Greg Piefer founded SHINE Technologies in 2005. © Kat Schleicher
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Nuclear fusion has the potential to produce vast amounts of clean energy. The aim is to replicate how the sun and other stars produce heat. And unlike today’s fission-based reactors, there isn’t the risk of a nuclear meltdown if something goes wrong.
As a long-term investor in game-changing companies, Baillie Gifford has been monitoring the fusion sector for over a decade. But it wasn’t until getting to know the private company SHINE Technologies that we first invested our clients’ capital in this field, in June 2021.
Part of SHINE’s appeal is that it’s taking a phased approach to the fusion challenge. The firm is mastering activities that advance the business towards its ultimate goal but can be profitable in their own right much earlier. There are parallels to how SpaceX has built a satellite-launching business as a financial stepping stone to sending humans to Mars.
Like SpaceX, SHINE takes a bottom-up, first principles approach to innovation rather than the top-down, rules-based one of incumbent nuclear companies. In other words, SHINE questions ‘what are the true constraints of the problem?’ and then engineers new safe, cost-effective solutions instead of seeking to follow established conventions for their own sake.
That entails risks, but as SHINE’s founder and chief executive Greg Piefer explains, his firm can be nimbler and more commercially minded than government-backed fusion labs. Moreover, unlike many of its private sector rivals, the company plans to become profitable in 2024.
The following conversation has been edited for clarity and length:
Luke Ward:
What led you to found a fusion company?
Greg Piefer:
I was a nerdy kid. I liked to watch TV shows like Star Trek that had an optimistic view of humanity’s future, with people working together to solve big problems. In them, energy abundance clearly played a huge role in elevating everybody’s standard of living. So being nerdy, I’d go to online libraries and read about particle accelerators and fusion reactors. The seed was set young.
Then I went to the University of Wisconsin, where I was taught by a guy who ran the university’s Fusion Technology Institute and an ex-astronaut who had walked on the moon. The tie-in with the moon is that it’s rich in helium-3, which is ideal for fusion reactions but doesn’t really exist on Earth in huge quantities. They told us one space shuttle cargo bay full of helium-3 would run the entire United States for a year. And I was, like: ‘Holy cow.’ So it really set in deep there.
LW:
The physics involved is highly complicated, but the engineering and business model around fusion also require huge amounts of innovation too.
GP:
I’ve never wavered in my belief that fusion is the way hi-tech societies will make energy. Eventually, fusion will be much cheaper than other forms of energy generation, but it will take a much higher level of technology than what we currently have to produce it.
So I thought it’s going to be a long game, and it’s going to take a lot of funding and practice to get good at it. That led to our approach: you can do things with fusion today that can provide important value for the world and allow us to practise, establish supply chains, start to establish economies-of-scale and build the human know-how you need to pull the larger projects off. We wanted to focus on use cases that would generate a high gross margin today because we wanted the business not only to be self-sustaining but also to reinvest in technology development.
LW:
So you started by harnessing low-power fusion reactions to create neutrons – subatomic particles with a neutral electric charge – for use in advanced imaging systems. And the aerospace industry is using them to spot defects in mission-critical components.
GP:
When a neutron hits a nucleus, it can change it from one element into another. So we’re able to take elements of low value as starting materials and turn them into hyper-valuable isotopes worth somewhere between hundreds of millions and billions of dollars per gram. [For context, a typical sachet of sugar that you would find in a restaurant contains about two grams.]
Diagnostic medicines need these products to look at blood flow in the body, particularly in the heart. Doctors use them to look for obstructions. We can produce the element technetium-99m to do this using our fusion process.
We’re also producing isotopes for therapy, including something called lutetium-177 [Lu-177], which is effectively a smart bomb for cancer.
Nuclear medicine
Images courtesy of SHINE
LW:
So over the next couple of years, you’re aiming to bring these isotope facilities fully online and significantly increase output. In the meantime, the medical industry remains reliant on older nuclear fission reactors, which have been doing this as a kind of afterthought.
GP:
Exactly. They were built for nuclear research in the 1950s and 1960s with a 30-year life in mind. They weren’t designed or optimised for isotope production, and there are now regular shortages of these products for patients because of the reactors unexpectedly going offline.
We’ve got fusion to such a level of neutron output that our Wisconsin facility can become the world’s largest producer of medical isotopes. We plan to make 20 million doses of medicine per year.
The other issue is that the raw materials lutetium-177 historically relied on solely came from Russia. Our technology has allowed us to develop a platform where we can produce our own raw materials, so we break the reliance on Russia for these cancer therapies.
LW:
And there’s an even bigger potential prize involving the transmutation conversion process. Could you talk a little bit about that?
GP:
As I mentioned, we’re going to be doing transmutation at a scale of hundreds of grams per year. As you scale that up to kilograms or tens of kilograms per year, you start to be able to solve different problems.
The most important one we see today is recycling nuclear waste. We can take waste from existing reactors, chemically separate out the isotopes and recycle most of it. The vast majority of that has huge energy content, which can go back into the reactor. It’s something we plan to do very soon, let’s say in the next five years.
But then there’s another problem. Even after you recycle all the waste, there are radioisotopes that just have very long half-lives – one thousand to one million years or even more – that aren’t useful for anything and are difficult or impossible to dispose of. This is where fusion comes in. The transmutation process can turn them into short-lived or even stable isotopes of value. So the next step for fusion is to scale it to that, by which point we’ll be getting pretty close to power generation.
LW:
And how big could these markets be?
GP:
The nuclear waste market is already worth tens of billions of dollars, and those involved can’t do the things we’re planning. So we can grow that opportunity. And then moving into energy, that’s exciting to investors as it has a multi-trillion-dollar total addressable market. It’s also exciting to me because of what it means: fusion power won’t solve all our social problems, but it’s a powerful tool that will allow humanity to do things on a massive scale. It’s going to be one of the most exciting markets to be in for centuries, in my opinion.
LW:
So the critical point is that you need lots of capital reinvestment and learnings from other activities to profitably bring nuclear fusion power to the masses.
GP:
Yes. Commercialising fusion power will require huge amounts of capital over long periods of time. In the near term, it’s got to be billions of dollars per year. And it’s probably tens of billions per year as you scale up.
It will take maybe 20-plus years until we have something that looks like a viable power plant. But SHINE will be making money in the meantime. And we won’t just be doing science for science’s sake. We’re building a truly durable and sustainable company that’s making products while we make those investments.
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