Y Combinator Startup Podcast - Fusion Energy Is Tech's Next Big Unlock

Episode Date: June 6, 2025

Fusion may still sound like science fiction— but it might not be for much longer. With AI pushing demand for clean power to new highs, a breakthrough may finally be close.For Decoded, YC General Partner Gustaf Alstromer traces the history of fusion, the physics behind it, and the engineering challenges that stalled it for nearly a century. He also looks at how Helion is approaching the problem differently, as they develop a new fusion system expected to deliver power to Microsoft by 2028.

These massive data centers are the beating heart of the AI boom that's reshaping our world, and they're hungry for more electricity. That's one of the reasons that for the first time in a decade, demand for energy in America is spiking. To keep up, we're burning more and more fossil fuel and fast. But there's another path, clean, safe, virtually limitless source of power, fusion energy. Fusion is the way the sun works. Only here on Earth, we've actually struggled to be able to do it in a commercializable, cost-effective way. We built now a number of machines showing that we can do that.

So what would it take for fusion to power the future? Let's find out. For nearly a century, scientists have chased the promise of nuclear fusion. In the 1930s, physicists realized that fusing light atoms could release immense energy. The first experimental reactors came a few decades later in the 1950s. So how have we not still conquered fusion almost 100 years later? To understand why, you first have to understand the science. Nuclear fusion is the process of smashing together two light atomic nuclei.

You actually can take those two atoms, the core of those, the nuclei of those atoms, and push them together, overcome their internal atomic forces, and what happens when you do that? They actually fuse and form a heavier element. Unlike nuclear efficient, which splits heavy atoms, fusion joins small ones, can yield far more energy per gram of fuel. That new element has a tremendous amount of energy. That helium is born with, on the order of, 10,000 times the energy.

that it started with. That energy comes from the tiny difference in mass between the reactants and the products, convert to kinetic energy. It's only about 0.1% of the fuels mass being converted into pure energy, but that's millions of times more efficient than fossil fuels. To make fusion happen, you must first turn fuel into plasma,

where electrons roam free nuclei move fast enough to occasionally collide and fuse. You then heat the plasma to roughly 100 million degrees Celsius, so the charged nuclei can overcome their electrostatic propulsion and fuse together. But how do scientists confine the plasma long enough for fusion reactions to occur? There's a few ways to do so. Magnetic confinement uses powerful magnetic fields in reactors known as Tokomax to trap the charged plasma. There's also what's known as inertial confinement, which compresses fuel with lasers or pulsed power

fusing them before it all flies apart. And then there are hybrid concepts that try and to combine these methods. So that's Fusion 101. Heat fuels into plasma at extreme temperatures, find a way to keep it contained and stable, and finally capture the energy. If it sounds tricky, that's because it is.

And that balancing act is what made fusion such a big challenge to bring from idea to reality. Uniting fusion is only half the battle. You also have to get more energy out than you put in. In the world of fusion, reaching a break-even point has been an elusive goal for decades, and an economically valuable reactor. reactor, one capable of truly changing the energy landscape, we need to do far more than simply

break-even. Only one facility had claimed to reach this break-even point. In December 2022, the National Ignition Facility at Lawrence Livermore Lab produced fusion output equal to laser energy delivered to its target. While it's great news, there is still a long way to go. Historically, fusion products have shown the scaling up means massive machines, multi-billion dollar budgets, decades-long delays, and the old refusional. frame that fusion is always 20 years away.

But thanks to companies like Helion, the future is closer than ever before. Helion is taking unique approach to fusion, combining proven ideas in a new way to build a smaller, faster generator, and aiming to succeed with others have failed time and time again. Helion's fusion reactor is built around a unique kind of confinement system.

Unlike the large donut-shaped tokemax, the dominates fusion research, helium's device is linear, compact, and pulse-driven. Helion's generators are what is called a linear topology. So this literally means that it's a very long system. On either end, we inject our fusion fuel, this mixture of Deuterium and Helium 3, very quickly, less than a thousandth of a second.

Altogether, Helion uses what's called a magneto-inertial approach. The plasma collides over a million miles per hour. Magnetic fields then confine the plasma, rapidly compressing it to over 100 million degrees igniting fusion. The whole process happens in under a third million miles. thousands of a second, making the system smaller, simpler, and faster to build than traditional designs. At the heart of Helium's approach is a bold fuel choice.

Deuterium and Helium 3. Most fusion products use Deuterium and Tridium, but Tritium is radioactive, scarce, and produce high energy neutrons, which are harder to capture for electricity. Helions mix allow the reactor to generate mostly charged particles, meaning the energy is already in an electrical form. Even better, Heelon has developed a way to generate helium-3 in its reactors by also fusing deuterium atoms together, solving the long-standing challenge of helium-3 scarcity without needing lunar mining or exotic supply chains.

One thing that we've pioneered here is the formation of helium-3. If you have a fusion system working, you can do that fusion of Deuterium, make helium-3, add another Deuterium, and now you're making electricity. One of Helium's bigger breakthroughs is their system for direct energy energy. recovery. Instead of boiling water to spin a turbines like a traditional power plant, helium's machines captures the plasma energy directly through the same magnetic fields used for compression. The good analogy to this is regenerative braking in electric cars. As fusion reactions push back against the magnetic field, electricity is pulled directly out and

stored in capacitors. We take all that electricity, we turn it into electrical current in our electromagnets. And those magnets are the primary compressor, the primary thing we do fusion with, but also, As fusion happens, we can extract that electricity right back with those same magnets. This method can reach any conversion efficiencies over 90% making the entire system smaller, cheaper, and more efficient. Getting to this point wasn't easy. He didn't broke away from the slow traditional R&D model by running, building, testing, and designing in parallel. While operating one machine, they're already building the next and prototyping the factories needed to mass produce future reactors. You don't just design a system and then build it.

and then test it and then learn from it and then design another system. You actually want to do all of that in parallel. A good example is as we were still running Trento, our sixth generation machine, we were actually building Polaris, our seventh generation machine, based off of the lessons we had already learned as builders. We want to be building generators, building prototypes, so we're always building hardware as fast as possible. This hardware-first mindset focused less on theoretical perfection

and more on real-world engineering. helping Helion move from early prototypes to the seventh generation Polaris system in under one decade. Now, Helion's goal is clear. Prove that fusion electricity, not just fusion energy, can be delivered reliably. With the partnership to power and Microsoft Data Center already lined up, the company is racing to build its first commercial-scale fusion generator, and if they succeed, could redefine the global energy landscape. For decades, fusion was to square in the realm of scientific research.

Helion is trying to make it into a product. Our goal is to have the cheapest source of electricity out there that doesn't generate carbon dioxide and can't make nuclear weapons. And if we can go do that in the world and deploy that quickly and safely, then I think we can radically transform standard of livings throughout the world. If they succeed, we can soon have a power source that's abundant, carbon-free, and built for the needs of a rapidly evolving world. From the fringes of physics to powering technologies of tomorrow,

fusion energy can be the breakthrough that reshapes the world.