(SE/P2-1) Is Fusion Research Worth It?

R.J. Goldston1), D.H. Goldenberg2), J.S. Goldston3), L.R. Grisham1), J.D. Linton4)
1) Princeton Plasma Physics Laboratory, Princeton, NJ, United States of America
2) Rensselaer Polytechnic Institute, Troy, NY United States of America
3) Federal Reserve Bank of Philadelphia, Philadelphia, PA, USA
4) University of Ottawa, Ottawa, Canada

Abstract.  Long-term energy R&D such as fusion needs to be valued in the framework of options analysis. The R&D itself does not provide energy, but rather provides the option to construct and operate energy-producing systems. An initial analysis of this problem applied the Black-Scholes formula based on historical fluctuations in the cost of energy. That study concluded that for reasonable assumptions about the operating cost of fusion power plants, the fusion option was cost effective. Here we use a simpler and more transparent estimate of the future value of energy, but look more carefully at the question of the opportunity cost of engaging in fusion R&D, including the possibility of hedging financially against increased prices for acceptable energy through an “energy insurance” fund, as compared with the fusion option. We find that the fusion option is very attractive if the probability is more than a few percent that fusion will cost less than the best environmentally acceptable alternative for its potential market share.

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