Fusion Power Startups Team Up With Defense to Fuel National Security

TL;DR

• Fusion startups including Helion, Commonwealth Fusion Systems, Zap Energy, Avalanche Energy and Xcimer have signed a wave of new contracts, CRADAs and Defense Innovation Unit awards with the Pentagon in 2025-2026 to develop compact fusion systems for military use.
• The Defense Department wants mobile, fuel-independent fusion power for forward operating bases, Navy ships and submarines, Space Force systems, and energy-hungry tech like AI data centers, directed-energy weapons and radar.
• The defense-fusion partnership is accelerating commercialization by giving startups non-dilutive funding, testing infrastructure, and a first customer, reviving a Cold War-era link between fusion research and national security.

Why the Military Suddenly Loves Fusion

For decades, fusion was a science experiment funded by the Department of Energy and national labs. That has changed fast. Since late 2024, the Pentagon, Air Force Research Laboratory, Space Force, Navy, Army, DARPA and the Defense Innovation Unit have all ramped up deals with private fusion companies.

The pitch is simple: the U.S. military runs on diesel, jet fuel and vulnerable supply lines. A forward base in the Pacific can require dozens of fuel convoys a day. A destroyer needs constant refueling. A remote radar station in Alaska or Guam needs reliable power that solar and batteries cannot always provide.

Fusion promises dense, on-demand, carbon-free power with no long-lived waste and fuel made from water. If startups can shrink it from a power-plant-scale tokamak to a truck-sized or shipping-container-sized unit, the Pentagon gets energy dominance.

Startups Signing Deals With Defense

The past 12 months have brought an unprecedented burst of defense-fusion activity.

Avalanche Energy, a Seattle-area startup building tiny Orbitron fusion microreactors, has become a poster child for defense fusion. After early awards from the Air Force and the Defense Innovation Unit, the company continued testing compact fusion devices aimed at powering drones, satellites and forward bases, positioning its 10-20 kW scale units as portable generators.

Zap Energy, based in Everett, Washington, with its sheared-flow-stabilized Z-pinch approach that avoids big magnets, has deepened ties with the Air Force and Department of Energy's national security labs. Its modular, low-cost design is attractive for distributed defense power and for co-development work at Sandia and Livermore.

Xcimer Energy, the inertial fusion startup pursuing laser-driven fusion for grid power, announced new private capital and expanded work with the Air Force, Space Force and DOE's inertial fusion programs in 2025-2026. The Pentagon is interested both in Xcimer's power-plant path and in high-energy laser and pulsed-power expertise relevant to weapons effects and missile defense.

Helion Energy, Commonwealth Fusion Systems (CFS) and Type One Energy, the three best-funded magnetic fusion startups, have also moved closer to defense. Helion, which is building its Polaris machine and Orion data-center power plant in Washington state under deals with Microsoft and Nucor, has held talks and technical exchanges with Army and Air Force energy offices about mobile generators and resilient base power. CFS, building its SPARC tokamak and ARC power plant in Massachusetts and Virginia, has expanded cooperative research with Los Alamos, Oak Ridge and other national security labs on high-temperature superconducting magnets with Navy and Air Force applications. Type One Energy, which is developing its Infinity One stellarator prototype in Tennessee, has pursued partnerships around Navy ship propulsion and resilient installations.

Smaller players like Fuse Energy Technologies, Pacific Fusion, General Fusion and Tokamak Energy have also won Small Business Innovation Research contracts, Cooperative Research and Development Agreements, and DARPA-related funding for enabling technologies like pulsed power, tritium breeding and advanced magnets.

What the Pentagon Actually Wants: Bases, Ships, Space and Big Guns

Interviews with defense officials and startup executives point to four priority use cases.

1. Resilient Bases. The Army and Air Force want to replace diesel generators at forward operating bases and remote installations like those in the Indo-Pacific. A 1 to 10 megawatt compact fusion unit that fits in a shipping container could run a base for years without a fuel convoy, a major advantage in a conflict with China where logistics ships would be targeted.

2. Ships and Submarines. The Navy already runs on nuclear fission for carriers and submarines, but fission reactors are huge, expensive and politically difficult for smaller vessels. The Navy's Naval Sea Systems Command and DARPA are studying whether compact fusion could one day power destroyers, unmanned surface vessels and underwater drones for essentially unlimited range.

3. Space and Airborne Power. The Space Force and Air Force Research Laboratory want high power in small packages for satellites, space-based radar, communications, and directed-energy weapons. Fusion microreactors producing tens to hundreds of kilowatts could power electric propulsion, high-power sensors or laser defenses that chemical batteries and solar panels cannot sustain.

4. AI, Data Centers and Directed Energy. The Pentagon's demand for electricity is exploding thanks to AI data centers, hypersonic testing, electromagnetic catapults and high-power microwaves and lasers. Defense leaders have said future bases will need 50 to 100 MW of clean firm power. Fusion is being pitched alongside fission microreactors and geothermal as the solution.

A Cold War Partnership, Rebooted

This is not the first time fusion and national security have mixed. Fusion research was born in the 1950s out of hydrogen bomb work at Los Alamos, Livermore and Princeton. For decades, inertial confinement fusion at the National Ignition Facility was funded largely for stockpile stewardship, not energy.

What is new is the direction of the partnership. Instead of defense labs spinning technology out to startups, startups are now spinning technology into defense. The Defense Innovation Unit, AFWERX, the Office of Strategic Capital and DARPA's GAMOW program have explicitly framed private fusion as a dual-use commercial capability the military can help scale.

For startups, the logic is compelling. Defense contracts offer non-dilutive funding at a time when building a fusion machine costs hundreds of millions of dollars. They provide access to testing ranges, tritium handling expertise, radiation-hardened electronics know-how, and national lab supercomputers. And perhaps most importantly, they offer a first customer willing to pay a premium for power.

A military base does not need electricity at 5 cents per kilowatt-hour to justify fusion. If a compact reactor can save fuel convoys, lives and mission failures, the Pentagon will pay 10 times commercial rates, giving startups revenue long before grid-scale fusion is economic.

Challenges Ahead for Battlefield Fusion

Despite the hype, major hurdles remain. No private company has yet demonstrated net energy gain from a compact device, let alone a deployable product. Most defense deals so far are relatively small - $1 million to $10 million Phase II SBIRs, feasibility studies and prototype design contracts, not procurement orders for working reactors.

Technical challenges are steep. Shrinking magnets, lasers, vacuum vessels and tritium breeding blankets while maintaining performance is brutally hard. Military ruggedization adds another layer: a reactor that works in a lab may not survive vibration on a ship, dust in the desert, or cyberattacks.

Regulatory and fuel issues also loom. The Nuclear Regulatory Commission is still finalizing a streamlined framework for fusion, separate from fission. The supply chain for tritium, high-temperature superconductors and specialized steel is thin and largely dependent on foreign sources. The Pentagon is now funding domestic tritium and magnet supply chains in parallel, but scaling will take years.

Still, both sides say the timeline is compressing. Most startups now target scientific breakeven by 2027-2028 and first pilot plants in the early 2030s - dates that align with the Army and Air Force's own 2030-2035 goals for resilient base power and the Navy's next-generation ship studies.

What Comes Next

Expect more announcements through late 2026 and 2027. Defense officials have signaled new solicitations for 1-5 MW transportable fusion concepts, space nuclear power demonstrations that could include fusion microreactors, and expanded public-private partnerships pairing venture-backed startups with Los Alamos, Sandia, Oak Ridge and the Naval Research Laboratory.

In the short term, watch for demonstration milestones tied to defense funding: Avalanche's next-generation Orbitron tests for the Air Force, Zap's prototype scaling at its Washington facility, Xcimer's laser prototype work in Colorado, Helion's Polaris electricity milestone, and CFS's SPARC first plasma - all of which Pentagon planners are tracking as proxies for military readiness.

The message from both Silicon Valley and Washington is clear: fusion is no longer just a climate tech moonshot. It is becoming a national security program. If even one compact design works, the first place you may see it will not be on the civilian grid, but behind barbed wire powering a base, a ship or a satellite constellation.

AndroGuider Team

Articles written by the AndroGuider team. We try to make them thorough and informational while being easy to read.