Fusion energy startup Zap Energy is pulling a partial pivot, adding nuclear fission to the mix

No one said building a fusion power plant would be easy. Physicists and engineers have been working on this problem for decades. But over the past year or so, nuclear fusion startup Zap Energy took a closer look at its path to a working power plant and decided it would be faster to build a fission power plant first.

Wait what?

“Fission and merger are two sides of the same coin,” Zabrina Johal, ZAP’s new CEO, told TechCrunch. “They have a lot of challenges that match each other.”

Zap is among the best-funded nuclear fusion startups, having raised more than $300 million, so this partial pivot holds some shock value, no matter how many synergies there are between fission and fusion.

It makes even more sense against the backdrop of rising power demand from AI data centers, which is expected to nearly triple by 2030. Technology companies want electricity today, and one of the challenges facing every nuclear fusion startup is that grid-ready power plants won’t be ready for several more years — likely a decade or more.

“There is not enough power and energy in the world to build all the data centers needed,” Johal said. “This meant we needed to do this faster; we needed to get something relevant to today’s network.”

Two ways to split corn

Fission is commercially viable, while nuclear fusion is not. Fusion is the process of combining two light atoms such as hydrogen, which also releases energy. One experiment was able to produce more energy than the fusion reaction required for ignition, but it was nowhere near what a power plant needed to generate. Fission splits heavy atoms like uranium to produce energy, and we’ve been doing it since the 1950s.

Despite decades of experience, building cost-effective fission reactors remains a major challenge. Fission startups that build small modular reactors (SMR) rely on mass manufacturing to help reduce costs, although this theory has not yet been proven. The benefits of scaling up production can take about a decade to realize.

Johal said ZAP expects to start generating revenue from its new nuclear fission business within a year. “Our business model does not depend on generating electrons,” she said. She said revenue could come from federal programs from the Department of Defense and the Department of Energy, but could also include “critical payments” and reserved production capacity from companies that need huge amounts of electricity.

Significant payments could be an interesting model for Zap and other energy startups to follow.

It is similar in concept to how ASML extracted money from Intel, TSMC and Samsung to develop extreme ultraviolet (EUV) lithography. Semiconductor manufacturers effectively paid a premium for ASML shares, underwrote R&D into the technology and retained capacity once the UV machines went into production.

But there is a fundamental difference between what Zap is trying and what ASML has succeeded in achieving. When ASML launched its “Customer Co-Investment Program for Innovation”, it was clear that the Dutch company was the only show in town – everyone had given up on EUV. In the world of energy, technology companies have a range of different technologies and suppliers to choose from. They’ll want to see something extra special in Zap’s fission proposal before they move forward.

On this front, potential buyers can already start evaluating ZAP’s plans. The startup’s fission reactor will be based on the 4S, a molten salt-cooled design jointly developed by Toshiba and the Japan Energy Industry Research Institute. In the end, it was never built, but Johal said the design comes “without any intellectual property entanglement.”

Johal expects there will be enough demand in the 2030s that ZAP will find plenty of customers, even though it is years behind other fission startups. “There will not be enough reactors in the near term,” she said.

Follow the money

For ZAP’s fission gambit to pay off, one of two things must happen: it must bring in revenue or bring in new investment.

Given Johal’s comments on government funding and significant payments from large energy users, revenue is the obvious game. The cost of developing a single reactor concept is very high. It may not cost twice as much to develop a second, but it certainly isn’t free. The more coins the better.

Zap isn’t the only merger company seeking side hustles to generate revenue. Commonwealth Fusion Systems and Tokamak Energy sell their high-temperature superconducting magnets to other companies and conduct fusion experiments, while others such as TAE and Shine Technologies work in nuclear medicine.

Some of these revenue opportunities are more consistent with building a fusion power plant than others. Zapp says his fission plan will help him move faster on everything except the nuclear fusion reactor itself, including things like testing materials and power systems. The company also says it can gain expertise in regulatory areas, although Johal said it is more about building relationships with regulators than dealing with specific rules. The Nuclear Regulatory Commission, a cautious government agency, has provided fusion companies with a separate set of guidelines. Despite all their similarities, fusion and fission are still very different technologies.

Or maybe Zap wouldn’t need new revenue if it could attract a new class of investors. If Zap can capitalize on enthusiasm for fission startups, it may be able to find an exit for existing investors sooner. For example, X-energy, which has yet to build a power plant, went public last week in a massive initial public offering that brought the company $1 billion.

Much of this assumes that Zap will be able to demonstrate progress in connecting a small modular reactor (SMR) to the grid in the early 2030s.

Zapp’s arguments that adding fission to his layer will help him reach commercial fusion energy sooner are compelling, but time may prove me wrong. However, it is difficult to reconcile those ambitions with the challenges – and costs – of building a second reactor based on a completely different technology. There are enough similarities to keep this from being an Eighty-One, but it’s far enough away from Zap’s previous path that he’ll need to tread carefully to ensure it doesn’t become a permanent detour.