UK nuclear fusion company First Light Fusion sees massive value write-down after pivot away from reactor plans

A British nuclear fusion company, First Light Fusion, has experienced a substantial 60 per cent reduction in its valuation following the decision to abandon its plans for building a prototype fusion reactor. The Oxford-based firm saw its price tag slashed by one of its key backers, IP Group, dropping from £236 million last year to £100 million this year. This decision reflects a major shift in the company’s approach to commercialising its technology.

First Light Fusion’s initial strategy centred on constructing a prototype plant that would showcase its innovative “projectile fusion” technology. This approach employs a small projectile, approximately the size of a five-pence coin, fired at immense speeds into a fuel capsule using powerful electromagnets. The aim is to replicate high-speed collisions occurring naturally in space to generate nuclear fusion reactions. However, this ambitious endeavour was shelved due to funding constraints.

The firm has instead decided to transition to becoming a supplier of its unique technology to other nuclear power companies. A central element of its offering is an invention called an “amplifier”. This device houses a nuclear fuel capsule and significantly enhances the power of fusion reactions. First Light Fusion’s leadership believes this licensing model will enable the company to achieve growth while requiring lower levels of capital investment.

Nuclear fusion has long been heralded as the “holy grail” of energy innovation. By replicating the processes that occur at the heart of the sun, scientists anticipate this technology could unlock an almost inexhaustible supply of clean energy. Despite decades of research and billions of pounds in funding, widespread viability for fusion energy remains out of reach, with scientists across continents racing to make breakthroughs.

The UK government recently pledged £410 million to further fusion research, aiming to develop a functioning prototype fusion plant by 2040. Meanwhile, China has made notable strides in the field, including generating an “artificial sun” at temperatures exceeding 100 million degrees Celsius for over 17 minutes – a significant record. The UK now faces increasing pressure to maintain its competitiveness in this pivotal sector.

First Light Fusion is optimistic about its reoriented business model. Chief Executive Mark Thomas stated: “We have been very pleased with the response to our strategy pivot, moving to an enabler of inertial fusion while rapidly accelerating revenues.” The company recently secured the first tranche of a new funding round and expects further progress in the near future. Other investors, including Chinese tech giant Tencent, have shown continued support for the business.

The Fusion Industry Association has previously warned that the UK risks losing its position in the global race for nuclear fusion dominance. However, First Light Fusion appears committed to its new role as a technology provider, aiming to drive revenues while contributing to global progress in this transformative energy field.