State of Commercial Fusion Energy: Market Updates, SPACs, and Technical Breakthroughs (Feb 2026)
The last few weeks have seen numerous announcements by U.S. fusion energy companies.
First, let’s briefly explain fusion. With fission, you take a heavy and unstable nucleus and split it into two smaller nuclei, releasing energy and creating a chain reaction.
With fusion, you cause two light nuclei (usually hydrogen isotopes) to collide and merge into a heavier nucleus (such as helium), releasing energy. The sun is an enormous fusion reactor.
For commercial fusion, you need three things: 1) temperatures high enough (around 50 to 150 million °C) so nuclei move fast and fuse frequently; 2) sufficient density creating more opportunities for nuclei to collide, fuse, and release energy; 3) the ability to confine the reaction, keeping the plasma dense and hot enough to yield a net energy output.
Plasma itself is a state of matter in which a gas is highly energized so its atoms have lost one or more electrons, creating a mix of free electrons and ions.
Confinement of plasma can be achieved with the inertia of a compressed pellet or by using magnetic fields.
The pellet confinement approach - inertial confinement fusion, or ICF – is achieved by compressing a small fuel pellet (typically hydrogen) rapidly and with high density so it fuses before it can break apart.
With magnetic confinement, two main technologies exist: 1) tokomaks – donut shaped devices combining magnets with electric currents in plasma to construct a sort of magnetic cage; and 2) stellerators – machines employing magnetic coils that yield twisted magnetic fields requiring less currents in the plasma. Companies are pursuing approaches along these two main lines, with the majority using the magnetic approach.
The major recent technical achievement was Helion’s announcement that it had achieved plasma temperatures of close to 150 million degrees C.
On the commercial front, Type One Energy and the Tennessee Valley Authority are advancing licensing and construction plans for a 350 MW stellerator fusion plant, with groundbreaking as early as 2028.
Regarding licensing, Thea Energy received the first Department of Energy certification for its pilot stellerator design.
In financing, Avalanche Energy received $29 million in new investor funding, following significant breakthroughs in plasma physics, to support licensing, commercial-scale operations, and a test program. Avalanche is developing a tiny fusion reactor between 1 and 100 kW, “small enough to sit on your desk.”
Inertia Enterprises also raised almost $450 million to construct powerful lasers, as well as a power plant slated for 2030 commissioning.
Meanwhile, General Fusion announced an agreement to go public at about $1 billion through a SPAC this spring.
Of course, challenges await all of these companies: technological issues, licensing, supply chain, and the critical need to deliver electricity at a competitive price.
Investors are interested. Through the middle of last year, the industry received almost $10 billion in funding, and billions have since been invested.