Fusion PPAs Before Reactors: Why Big Buyers Are Preordering Power—and How to Play It

Executive Hook: Fusion is selling electricity that doesn’t exist-on purpose

Commonwealth Fusion Systems just signed a billion‑dollar power purchase agreement with Eni for a first commercial plant in Virginia-before the demonstrator is complete, before a grid‑connected reactor exists. Microsoft did something similar with Helion, pre‑ordering fusion power years ahead of delivery. This isn’t hype for hype’s sake; it’s a financing strategy. Customer‑backed offtake is accelerating capital into fusion, while raising the risk of expectations that outrun physics and economics.

Industry Context: Demand shocks are meeting long build times

Data center growth, electrification of industry, and decarbonization targets are colliding with grid constraints and decade‑long interconnection queues. Buyers are hunting for firm, clean power that can scale by the early 2030s. Fusion promises high‑capacity, dispatchable, zero‑carbon generation on a small footprint. That promise-plus progress like high‑temperature superconducting (HTS) magnet milestones and sustained test operations at several startups—has unlocked more than $10 billion in private funding and a wave of pre‑sold offtake.

But promise isn’t product. Laboratory net‑energy results (e.g., NIF’s milestone) don’t translate directly to commercial reactors that operate continuously, safely, and economically. The business question isn’t “Will fusion work?” It’s “When will it be bankable for my portfolio—and at what cost of risk?”

Core Insight: Treat fusion PPAs as strategic options, not foregone conclusions

Forward PPAs for fusion are more like preorders for a next‑gen console: you lock in a spot in line, not guaranteed gameplay on day one. For buyers, these contracts function as real options on future clean baseload—valuable if milestones are met, inexpensive if structured correctly, and dangerous if written like conventional renewables PPAs.

The winners will separate “signal” from “sizzle” using milestones tied to physics, manufacturing, and regulatory readiness—then load those into financing terms, not press releases. Done right, offtake helps de‑risk first‑of‑a‑kind (FOAK) plants. Done wrong, it front‑loads brand risk, legal complexity, and stranded‑capital exposure.

Common Misconceptions: What most companies get wrong

“A signed PPA means technical readiness.” No—buyers are underwriting milestones, not megawatt‑hours. The contract often starts as conditional and heavily contingent.
“NIF proved commercial viability.” NIF proved physics in a pulsed, laser‑driven setup. Commercial pathways (tokamak, stellarator, magneto‑inertial, FRC, Z‑pinch) must demonstrate sustained operation, component lifetime, and economics.
“Fusion will be cheap by default.” FOAK cost curves start high. Industry estimates to reach pilot can run in the hundreds of millions to low billions, with some pathways projecting $10B+ to commercial fleet scale.
“Fusion bypasses grid constraints.” Interconnection, permitting, and cooling still apply. Balance‑of‑plant, transmission, and power quality integration matter as much as the core reactor.
“All fusion is the same.” Tritium supply chains, neutron flux and materials fatigue, maintenance cycles, and fuel cycles vary widely by approach—and drive OPEX and uptime.

Strategic Framework: Five lenses to evaluate fusion offtake and investment

Technology Readiness and Durability
- Signals: net energy gain in a power‑plant‑relevant configuration, sustained pulse/steady‑state operation, validated HTS magnets, component lifetime (first wall, blanket, divertor) targets.
- Ask for: third‑party validation, test logs, and failure mode/maintenance interval projections.
Unit Economics and Cost Trajectory
- Signals: estimated LCOE at FOAK vs NOAK, capacity factor assumptions, staffing and maintenance model, consumables (e.g., tritium) plan.
- Ask for: sensitivity ranges on capacity factor, component replacement cycles, and commodity risk.
Capital Structure and Bankability
- Signals: mix of equity, strategic offtake, and debt; milestone‑based draws; performance bonds; creditworthy backers.
- Ask for: conditions precedent, parent guarantees, step‑in rights, and cure periods in PPAs.
Regulatory and Siting Path
- Signals: licensing strategy aligned with evolving fusion‑specific frameworks, environmental review plan, grid interconnection queue position.
- Ask for: critical‑path map with dated gates and regulatory engagement status.
Grid Integration and IT/OT Readiness
- Signals: power quality specs (harmonics, ramp rates), black‑start capability, islanding/microgrid interoperability, data telemetry and cybersecurity design.
- Ask for: detailed one‑line diagrams, controls architecture, and telemetry standards compatible with your EMS/SCADA.

Action Steps: What to do Monday morning

Define your fusion thesis. Is it a hedge for 2030s firm clean power, a strategic co‑development, or a branding play? Write down the target in‑service year, acceptable LCOE bands, and maximum risk budget.
Structure PPAs as options. Use milestone‑triggered obligations, staged volumes, and price collars. Include long‑stop dates, performance bonds, liquidated damages, and step‑down rights if timelines slip.
Tie cash to physics. Make equity or prepayment tranches contingent on independent verification of key milestones (e.g., sustained operation at target confinement and output, component lifetime proofs).
Hedge with a portfolio. Pair fusion offtake with near‑term firming: demand response, grid‑scale batteries, long‑duration storage pilots, uprates/PPAs for existing nuclear, and renewables with shaped delivery.
Build a grid‑integration plan now. Reserve interconnection capacity, specify power‑quality requirements, and design microgrid/islanding modes for critical loads (especially for data center and industrial campuses).
Stand up a cross‑functional “Fusion Readiness” squad. Include procurement, treasury, regulatory, OT security, and sustainability. Give them a 90‑day mandate to create a playbook and deal templates.
Negotiate data rights. Secure telemetry access, test data sharing, and joint IP provisions for integration tooling and digital twins; this will compress future deployment cycles.
Scenario plan with gates. Build Red/Amber/Green paths for 2028/2030/2035 in‑service dates. Pre‑define what you will accelerate, pause, or replace under each scenario.
Mind the communications risk. Calibrate public claims. Report fusion offtake as contingent capacity with clear milestones to avoid greenwashing backlash.
Track leading indicators. Watch HTS magnet reliability data, component lifetime results, regulator posture, and supply chains (e.g., tritium handling, specialty materials) more than headline PPA dollars.

The Bottom Line: Buy the option, not the fantasy

Fusion’s commercial future is not guaranteed, but early buyers aren’t irrational—they’re purchasing optionality in a market starved for firm, clean capacity. If you approach PPAs with milestone‑linked commitments, portfolio hedges, and rigorous integration planning, you can capture upside without betting the company. The companies that win here won’t be the loudest—they’ll be the ones who quietly align contracts with physics and turn first‑of‑a‑kind risk into a manageable, strategic asset.