A nuclear fusion energy company, Helion Energy, has signed a power purchase agreement (PPA) with high-tech giant Microsoft to supply electricity generated from its first fusion power plant.

The plant, to be sited in the US, is planned to come online by 2028 and will generate 50 MW after a one-year ramp-up period. Sceptics says the technology is potentially years away from being proven.

The PPA is the world’s first for fusion power. Helion is based in Washington State, where Microsoft is based as well. Billionaire Bill Gates, Microsoft’s founder, is well known for his support of advanced nuclear technology in the quest to fight climate change.

Fusion “is inherently clean, inherently safe and could one day provide vast amounts of the type of power we need to tackle the climate crisis,” said Senator Maria Cantwell after Microsoft's announcement.

Fusion power does not create radioactive waste, and can be considered the ‘holy grail’ of the energy transition – clean, carbon-free and limitless, but as yet, out of reach.

The power source is in its early days. In December, US researchers in California announced the first ‘net energy gain’ experiment – for the first time ever, more energy was produced from fusion than was used in the lasers to power the experiment.

The PPA marks “a market milestone” for the fusion technology industry, Dennis Whyte, director of the Plasma Science and Fusion Center at the Massachusetts Institute of Technology, told The Hill.

The pressure is on Helion. The PPA “is a firm contract”, a spokesperson told The Hill. “Pricing will be market rate. If Helion misses the [2028] deadline for putting power on the grid for Microsoft by then, Helion will face financial penalties, which signifies the strength of this agreement.”

A significant early investor in Helion is Silicon Valley insider Sam Altman, who also is CEO and a founder of OpenAI, which has developed ChatGPT, which Microsoft has also invested in.

“My vision of the future and why I love these two companies is that if we can drive the cost [of] intelligence and the cost of energy way, way down, the quality of life for all of us will increase incredibly,” Altman told CNBC. “If we can make AI systems more and more powerful for less and less money – same thing we are trying to do with energy at Helion – I view these two projects as spiritually very aligned,” he said.

“We are optimistic that fusion energy can be an important technology to help the world transition to clean energy,” said Brad Smith, Microsoft’s president, in a statement. “Helion’s announcement supports our own long-term clean energy goals and will advance the market to establish a new, efficient method for bringing more clean energy to the grid, faster.”

Helion’s process used deuterium and helium-3, hence the company’s name. To create fusion, in a plasma accelerator, Helion raises fusion fuel to 100mn degrees Celsius and directly extracts electricity with a high-efficiency pulsed approach.

Deuterium and helium-3 fuel would be heated to plasma conditions. Magnets would confine this plasma in a field reversed configuration (FRC). Magnets then would accelerate two FRCs to 1.6mn kph from opposite ends of the 12-metre accelerator.

The FRCs would collide in the centre, and at collision they would be further compressed by a powerful magnetic field until they reached fusion temperatures of 100mn degrees Celsius.

The company has previously built six working prototypes and was the first private fusion company to reach 100-million-degree plasma temperatures with its sixth fusion prototype, according to its website. Helion is currently building its seventh prototype, which it expects to demonstrate the ability to produce electricity in 2024.