The insatiable power demands of artificial intelligence have tech companies hunting for new energy sources. This search has fueled intense competition and investment into both fusion and fission startups. For many, natural gas remains the easy answer for reliable, around-the-clock baseload power. It is a tested, inexpensive, and widely available resource. However, the war in the Middle East exposed its vulnerable supply chain after Iranian drone strikes disabled a significant portion of natural gas infrastructure in Qatar, a major exporter. Simultaneously, surging demand has created a waitlist for gas turbines so long that orders placed today likely will not be fulfilled until the early 2030s.
These delays pose a risk not only to tech companies but also to the natural gas industry itself. In the United States, forty percent of the natural gas consumed today goes toward generating electricity. By the time turbine shortages subside, the industry could face a fresh crop of competitors. Both small modular nuclear reactor startups and fusion power startups plan to start connecting their first commercial power plants to the grid within the next five to seven years, which is about how long it takes to receive parts for a new natural gas power plant.
Among the new competitors, small modular nuclear reactor startups might have the best shot at displacing natural gas plants. In many instances, the technology tweaks the designs of existing fission reactors, but the fundamental physics has been proven and widely used for decades. Several SMR companies aim to have reactors operational before this decade ends. Kairos Power, which counts Google as a future customer, received approval for its demonstration reactor in 2024, and construction is well underway. Oklo, which merged with Sam Altman’s blank check company in 2024, is targeting 2028 for its first commercial operations. Others hope to follow a few years later. X-energy, which counts Amazon as an investor, is aiming for the early 2030s, while the Bill Gates-founded TerraPower, which has a deal with Meta, plans to begin commercial operations in 2030.
To displace natural gas as the generating source of choice, small modular reactors will need to scale quickly to realize the economies of scale their business models depend on. That will not be easy. But tech companies appear confident enough that they are either investing in these startups or signing agreements with them for gigawatts worth of power.
The other technology companies are warming to is fusion power. Though not as proven as fission, nuclear fusion promises to deliver large amounts of power using little more than seawater as fuel. Fusion startups are also targeting the early 2030s, or sooner, to deploy their first reactors. One front-runner, Commonwealth Fusion Systems, is on track to activate its demonstration reactor next year. Its first commercial reactor is expected to start generating power in Virginia in the early 2030s. Another startup hopes to start construction on a grid-scale power plant in 2030. Its technology is based on the reactor design employed by the National Ignition Facility, which first proved that controlled nuclear fusion reactions could generate more power than they consume.
But Helion may have the most aggressive timeline of all. The Sam Altman-backed startup is racing to build its first commercial-scale power plant by 2028 to supply Microsoft with electricity. The company is also reportedly in talks with OpenAI to provide up to 5 gigawatts by 2030 and 50 gigawatts by 2035. To hit those numbers, Helion would have to build 800 reactors by the end of the decade and another 7,200 in the five years after that. If the startup can deliver power in those quantities, it would completely rewrite the energy market. Last year, the United States added 63 gigawatts of new generating capacity across all sources. If Helion could build close to 10 gigawatts of new capacity every year, the company alone would add more power than the entire natural gas industry did last year.
The challenge for all these companies, including gas turbine manufacturers, is cost. Small modular reactor startups are counting on mass manufacturing to drive cost reductions, but that hypothesis has yet to be proven. Today, nuclear power is one of the most expensive forms of new generating capacity. Fusion faces a similar scale-up challenge, though it faces even more unknowns. Some experts predict initial costs for fusion power could also be high. New baseload natural gas power plants, meanwhile, run at a lower cost per megawatt-hour, though prices have been trending up in recent years, perhaps setting it on a collision course with both new fission and fusion reactors.
But they might all be undercut by renewables paired with batteries. The costs of wind and solar power have dropped precipitously over the last decade. Solar prices continue to inch downward with no signs of stopping. Batteries, too, have grown cheaper, to the point where grids are installing massive quantities of them. Even without subsidies, solar paired with batteries ranges in cost, overlapping with fusion, fission, and natural gas. Those figures are all with current battery technology derived from chemistries intended for electric vehicles. Newer designs aimed squarely at grid connections could slash prices further. Form Energy, for example, recently signed a deal to provide Google with electricity from a massive iron-air battery. Another company can repurpose old oil tanks to store its inexpensive organic fluid, where the size of the battery is only limited by the size and number of the tanks. Because these new batteries avoid the use of critical minerals like lithium, cobalt, or nickel, they promise to dramatically reduce the cost of long-duration energy storage to the point where it becomes hard to make a case for anything else.