Nuclear fusion energy startups are expanding partnerships with the U.S. defense sector, marking a clear return to a historic relationship between fusion research and national security applications. The shift comes as companies ultimately seek to generate electricity for the grid, while facing a slowdown in venture capital funding allocated to climate technologies and a sharp rise in the cost of developing fusion reactors.
The connection between nuclear fusion and defense is not new. Part of the sector emerged decades ago, when physicists explored civilian uses for scientific knowledge associated with thermonuclear bombs during the Cold War. The U.S. government's National Ignition Facility, which hosted a major fusion experiment in 2022, has also supported national security applications for more than 25 years.
Defense Funding Opens an Additional Path
Fusion companies need long-term funding to develop laser systems, fuel materials, experimental facilities and power plants. Therefore, the entry of defense companies or government entities as partners represents more than research cooperation; it may provide an alternative source of funding in a sector where climate financing rounds have become more difficult.
A growing defense need related to drones is particularly prominent here. Traditional air-defense systems were designed primarily to counter piloted aircraft, which are larger and less numerous than unmanned aircraft. In some cases, this has created a large gap between the cost of an attack and the cost of interception; about a decade ago, a U.S. Patriot missile costing $3 million was used to shoot down a consumer drone worth approximately $200.
Laser weapons are one pathway that could change this equation because they fire rapidly and have relatively lower operating costs, relying on electricity supplied by a generator, reactor or engine aboard a ship rather than a single expensive missile intended for one-time use. For fusion companies developing laser-based reactors, having high-power laser systems makes them potential partners for the defense sector.
Xcimer's Partnership with RTX
Xcimer, which specializes in laser-based fusion, announced a partnership and investment from RTX, which includes the defense company Raytheon. Under the agreement, Xcimer will receive funding from RTX Ventures, while RTX will begin studying the use of the company's lasers for its own purposes.
Xcimer, based in Denver, operates what it describes as the world's largest privately owned laser system. The company intends to use it to develop a power plant based on bombarding fuel targets with lasers and compressing them until the atoms fuse and release energy. However, the current Phoenix system operates at a power level one order of magnitude below the power required for a commercial plant, meaning that the system's possession of capabilities attracting defense interest does not yet mean that it has the specifications of a ready-to-operate power plant.
Pacific Fusion and the National Nuclear Security Administration
The activity is not limited to Xcimer. Last month, Pacific Fusion announced a memorandum of understanding with the National Nuclear Security Administration (NNSA) to cooperate on high-energy-density fusion experiments. The company has also begun construction of an experimental facility in New Mexico, near the Sandia and Los Alamos national laboratories.
The facility's primary goal is to demonstrate Pacific Fusion's design's ability to produce more energy than it consumes. However, the company says the facility will also serve defense applications, as its fusion reactions will be far more powerful than the reactions the government currently uses in nuclear-weapons experiments. Keith LeChein, Pacific Fusion's co-founder and chief technology officer, said the facility has value in this defense area. Carrie von Muench, the co-founder and chief operating officer, explained that defense applications had been part of the company's calculations from the outset.
What Is Changing in Practice?
This convergence suggests that fusion companies may not rely solely on the electricity market in the future to finance the early stages of development. The technologies themselves, particularly lasers and high-energy-density power sources, can serve civilian and defense objectives simultaneously. Defense funding may accelerate the construction of facilities and experiments that would be difficult to finance commercially through the climate sector alone.
However, the available facts do not establish that these partnerships will quickly lead to a commercial fusion plant or a laser weapon ready for use. Xcimer's agreement with RTX includes investment and exploration of potential applications, while Pacific Fusion's memorandum with NNSA is a framework for cooperation, not an announcement of the deployment of a defense system. The gap between Phoenix's current power and the requirements of a power plant also shows that the engineering path remains long. Therefore, the most important development at present is the change in the funding base and partners surrounding fusion companies, not the achievement of commercial electricity production or a completed defense transformation.