Insurers urged to back nuclear fusion as commercial viability nears

The first operational nuclear fusion reactors may be set to come online in the 2030s, and given the technical, operational and financial risks involved, the insurance industry will have a large role to play in helping move the technology from science-fiction to reality.

This was according to a panel of experts speaking at a Lloyd’s of London hosted event titled, Fusion energy: Why now and how to address risks for scalable growth.

Nuclear fusion makes use of powerful magnets to contain a ball of superheated plasma, reaching temperatures and pressures high enough to fuse light nuclei together, releasing massive amounts of energy.

It is often confused with the existing technology of nuclear fission, in which large nuclei are split apart, releasing energy and strongly radioactive byproducts.

According to Matthew Kendle, managing director at Marsh, fusion is a fundamentally safe power-generation method, more akin to coal plants than nuclear fission plants, and “there is a complete misconception in the insurance market, and more generally, that fusion is fission”.

However, the complexity and nascency of the technology makes determining the scientific risks involved, and therefore the appropriate cost of cover for initial constructions, very difficult.

Tim Dodwell, chief executive at DigiLab, explained: “We have to accept that fusion is a game of extrapolation, as we scale it up to the size of the reactor that we want. This is much more an engineering risk.

“When we think about how systems are designed modularly – from neutron breeding to how heat is transferred – a lot has been thought about how those risks are isolated to individual physics problems. I think a lot of the risk and uncertainty comes from the compounding of those into a system.”

Prior experience

According to Glenn O’Halloran, underwriter at Oak Re, the industry has prior experience in supporting such challenging and novel projects to market.

He said: “If we look back at the history of the insurance market being in similar positions before with other technologies, these other technologies were the first of their kind at the time.

“The insurance market sector educates themselves and adapts their insurance. The same thing happened with wind and solar and other technologies before that.”

He went on to explain how the building of a nuclear fusion plant was more akin to these technologies than a fission plant, with regulatory approval taking one to two years rather than five to ten, and total construction costs of a few billion dollars rather than five to 10 billion.

With some projections suggesting fusion could become the world’s dominant power source, and with a safety profile akin to a traditional power generation plant, insurance could soon find itself with a vast new market.

O’Halloran concluded: “Within the insurance market, there’s only a few massive opportunities that come through in any one single career to this size and scale.

“Fusion is definitely going to receive a huge amount of investment and potentially be the biggest energy source in the world.”