Our business development plan is in three phases:
Phase I: Scientific Research to Demonstrate Net Energy
The goal of phase I is to demonstrate in a laboratory more energy out of the device than we put into it. This would be a tremendous breakthrough and would solve the scientific challenge of fusion energy production. This is the phase we are now in. While time estimates are extremely uncertain, we hope to complete this phase in about 12 months and with an additional $1 million in expenditures.
Phase II: Engineering and Development of Working Prototype Generator
In Phase II, we will develop the Focus Fusion device as a repetitively pulsed generator, pulsing up to a few hundred times a second, develop the conversion devices to convert the ion beams and X- rays to electricity, and perfect the cooling system and general electrical control system. We will also optimize the fusion energy generation efficiency. At the end of Phase II, which LPP estimates will take another 3 – 4 years, we plan to have the world’s first functioning fusion generator producing net electricity. It will be ready for mass-production. We estimate the budget for this phase to be about $100 million, to be raised from a combination of government and private sources.
We also intend to obtain an industrial partner to develop our X-scan spin-off technology, which we expect will provide some royalty income during this phase.
Phase III: Commercialization
We believe that the fastest and lowest-risk method of generating income from the fusion generator is through selling non-exclusive licenses on the technology. LPP will be protecting its intellectual property rights with a series of patents. Likely initial licenses agreements will be with large international companies already in the power generation sector and with large governmental energy organizations. The up-front money from the sale of such licenses will generate a relatively large income stream initially that will be supplemented when royalties being to flow after actual production is begun. We also intend to initiate our own production facilities in order to have the manufacturing expertise needed to aid licensees.
Our plan is that, early in Phase III when we have reached profitability, we will organize an IPO to become a public company.
Early engineering analysis suggests the 5 MW Focus Fusion reactors could be produced for less than $1 million apiece, possibly much less, when economies of scale typical with mass production are realized. Since annual hydrogen boron fuel costs would be very low, generator capital cost, including maintenance, drives the cost of electric power produced, which at $1 M comes to 0.5 cents per KwH. This is less than one-tenth of the cost of conventional electricity generation units of any style or fuel design. It means that once the prototype is successfully developed, Focus Fusion generators will be the preferred technology for new electrical distributed generation.
It is likely that units larger than 5 MW will be formed by simply stacking smaller units together, with approximately the same cost per kW of generated power. Such multi-unit systems will also have greater reliability than single larger systems, with built-in redundancy.
We can project the eventual market for new electric fusion generators. Current global new electric generation capacity today amounts to about 100 GW per year, averaging over the last decade. We estimate that the introduction of a much cheaper energy source will in fact increase growth of electric consumption considerably. There will also be a significant market for the replacement of existing sources as well.
We project that licensed manufacturing partners will begin building and selling LPP design fusion generators starting around 2024 with annual production increasing very rapidly over the following ten years. At 5% royalties on sales, LPP revenues from royalties would also ramp up starting in 2025, reaching hundreds of millions of dollars in the first two or three years and surpassing $1 billion after a few years more. LPP may realize revenues before 2024, from license agreements and providing consulting services to licensees as they refine their commercial generator designs to make manufacturing most efficient.
A more realistic estimate of eventual market size assumes that Focus Fusion will eventually replace nearly all forms of existing energy, not just electricity, and that with much cheaper power, energy consumption will grow rapidly – perhaps 10% per year. In this case, since current total energy consumption in all forms is over 10,000 GW, a market of closer to 500 GW (25,000 generators) per year is reasonable with royalties of about $2 billion per year.