China’s NovaFusion Energy Technology and several of its counterparts are racing to accelerate the timeline for nuclear fusion commercialization, aiming to meet the enormous electricity demand fueled by rapid artificial intelligence development.
“AI’s explosive growth has sharply increased electricity needs, compelling us to shrink the timeline for commercial nuclear fusion from 30 to 50 years down to just five to 10 years,” said Guo Houyang, founder of NovaFusionX, during a recent industry forum. “If we don’t resolve the power challenge within this timeframe, AI’s computational capabilities will inevitably reach an electricity ceiling.”
It is projected that global data center electricity consumption will approach around 1,130 terawatt-hours by 2030—roughly matching Japan’s annual electricity use, according to Goldman Sachs. AI-focused data centers demand power that is reliable, zero-carbon, deployable across distributed locations, and cost-effective—conditions that existing grid infrastructure and renewable energy sources currently cannot fully satisfy, Guo emphasized.
The push to speed up development stems from three key factors, he noted. First, the surge in AI computing has created a rigid demand for stable, green power around the clock. Second, technological advances by companies like Helion Energy in the U.S. have demonstrated the scientific feasibility and engineering potential of their approaches, particularly the field-reversed configuration method. Third, China’s mature innovation ecosystem—bringing together talent, industry, policy support, and capital—has enhanced the country’s prospects.
Nevertheless, experts at the forum cautioned that transitioning from laboratory prototypes to mass-produced, reliable commercial systems involves significant engineering and manufacturing hurdles.
Founded in April last year, NovaFusionX aims to achieve its first plasma discharge by year’s end. The company plans to become the first private Chinese firm to reach temperatures exceeding 100 million degrees Celsius by next year, attain net energy gain from deuterium-tritium fusion (with a Q factor over 1) by 2029, and establish the nation’s first small, distributed fusion demonstration plant early in the 2030s. The firm is currently in talks with clients about potential power purchase agreements but has not finalized any deals yet.
Different Approaches to Technology
Unlike the tokamak—a device that confines plasma with a large, ring-shaped magnetic field and remains the dominant strategy among state-backed organizations—NovaFusionX has opted for an alternative method: field-reversed configuration (FRC) technology combined with a small modular reactor design, called “FRC-SMR,” Guo explained. He originally proposed this approach in the U.S. in 2010, and the same concept later influenced Helion Energy’s commercialization plans. An FRC unit could cost around $100 million to build, with electricity costs potentially dropping below 7 cents per kilowatt-hour—sidestepping the material lifespan issues faced by larger reactors. However, Guo noted that these estimates are based on current projections and have yet to be validated through commercial operations.
Another Chinese company, Dongsheng Fusion, employs the tokamak route but is exploring a more challenging, environmentally friendly fuel—deuterium-helium-3—to avoid duplication of efforts with existing state-backed projects, said General Manager Nie Lin. Much of the technology overlaps with national programs, he added, with an eye toward integrating innovations into the broader ecosystem, making the relationship more complementary than competitive.
Rising Investment and Capital
Technical breakthroughs and clearer commercial applications have attracted significant investment into the nuclear fusion sector. Globally, 56 fusion firms have collectively raised over $14.2 billion, including $4.5 billion in the past year alone—marking a 69% increase from the previous year, according to the Fusion Industry Association. For the first time, private capital has surpassed government funding as the dominant source of investment.
Hongfu Investment, based in Shanghai, has established a fund exceeding CNY 200 million (about $28 million) dedicated to the fusion industry, with a focus on technological development, noted Investment Director Luo Yusheng. Since the debut of ChatGPT in late 2022, the rapid advancement of AI has significantly influenced fusion research—impacting plasma control, simulation, and other key areas—making it a major factor in the industry’s growing enthusiasm.
Suppliers of components and materials such as magnets, power electronics, and superconducting materials tend to see earlier revenue and profitability than reactor developers, offering clearer exit opportunities. Reactor development, often led by major industry players, represents a potential trillion-yuan market, but the success and timeline remain uncertain, Luo explained.
Luo highlighted that a key investment criterion involves whether a team has a solid organizational structure and engineering experience—high standards that keep genuinely investable teams in limited supply. China’s 14th Five-Year Plan designates controlled fusion as a national science and technology priority through 2030, providing policy support and setting a framework for potential exit strategies, although meeting key technical milestones remains critical.
China-U.S. Competition
Helion Energy, a U.S.-based fusion company, has signed a 50-megawatt power purchase agreement with Microsoft, targeting delivery by 2028. It raised $465 million in Series G funding at a valuation of $15.5 billion. While Chinese companies watch closely, Helion has yet to produce commercial power.
According to Guo, the U.S. has an advantage in validating prototypes from concept to initial operation, owing to a longer history of device iteration and higher risk tolerance. China’s strengths include its comprehensive supply chain, advanced AI capabilities, sophisticated manufacturing, and policy backing from the Five-Year Plan. He noted that while the U.S. excels at zero-to-one prototype development, China has the potential for large-scale industrial production in the subsequent phases.
Nonetheless, many manufacturing experts agree that energy breakthroughs require solving scientific, technical, and engineering challenges before becoming manufacturable products.
Ni Jun, dean of Shanghai Jiao Tong University’s Global Institute of Future Technology and chief manufacturing officer at battery giant CATL, pointed out that any energy innovation must first address fundamental scientific and engineering problems. He cited the decade-long journey of solid-state battery research by Lithium New Energy Technology as an example—highlighting that many companies claim to be close but often don’t reach commercialization.
Before fusion energy becomes commercially viable, a more realistic scenario involves a transitional phase that relies on renewable power combined with energy storage and natural gas. Deng Shujun, deputy general manager at Wison New Energies, added that many clean energy projects remain at the conceptual or pilot stage, underscoring the need for further development before large-scale deployment.