The escalating energy demands driven by artificial intelligence have prompted technology companies to explore diverse energy sources, intensifying competition and investment in both fusion and fission startups.
For many, natural gas remains the go-to solution for uninterrupted, reliable power due to its proven track record, affordability, and accessibility. However, recent geopolitical tensions in the Middle East exposed vulnerabilities within its supply chain, particularly after Iranian drone strikes severely impacted the natural gas infrastructure in Qatar, a key exporter. Concurrently, increasing demand for power has resulted in extensive waitlists for gas turbine orders, with anticipated fulfillment dates extending into the early 2030s.
These delays not only endanger the operations of tech companies but also threaten the stability of the natural gas industry itself.
In the United States, 40% of natural gas consumption is dedicated to electricity generation. By the time shortages in turbine supply are resolved, the industry may find itself facing a wave of new competitors. Small modular nuclear reactor (SMR) startups and fusion power companies are gearing up to connect their first commercial power plants to the grid within the next five to seven years, aligning their timelines with the lengthy processes associated with new natural gas power facilities.
Emerging Nuclear Technologies Challenge Gas Dominance
SMR startups may have the strongest potential to replace traditional natural gas power plants. While these technologies often modify existing fission reactor designs, the underlying physics has been proven effective for decades.
Several SMR initiatives are aiming to launch reactors before the decade concludes. Kairos Power, which has Google as a future client, has received regulatory approval for its Hermes 2 demonstration reactor, with construction currently in progress. Another notable firm, Oklo, which merged with a company founded by Sam Altman, is targeting commercial operations by 2028, according to its annual report.
Additional players are scheduled to make their debut a few years later. X-energy, which counts Amazon as an investor, is looking at the early 2030s for its offerings, while TerraPower, co-founded by Bill Gates, aims to initiate commercial operations by 2030 through a partnership with Meta.
To successfully overshadow natural gas as a primary energy source, SMRs must rapidly scale their operations to harness the economies of scale essential to their business models. However, tech companies appear to have enough confidence in the path forward that they are either investing in or entering agreements with these startups for substantial amounts of power.
Fusion Power Promises a Bright Future
Another avenue gaining traction among technology companies is fusion power. Although not as established as fission, nuclear fusion holds the promise of generating extensive quantities of energy using only seawater as fuel.
Like their SMR counterparts, fusion startups are targeting the early 2030s for their initial reactor deployments. Commonwealth Fusion Systems, a leading contender, is set to activate its demonstration reactor next year, with its first commercial reactor, the 400-megawatt Arc, anticipated to begin operations in Virginia during the early 2030s.
Inertia Enterprises, a newcomer poised to break ground on a grid-scale plant by 2030, is leveraging technology derived from the National Ignition Facility’s reactor design—historically the first project to prove that controlled nuclear fusion could yield more power than it expends.
Helion stands out with one of the most aggressive timelines in the sector, aiming to construct its first commercial-scale facility, Orion, by 2028, primarily to supply electricity to Microsoft. The company is also reportedly negotiating with OpenAI to provide significant power quantities, with goals of developing 800 reactors by the end of the decade and 7,200 more in the following five years.
Should Helion accomplish its ambitious objectives, it would dramatically transform the energy landscape. The U.S. added 63 gigawatts of new generating capacity last year; if Helion can create nearly 10 gigawatts annually, it would surpass last year’s contributions from the entire natural gas sector.
Cost Challenges Across Energy Technologies
A significant hurdle facing all these companies, including gas turbine manufacturers, is the issue of cost.
SMR startups are banking on mass production to facilitate cost reductions. However, this strategy remains unproven. Presently, nuclear power is one of the costliest new sources of generating capacity, averaging around $170 per megawatt-hour, according to Lazard. Fusion faces a similar scaling challenge, but with even greater uncertainties; some experts estimate an initial cost of about $150 per megawatt-hour for fusion plants.
In contrast, the construction of new baseload natural gas power plants currently averages $107 per megawatt-hour, although prices have steadily risen, potentially pitting them against both emerging fission and fusion technologies.
However, competition may emerge from renewable sources paired with battery storage.
The costs for wind and solar energy have plummeted over the past decade. While wind has somewhat stabilized in price, solar continues to trend downward. Simultaneously, battery costs have declined significantly, leading to vast deployments; last year, the U.S. added 58 gigawatt-hours of new energy storage capacity. The price for solar combined with batteries now ranges between $50 and $130 per megawatt-hour, creating competitive pricing against fusion, fission, and natural gas.
These figures reflect current battery technologies designed for electric vehicles. Innovative alternatives targeted at grid applications could further reduce costs. For instance, Form Energy has recently engaged in a deal with Google, delivering electricity from a 30-gigawatt-hour iron-air battery. Meanwhile, XL Batteries is repurposing existing oil tanks to store its cost-efficient organic fluid, showcasing how size limitations could be adapted to maximize storage potential.
By eliminating reliance on critical minerals such as lithium, cobalt, and nickel, these new battery technologies promise to significantly lower the costs of long-duration energy storage, presenting formidable competition to alternative energy sources.