MARKET ANALYSIS FOR PE/VC NEW SOURCES OF ENERGY: the commercial viability of clean energy sources 2020 What’s in this report:
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To provide a comprehensive view on What are the transformational sources for clean energy sources to estimate the clean energy? commercial viability of nuclear fusion as a source of energy generation Explain feasibility of Fusion and how viable it is (any estimate to commercialization)
What are the issues related to scalability for GEOGRAPHIC SCOPE fusion?
Any table comparing key metrics (production, GLOBAL cost etc.) of fusion vs other forms
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© 2020 Grail Insights Key Findings
Nuclear is one of the prime non-renewable source of energy that contributes to 10.2% of the world's electricity, which is generated by about 441 nuclear power reactors. About 53 more reactors are under construction, equivalent to approximately 15% of the existing capacity
Several government entities and private companies are investing significantly in the Nuclear Fusion technology as a viable source of energy in the future. The biggest project is ITER*, which is expected to start its fusion generation operations by 2035
China is moving swiftly, compared to other countries and is expected to develop its first commercial scale demo nuclear fusion plant by 2030. Several other regions, including the US, South Korea, and EU, are looking forward to develop commercial scale fusion power demo reactor by ~2050
Apart from the government projects, several private companies and investors including, Lockheed Martin, General Atomics, Bezos Expeditions, Breakthrough Energy Ventures, are also investing their resources into fusion power technologies
Start-ups, such as General Fusion, Commonwealth Fusion Systems and TAE Technologies, have received substantial funding (~USD 1 Bn combined till date) from prominent venture capitals. Certain start-ups including General Fusion and Tokamak Energy are planning to develop their first commercial plant by 2030
In terms of external costs, Fusion energy, with an average cost of 1 USD/MWh, is the most economical. However, the initial capital investment is high with Fusion power plant, compared to other forms of energy
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Notes: *ITER (International Thermonuclear Experimental Reactor) is an international nuclear fusion research and engineering megaproject in France © 2020 Grail Insights Contents
Market Overview
Industry Outlook
Commercial Viability
Investment Outlook & Key Players
KPI Comparison Non-Exhaustive Market Overview – Energy Sources Modern Renewables and Nuclear Energy are the prime sources of clean energy and electricity in the global market
TRADITIONAL SOURCES CLEAN AND NEW SOURCES OF ENERGY
TRADITIONAL BIOFUEL EXISTING
Hydropower, solar, wind and nuclear fission Wood fuels, agricultural by-products and dung EMERGING
FOSSIL FUELS Geo-thermal, Modern bio-fuel, Hydrogen Fuel Cell
FUTURISTIC
Coal, crude oil, and natural gas Nuclear Fusion
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Source: REN21; Energy.gov © 2020 Grail Insights Non-Exhaustive Market Overview of Clean Energy Low-carbon clean energy made up 20.5% of global primary energy consumption in 2019, of which nuclear energy accounted for ~4.5% and is projected to remain a mainstream source of electricity generation
CLEAN ENERGY MARKET SHARE Low-carbon clean energy has been established globally as a mainstream source of electricity generation Low carbon clean energy accounted for 20.5% of global primary energy consumption in 2019 and is expected to increase to 26.3% by 2030. Most of the increase will likely come from traditional renewable sources such as solar, wind, and hydropower However, Nuclear energy had a relatively low share of 4.5% in 2019; advancements in technologies in nuclear sources, including Plasma and Fusion nuclear reactors, are providing opportunities to scale up the nuclear energy share in the coming future
Renewable Share of Total Final Energy Consumption, Global Primary Energy Consumption By Energy Source, 2019*(e) Projection
Nuclear Energy 4.5% Renewable energy 16.0% 21.7% (excluding biofuels) 79.5% Wind 4.5% Fossil Fuels Modern Renewables 4.6% Nuclear 25.2% 22.1% 3.0% 1.4% Solar Coal 22.2% 21.8% 16.0% 10% Natural gas Hydropower 32.1% 29.9% Petroleum and other 1.5% liquids (including biofuels) Geothermal Heat/ other 2019 2030 renewable
7 Note: *Forecasted figures, BP Energy market review Source: eia.gov; Our World In Data; BP © 2020 Grail Insights Non-Exhaustive Market Overview of Nuclear Power in Electricity Generation Around 10.2% of the world's electricity is generated by about 441 nuclear power reactors. About 53 more reactors are under construction, which will be equivalent to approximately 15% of the existing capacity
GLOBAL NUCLEAR POWER STATUS (2020) Currently Operating 2nd Largest source of global low Under Construction carbon electricity
Number of 441 Reactors 53 ~10.2% Global share of nuclear electricity production
REGIONAL DISTRIBUTION OF NUCLEAR POWER CAPACITY 389,979 MWe Total net installed Africa In MWe capacity Latin America North America 18 Out of 53 under construction Asia nuclear reactors are in China and Europe
0 50,000 100,000 150,000 200,000 India Operational Under Construction
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Source: IAEA, World Economic Forum, BP © 2020 Grail Insights Non-Exhaustive Nuclear Power Production Projections Analysts predict that the nuclear power production share is expected to increase from 10.2% in 2018 to 11.7% by the end of 2050, in an optimistic scenario
NUCLEAR ENERGY MARKET GROWTH World Nuclear Electricity Production (Forecast) Total global electricity production is expected to rise by 33% over 2030 and 94% by 2050, at an annual growth rate 5,761 4,977 of ~ 2.1% The world nuclear electrical generating capacity is 3,844 projected to increase to 3,844 TW-h by 2030 and to 5,761 2,990 Low 2,563 2,836 2,804 TW-h by 2050 in the high case High – This represents a 49% increase over current levels by
Capacity (TW·h)Capacity 2030 and an ~124% increase in capacity by 2050
– In 2018, electricity generation from operational 2018 2030 2040 2050 nuclear reactors increased about 2.4%, reaching 2563 WORLD TOTAL AND NUCLEAR ELECTRICAL PRODUCTION TW∙h
Electrical 2030 2040 2050 The share of nuclear electricity in total electricity 2018 Capacity Low High Low High Low High production in the world is expected to increase to 11.5% in 2030 and to 11.7% in 2050, in the optimistic scenario Total (TW·h) 25,196 33,538 41,101 49,032 The global nuclear electric power generation market is Nuclear (TW·h) 2,563 2,836 3,844 2,804 4,977 2,990 5,761 estimated to reach USD 156.2 Bn by 2023 from USD 129.8 % of total 10.2% 8.5% 11.5% 6.8% 12.1% 6.1% 11.7% Bn in 2018 at a CAGR of 3.8% during 2018-2023
Notes: Projections of nuclear power are presented as low and high estimates encompassing the uncertainties inherent in projecting trends. The low case was explicitly designed to produce a ‘conservative but plausible’ set of projections assuming that current market, technology and regulation trends continue to be the same. The high case projections are 9 ambitious but are still plausible and technically feasible. Source: IAEA, BCC Research © 2020 Grail Insights Contents
Market Overview
Industry Outlook
Commercial Viability
Investment Outlook & Key Players
KPI Comparison Nuclear Fusion in Electricity Generation Non-Exhaustive The current nuclear power reactors are primarily based on the Nuclear Fission technology; Scientists around the world are increasingly working on developing ‘Nuclear Fusion’ technology as a viable and scalable source of energy in the future
NUCLEAR FUSION AS A SOURCE OF ENERGY While the existing plants rely on nuclear fission; the high level of radioactive waste as a by-product has restricted its scaled growth Scientists are currently working on nuclear fusion to develop nuclear power to solve the challenge of radioactive waste – Nuclear fusion is potentially offering an inexhaustible supply of zero-carbon energy and has been successfully tested at a small-scale; however, it is yet to be tested at a commercial scale
PROMINENT REACTOR CONCEPTS
TOKAMAK REACTORS STELLARATOR Separate groups of scientists in Germany and China have recently Stellarator is another plasma device that relies primarily on announced breakthroughs in nuclear fusion using tokamak reactors external magnets to confine a plasma. – Tokamak reactors use a doughnut-shaped ring to house heavy and super- Stellarator produces high-density plasma that is symmetrical and heavy isotopes of hydrogen, known as deuterium and tritium more stable than a tokamak’s, allowing the reactor to run for long periods of time These isotopes are heated to 100 million degrees Celsius, to form a – Experimental reactors including Wendelstein 7-X in Germany, the charged plasma of hydrogen ions Helically Symmetric Experiment (HSX) in the US, and the Large Over 200 experimental tokamaks have already been developed worldwide Helical Device in Japan are working on this design concept ITER, a multinational nuclear fusion research and engineering mega-project Start-ups such as First Light Fusion are also working on Stellarator in France, is also based on Tokamak reactor concept and is expecting to demonstrate net energy gain by 2024
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Source: ABC News © 2020 Grail Insights Non-Exhaustive Industry Outlook – Prominent Nuclear Fusion Approaches Government entities and several private companies are mainly researching on different nuclear fusion approaches to develop a commercially viable fusion reactor that can deliver a net power output
K P I s KEY COMPANIES Magnetic confinement fusion is an approach to generate Temperature: 150 million degrees Celsius thermonuclear fusion power that uses magnetic fields to Plasma Density: Low density MAGNETIC confine fusion fuel in the form of a plasma Duration: Continuous operation CONFINEMENT More than 200 functional tokamaks and the plasma physics fundamentals use this technology. The most ambitious of Examples: Tokamaks, stellarators (ITER, these is the USD 20 Bn ITER project Wendelstein 7-X)
Inertial-confinement approach generally uses lasers to Temperature: 150 million degrees Celsius compress and implode the plasma INERTIAL Plasma Density: Extremely high-density The National Ignition Facility is the world’s largest inertial Duration: Nanosecond (pulsed) CONFINEMENT confinement fusion research facility, and uses the world’s most powerful laser to compress and heat a fuel capsule Examples: National Ignition Facility
Magnetized target fusion is a fusion power concept, which combines features of magnetic confinement fusion and Temperature: 150 million degrees Celsius MAGNETIZED inertial confinement fusion Plasma Density: Medium density TARGET FUSION Magnetized Target Fusion, with the aid of modern Duration: Microsecond (pulsed) electronics, materials, and advances in plasma physics, Examples: General Fusion could provide a potential practical path to fusion power
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Source: IEEE Spectrum; General Fusion © 2020 Grail Insights Contents
Market Overview
Industry Outlook
Commercial Viability
Investment Outlook & Key Players
KPI Comparison Non-Exhaustive Key Barriers to Commercial Viability of Fusion Energy Scalability and high costs are among the key barriers to the rapid commercial development of Fusion power. Also, at the current rate, fusion research will need another 30-35 years for commercial development
RESEARCH & DEVELOPMENT Fusion power is still in research phase. Experts believe that even under an optimistic scenario, fusion research will need another 30-35 years or even longer until all technological and physical problems are solved. The first commercial fusion power plant is not expected to enter the energy mix before 2050
FEASIBILITY & SCALABILITY One of the key challenges of fusion energy is the temperature required to produce meaningful amounts of fusion power from a plasma. In the current scenario, maintaining a fusion reaction requires more power than it generates
COST & FINANCE The cost of project is another key barrier to the scalability of fusion power. The developed prototype reactors cost very high. In addition, the cost associated with the development of the DEMO design is again a big challenge The most advanced ITER project is estimated to cost around USD 20 Bn and is developing with funding from 35 nations
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© 2020 Grail Insights Non-Exhaustive Commercial Viability: Recent Developments Recent successes in the development of technology and scientific experiments globally have significantly improved the prospects for developing nuclear fusion as a potential and feasible source of energy
Various recent developments in the fusion power efforts are giving scientists and policymakers newfound optimism for the scalability of nuclear fusion in the field of power generation
2016 2017 2018 2019
Germany conducted the first China’s Fusion project, Tokamak Energy in UK has Princeton Plasma Physics Laboratory plasma discharge in Wendelstein 7- Experimental Advanced announced that its plasma has (PPPL) in US used radio frequency (RF) X, a large-scale stellarator capable Superconducting Tokamak (EAST) achieved 15 million degrees technology and Artificial Intelligence (AI) of steady-state plasma sustained a nuclear fusion for Celsius for the first time to reduce ‘plasma disruption’ – a key
confinement under fusion more than 100 seconds, and In 2018, energy corporation Eni challenge to achieve a sustained, net conditions achieved a temperature of 100 announced a USD 50 MM energy gain fusion reaction million degrees Celsius (180 investment in the newly founded UK announced a planned GBP 200 MM (USD million Fahrenheit) Commonwealth Fusion Systems, 248 MM) investment to produce a design ITER tokamak, in France, has to commercialize ARC technology for a fusion facility named the Spherical announced its projected timeline, using a test reactor (SPARC) in Tokamak for Energy Production (STEP), by which is anticipated for 2025 collaboration with MIT the early 2040
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Source: Phys.org; ScienceAlert; IEEE Spectrum © 2020 Grail Insights Non-Exhaustive Commercialization of ITER Project: A Case Study Most commercialization projects on Fusion energy are dependent on the success of ITER project. The project is expected to start its fusion operations by 2035
ITER is a multi-national project, which will be the first fusion project to produce net energy in France. It aims to test the OVERVIEW integrated technologies, materials, and physics regimes necessary for the commercial production of fusion-based electricity
PARTICIPATING It is a collaboration of 35 countries—China, the European Union, India, Japan, Korea, Russia and the United States— NATIONS aiming to build the largest tokamak, for the feasibility of fusion at a large-scale and a carbon-free source of energy
COST The expected cost of ITER is ~USD 20 Bn
End of Pre- End of Pre- fusion Power End of Pre- EO Finished fusion Power Operations-2 nuclear Main and Start Pre-fusion Operations-1 Pre-fusion and Pre-nuclear Shutdown Fusion assembly First of End of Power and Start of End of Power Shutdown For For Power phase 1 Plasma Assembly 2 Assembly 2 Operations-1 Assembly 3 Assembly 3 Operations-2 Assembly 4 Assembly 4 Operations PROJECT May 2020 Dec 2025 Jun 2026 Jun 2028 Dec 2028 Jun 2030 Sep 2031 Jun 2032 Mar 2034 Mar 2035 Dec 2035 DEVELOPMENT TIMELINES
Pre-Fusion Construction, Engineering Integrated Pre-fusion Power Integrated Integrated Assembly-2 Assembly-3 Power Assembly-4 Assembly-1 Operations (EO) Communication Operations-1 Communication Communication (24 months) (15 months) Operations-2 (12 months) (60 months) (6 months) (6 months) (18 months) (9 months) (9 months) (21 months)
Important landmarks Start of new phase End of phase 16 Source: ITER; IAES © 2020 Grail Insights Non-Exhaustive Commercial Viability and Projected Timelines for Industrial Fusion Roadmaps (1/2) All the countries are targeting the same goal of operating a demo in the 2045-2055 timeframe. The most optimistic projection is by China, followed by Korea, Europe, and the US
202 203 204 205 206 207 208 209 0 0 0 0 0 0 0 0
2032
FNSF Design + 10 Year R&D + 8 FNSF – Tokamak (~24 Years) Year Construction ~2055
CDA, EDA, Licensing, Construction US DEMO US - 1
~2035
ST-FNSF Design + R&D + construction ST-FNSF (20 years) ~2070*
US - 2 1st Commercially Operated Power Plant
~2055 EU Demo
R&D, CDA, EDA, Construction ~2065*
EU 1st Commercially Operated Power Plant
Notes: FNSF stands for ‘Fusion Nuclear Science Facility’, which is part of the US fusion development view to move to a fusion DEMO power plant after ITER to a commercial production; 17 CDA: Commercial Design Activity; EDA: Engineering Design Activities ; ST: spherical tokamak; * estimated time frame Source: nationalacademies.org © 2020 Grail Insights Non-Exhaustive Commercial Viability and Projected Timelines for Industrial Fusion Roadmaps (2/2) Most of these timelines are dependent on the ITER project; however, China is moving faster than other countries and claims to have positive R&D results
202 203 204 205 206 207 208 209 0 0 0 0 0 0 0 0
2042 South Korea Demo
R&D, CDA, EDA, Construction (Two Phase: 12 Year, 25 Year; 600 MW net power in 2nd Phase)
2060
S. KOREA 1st Commercially Operated Power Plant
2035 ~2050* Japan Demo
(Depends on the ITER Schedule) R&D, CDA, EDA, Regulations
JAPAN
~2030 China Demo
R&D, EDA, Construction CFETR* ~10 Years ~2050
st CHINA 1 Commercially Operated Power Plant
18 Notes: *CFETR: China Fusion Engineering Test Reactor); CDA: Commercial Design Activity; EDA: Engineering Design Activities; * estimated time frame Source: nationalacademies.org © 2020 Grail Insights Contents
Market Overview
Industry Outlook
Commercial Viability
Investment Outlook & Key Players
KPI Comparison Key Players and Investment Outlook – Nuclear Fusion Energy Non-Exhaustive Various private companies and investors, are also investing their resources into fusion power technologies. Start-ups such as General Fusion and Tokamak Energy are planning to develop their first commercial plant by 2030
ESTABLISHED PLAYERS START-UPS A number of established entities are aggressively pursuing the Various start-ups are currently working on private sector technology research into nuclear fusion
Lockheed Martin in collaboration with TAE Tokamak Energy made important progress toward its Technologies, The Massachusetts Institute of target of fusion power generation by 2025 and a Technology Plasma Fusion Center (MIT PSFC), and grid connected power plant by 2030 (GBP 77 MM of General Fusion Inc is currently developing a total funding) prototype compact fusion reactor (CFR) that would be capable of providing enough electricity to meet Commonwealth Fusion Systems in collaboration with the demand of a small city of 100,000 people by MIT is designing a fusion reactor capable of 2030 producing more power than it consumes. Their research will complement the work done by ITER (USD General Atomics, in collaboration with US 115 MM of total funding) Department of Energy is working on various research experiments for the nuclear fusion General Fusion, is currently working on a USD 350 MM technology demo plant (expected to start operation by 2024), and is planning to develop its first commercial plant Other companies including Bezos Expeditions and by 2030 (USD 192.1 MM of total funding) Breakthrough Energy Ventures are also investing their resources into the fusion power technologies. HB11, an Australian start-up, which is a spin-off from Both the companies are providing funding to the University of New South Wales (UNSW) Sydney, has technology start-ups working on magnetized-target secured patents for its laser-driven technique for fusion technology fusion energy
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Sources: CB Insights; Forbes; Bloomberg; TechCrunch; energystartups.org; CNBC © 2020 Grail Insights Non-Exhaustive Key Players: Snapshot (1/2)
PARAMETERS
General Fusion Inc. develops technology for Commonwealth Fusion Systems is a spin-off from alternate sources of energy. The Company develops TAE Technologies, Inc. develops clean fusion DESCRIPTION the Massachusetts Institute of Technology (MIT) nuclear fusion technology to generate energy energy. The Company generates and produces Plasma Science and Fusion Center (PSFC) without greenhouse gas emissions, pollution, or aneutronic fusion power radioactive waste
OWNERSHIP Private Private Private
FOUNDING YEAR 2017 2002 1998
LOCATION US Canada US
Developing beam-driven field-reversed Developing high-temperature superconducting configuration machine, which fires two plasmas Developing a fusion power device based on TECHNOLOGY magnets to confine plasma in a small tokamak into each other in a confinement vessel so that magnetized target fusion (MTF) called Sparc their magnetic field holds them while heated by particle beams
FUNDING TO DATE USD 115 MM USD 127 MM ~USD 800 MM
KEY INVESTORS
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Sources: CB Insights; Forbes; Bloomberg; TechCrunch; energystartups.org; CNBC © 2020 Grail Insights Non-Exhaustive Key Players: Snapshot (2/2)
PARAMETERS
Tokamak Energy is a fusion power research First Light Fusion is a spin-off from the University company. The company has built several tokamaks Helion Energy develops near term and low cost DESCRIPTION of Oxford, `working on Inertial confinement fusion with the final aim of reaching commercial fusion solution for clean, safe energy power generation
OWNERSHIP Private Private Private
FOUNDING YEAR 2011 2009 2013
LOCATION UK UK US
Developing a commercially viable miniature fusion Focused on spherical tokamaks conjunction with Developing a magneto-inertial fusion power TECHNOLOGY reactors working on Inertial confinement fusion high temperature superconductors (HTS) technology called The Fusion Engine technology
FUNDING TO DATE GBP 23.7 MM GBP 77 MM USD 12.1 MM
KEY INVESTORS
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Sources: CB Insights; Forbes; Bloomberg; TechCrunch; energystartups.org; CNBC © 2020 Grail Insights Contents
Market Overview
Industry Outlook
Commercial Viability
Investment Outlook & Key Players
KPI Comparison Key KPIs: Nuclear Fusion Energy v/s Other Sources Non-Exhaustive In terms of external costs, Fusion energy with an average cost of 1 USD/MWh, is the most economical. However, the initial capital investment is very high for Fusion power plant, compared to other forms of energy
EXTERNAL COSTS (USD/MWh), 2018 CAPITAL INVESTMENT (USD/KWe), 2018 10,000 120 7,500 80 5,000 40 2,500 0 - Wind- Wind- Nuclear Natural Wind- Wind- Nuclear Natural Fusion Solar PV Coal Fusion Solar PV Coal offshore onshore Fission Gas offshore onshore Fission Gas Low 0.9 2.7 4.7 16 21 39 92 Low 3,472 3,770 1,599 1,222 2,058 860 1,240 High 1.1 2.7 4.7 16 25 39 108 High 8,525 6,040 3,053 2,609 6,328 1,312 3,123 Average 1 2.7 4.7 16 23 39 100 Average 5,999 4,905 2,326 1,916 4,193 1,086 2,181
LEVELIZED COST OF ELECTRICITY (USD/MWh), 2018 TOTAL COST OF ELECTRICITY (USD/MWh), 2018 300 300 225 225 150 150 75 75 - - Wind- Wind- Nuclear Natural Wind- Wind- Nuclear Natural Fusion Solar PV Coal Fusion Solar PV Coal offshore onshore Fission Gas offshore onshore Fission Gas Low 75 138 44 81 41 67 77 Low 76 141 49 97 61 106 170 High 160 280 185 243 103 140 109 High 161 283 190 259 127 179 217 Average 117 209 114 162 71 103 93 Average 118 212 119 178 94 143 193
Notes: Low and High scenarios represent the data variation in ideal vs non ideal scenario. The low estimates assume the market and policies remain stable while high estimates present 24 the numbers in case of uncertain market condition and policies. Sources: ResearchGate GmbH © 2020 Grail Insights Power up your investments with Talk to Grail Research & Analytics We understand the needs of Private Equity and Venture Capital firms. You’ll Get end-to-end research support get decades of senior level expertise baked into every deliverable. across the deal cycle Reach out at [email protected]
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