The team at Breakthrough Energy, an energy-focused investment group founded by Bill Gates, published a new report entitled “The State of the Transition.” The 79-page document covers many topics spanning the 100+ portfolio companies in which Breakthrough Energy invests. Today, Breakthrough Energy is very active in fusion energy, with investments in:
Bill Gates Perspective - Mr. Gates sees 2024 as a pivotal moment for climate tech, similar to the early 2000s for global health, with technologies ready for deployment across the economy. This ecosystem of investors and innovators has achieved a lot already, helping to develop highly effective technologies that reduce humanity’s greenhouse gas footprint and are still developing more. Major global investors - including endowments, sovereign wealth funds, and infrastructure investors - are finally leaving the sidelines and engaging in climate tech opportunities in meaningful ways.
Patient Capital ≠ Lazy Capital - Breakthrough Energy Ventures is the venture capital arm of Breakthrough Energy. Over the past nine years, it has invested $3.5+ billion into over 110 climate tech companies, using this time and funding to continuously learn about these technologies and markets. Breakthrough Energy stresses the need for public and private investors to be patient; these are new and still emerging technologies, the adoption times are extended in the power grids across our planet, and we can not give up when we are at the threshold of success.
A Fusion Future - Fusion energy, seen by many as the 'holy grail' of climate tech, holds the promise of abundant clean energy. Breakthrough Energy's investment in six fusion energy companies and production of a detailed technical report on fusion energy (which, unfortunately, is only available to potential investors) underscore the immense potential of this technology. The report highlights significant advances in fusion technology, particularly in the development of smaller, more powerful magnets that could make fusion reactors economically viable, and offers a hopeful and optimistic outlook for the future of clean energy.
Economics of FOAK - The economic challenges for first-of-a-kind (FOAK) clean technology projects, including new science, early development costs, inflation, and high interest rates, must be addressed with patient public and private investments. For novel clean tech projects, engineering, procurement, and construction (EPC) challenges often lead to budget overruns. Flexible and creative funding solutions and extra political support will be needed for these projects as they develop and change.
Power Line Development - The report underscores the critical and urgent need for grid modernization, as outdated and inadequate grid infrastructure is already creating a substantial bottleneck for clean energy deployment. The Federal Energy Regulatory Commission (FERC) issued a landmark ruling to modernize the U.S. grid, addressing significant barriers to planning and paying for new transmission. Permitting delays are a vital roadblock, with examples of transmission projects taking up to 17 years to get approved. The report emphasizes this is a global need, noting similar challenges in Europe and Asia. A key obstacle is the mismatch between renewable energy generation locations and energy demand centers, requiring urgent long-distance transmission solutions.
Roadblocks to Overcome - Breakthrough Energy calls out several real roadblocks to overcome, spanning policy, infrastructure, financing, and technical challenges across various sectors of the clean energy transition. Acknowledging these challenges is crucial and will require a collective effort to overcome them:
Outdated and inadequate grid infrastructure creates a significant bottleneck for clean energy deployment.
Permitting delays for transmission projects, such as projects taking up to 17 years to get approved.
A mismatch between renewable energy generation locations and energy demand centers requires long-distance transmission solutions.
Challenges in planning and paying for new transmission lines, though recent FERC rulings aim to address this.
Bifurcated authority over transmission line siting between federal and state levels in the U.S., complicating the approval process.
The State of the Transition 2024 report highlights how Bill Gates and the Breakthrough Energy team see improvements in clean tech. Fusion energy is a significant investment area for Mr. Gate and Breakthrough, and they are placing a number of bets across multiple methods of fusion energy development. They believe advances in fusion technology, particularly in developing smaller, more powerful magnets, could make fusion energy machines economically viable.
Additionally, the report emphasizes the critical need for grid infrastructure modernization. Federal Energy Regulatory Commission (FERC) has issued a landmark ruling to modernize the U.S. grid, addressing tremendous barriers to planning and paying for new transmission. However, permitting delays remain a significant obstacle, with examples of transmission projects taking up to 17 years to get approved.
The report strikes a positive tone and perspective while acknowledging many significant challenges, making it clear that Mr. Gates and his team’s active support of fusion energy is very positive for the industry. The Fusion Report believes the science and engineering challenges will be addressed, and the fusion machine companies will move beyond FOAK to prototype to production. However, the most significant contribution from Mr. Gates and his team may be their effort to change policy to enable fusion energy.