Willis' Fowler: Google's investment in MIT spin-out a cue for insurers to assess nuclear risk with a different 'mindset'

(The Insurer) - As investment in nuclear fusion plants picks up with Google's latest power purchase agreement, Willis' Kate Fowler urged insurers to distinguish the risks between the novel technology and traditional fission reactors.

Last week, Alphabet's Google became the second tech company to strike a deal with a fusion project, penning an agreement for 200 megawatts of power from Massachusetts Institute of Technology spin-out Commonwealth Fusion Systems, which is planned to have a total capacity of 400 megawatts, Reuters reported.

Microsoft was the first tech giant to enter a fusion transaction after it invested in the Sam Altman-backed Helion in January.

The two major PPAs come despite nuclear fusion being an unrealized technology. However, the hefty investments may signal a faster route to the commercialization of the nascent energy source than previously thought as the U.S. reaches record energy demand.

FUSION VS. FISSION

The same teams at brokers and carriers may oversee nuclear fusion facilities and traditional nuclear fission reactors even though the two types of power generation are markedly different in how they work, the amount of waste they produce and their risk profiles, Fowler said.

Nuclear fusion mimics a process similar to what happens in the core of the sun and other stars. If the technology works as intended, which Fowler estimates might take a little over a decade to happen, fusion would generate less radioactive waste without the same chances of a nuclear meltdown, making it more climate friendly and giving it a different risk profile than a small modular reactor.

As a result, nuclear fusion projects are sanctioned by the state rather than the Nuclear Regulatory Commission.

"They don't have to get these special approvals to actually start construction," Fowler said.

"So there are fusion facilities that are under construction today, even though their technology isn't proven and isn't commercial yet... They've started construction in advance of small modular reactors."

HOW INSURERS CAN PREPARE

Given the differences from nuclear fission, those working on fusion power projects are eager to create a separate path toward an insurance market that sees them as distinct from the traditional nuclear apparatus, similar to how cogeneration or combined heat and power, plants are treated.

"(Fusion companies) don't necessarily want to be viewed as nuclear, but it is still a very specialized technical type of technology, and if you understand fission, you're probably the same person who's going to be able to more easily understand fusion," Fowler said.

But these companies do not necessarily want to work with the existing nuclear insurance markets.

While fusion companies are engaging with brokers on what insurance policies will look like when their plants reach operation and commercialization, underwriters are not making moves to differentiate themselves as fusion insurers.

"There are insurance markets out there right now supporting fusion construction, because they have started construction already, (but) the fusion industry is kind of forward looking," Fowler said.

"Everybody's thinking about it, everyone's talking about (it)...but it's all an assessment phase right now."

While it is early days, Fowler believes that the "insurance market needs to continue to assess it with a different mindset than they would have going in to look at a small modular reactor."

"Fusion is not fission," she said.

"And traditional insurance companies need to be looking at fusion technology and not have that mindset of, 'well, that's nuclear' because it's not a nuclear reactor that uses uranium fuel. It's so very different."