident and certain that their kids can play at the playground right around the corner. So public sentiment and public acceptance is a second key feature.
The third is the supply chain, and here I am very encouraged. We have built five machines, our existing machine as 86,000 parts and it operates flawlessly. The sheer number of existing partners speaks to the knowledge of the supply chain that is already understood. In addition, Sumitomo and Chevron, large organizations with complex organizations, are recent investors in TAE. They can provide us with capital as well their knowledge about the nuances involved to deliver energy to the grid and throughout the human experience. So, these will be incredibly valuable partnerships, beyond being just a provider of capital. We are encouraged by the foundation that has already been developed in the supply chain.
CG: As a CIO yourself, what suggestions do you have for institutional investors?
BC: I would suggest institutional investors to think big and go big.
In 2017, Hendrik Bessembinder, a finance professor at Arizona State University, published a paper that showed that despite the equity market’s gains over the past century, the gains were achieved by a small number of companies. In fact, of the roughly 26,000 companies listed between 1926 and 2016, more than half lost money or did worse than holding one-month Treasuries. In contrast, about 1,000 stocks — or just 4 per cent of the entire sample — accounted for all the net wealth creation over the period, or almost $35 trillion.
I would encourage investors to think about what investments are capable of solving large problems and posting high returns.
The largest investment returns, I believe, are generated by investing in leaders in innovation in how business will be done in the future.
When I when I apply that statement going forward, I think what will be the next great innovations? I do think that there is still a long-run ramp of growth ahead in cloud computing, software as a service, fintech, and automation. Leaders in data warehouse and machine learning will provide significant investment returns, significantly impact every industry, and will make our lives and our use of resources much more productive.
Yet there is no bigger market than the energy market. It is a global market, it has essential use cases for every residence and every business, in every sector, industry, and country, every moment of every day. Energy a huge market.
In addition to fusion’s enormous economic opportunity, is the impact fusion would have on humanity. To bring the price of energy down benefits every human being, all 7.7 billion of us. To make energy clean, low cost, reliable, and abundant, would create conditions for a whole new level of prosperity for the human experience, akin to and even beyond the gap up in the human experience from the agriculture era to the industrial age. And this time, without the consequences of fossil fuels and carbon emissions.
Fusion energy would set up the human experience for our next great wave, bring political and social stability, and a totally clean environment, in addition to economic prosperity.
I think the only thing that remains between fusion and ultimate success is if the industry is adequately capitalized. I would encourage investors to think about the unique potential economic return, the economic prosperity throughout the human family, the immensely positive environmental impact, and the positive political and social stability fusion energy would bring.
CG: Well, thank you very much, Bill Coaker, CIO of TAE Technologies. I really appreciate your time today.
BC: Christine, thank you very much for doing this. We think that this is important. We very much appreciate you taking the time to learn more.
Interview by Christine Giordano
To learn more about fusion and TAE, contact Bill Coaker at [email protected]