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A new book shows how energy companies are creating commercial nuclear power to tackle climate change
The approach of identifying and investing in solutions addressing the biggest problems has led Future Planet Capital to invest in Tokamak Energy, which aims to develop commercial fusion energy for global deployment in the 2030s. In his book, How to Avoid a Climate Disaster, Bill Gates states that the key solution to avoid a climate disaster is to convert everything to electric power (e.g. automobiles) and make electricity from renewable sources. However, he mentions that solar and wind energy are not efficient renewable sources because of their high land use. Hence, according to Gates, we do not have enough land to get all our electricity from these sources. The solution that could make a difference is nuclear energy – especially energy generated by nuclear fusion. This might require some explanation.
Nuclear fission is the process that regular nuclear reactors work on which involves taking very heavy atoms such as uranium and splitting them into smaller atoms to release their energy. Fusion, on the other hand, takes very light atoms, for example, hydrogen, and fuses those together to form slightly heavier elements, such as helium. Fusion is the process that powers the sun and the stars in the universe. In the very hot and dense conditions in the centre of the sun, the ions are being forced together with tremendous force such that they bond together and form these helium nuclei and release energy. This is facilitated by the incredible gravitational force that the sun has to create dense conditions that make this reaction occur readily.
On Earth, we don't have powerful gravity. That's why exceptionally powerful electromagnets are needed to generate the forces required. In addition, temperatures around ten times hotter than the center of the sun are required to achieve fusion on Earth. To achieve such high temperatures, a vacuum chamber surrounded by powerful magnets which are designed to confine superheated plasma without touching the chamber's walls (otherwise it would melt) is needed. The chamber is called Tokamak.
Fusion represents the holy grail for energy production. It offers us the potential of abundant energy produced in a safe manner without radioactive waste or carbon emissions. Hence, the solutions developed by Tokamak Energy could be the key contributors to achieving net zero targets and limiting climate change. Tokamak Energy's ability to achieve a landmark plasma ion temperature in excess of 100 million degrees Celsius, considered the threshold for commercial fusion, has significantly improved the probability of success.
Fusion research in the United Kingdom continued after the Second World War ended. Several universities, including Oxford and Imperial College, contributed to the research. In 1965, the United Kingdom Atomic Energy Authority created a laboratory in Culham, just south of Oxford, as a purpose-built home for Britain's fusion research program. Tokamak Energy was spun out of the UK Atomic Energy Authority in 2009 by three cofounders – Alan Sykes, Mikhail Gryaznevich and David Kingham. Future Planet Capital invested half a million in the Company by 2015. Since then, the Company has raised USD 250 million. While Future Planet Capital is well-positioned at an attractive IRR based on the most recent valuation round, this company still has a long way to go in terms of building a commercial solution. However, when Tokamak solves the nuclear fusion puzzle, it will unlock abundant clean energy and help us move away from fossil fuels and greenhouse gas emissions and, in turn, address the biggest challenge in the climate change problem. It will also likely lead to significant returns for Future Planet Capital.
Complex research from universities is not the only idea that Future Planet funds. They also invest in addressing the large socio-economic challenges of our time. A great example of solving a socio-economic problem at scale is Guideline, which simplifies retirement planning with affordable, automated plans, eliminating hidden fees and paperwork. Their online platform democratises secure retirement access, especially for those previously hindered by high fees or complex options.
Guideline was founded by Kevin Busque in 2017 after he sold TaskRabbit, a business he cofounded with his wife Leah, to Ikea. TaskRabbit operates an online marketplace that allows people to find freelance labour offering furniture assembly, delivery and handyman work. Guideline's idea was borne out of the pain faced by Kevin while handling the human resource function at TaskRabbit. While the large organisations were chased by fund managers, there were hardly any firms advising small businesses on how to handle the retirement plans for their employees. Kevin started work on offering the 401(k) plan, which is an employer-sponsored, defined-contribution personal pension account in the United States.
By enabling consistent saving and financial stability, the company empowers individuals and communities, facilitating sustainable long-term savings. By the end of 2023, Guideline's streamlined approach attracted over 47,000 businesses, solidifying their leadership in the affordable pension plan market, with over USD 12 billion saved for retirement and significantly reduced fee costs. Future Planet invested USD 1.4 million in Guideline in Series B. Since their investment, the company has attracted leading investors such as General Atlantic, Tiger Global and NEA, raising more than USD 300 million. At the last round valuation, Future Planet's stake is valued at 5.8x of its investment.
Investing in these innovative companies has led to a strong return profile for the Fund. Future Planet has already witnessed eight portfolio companies, including those invested in by its founders, become unicorns, a term used to signify companies valued at more than USD 1 billion.
Hansen-Luke believes that the real returns are yet to be reflected. Events like the success of Tokamak Energy and the IPO of Guideline will massively change the returns. They will make a huge difference to society as well. In his journey to help high-quality innovations secure the capital and support needed to tackle the world's biggest challenges, Hansen-Luke knows this is just the beginning.
