Commonwealth Fusion Systems said on Thursday it would sell high-temperature superconducting magnets to Realta Fusion, the second in a string of deals that suggests the company will lean heavily on its magnet technology in the coming years to bring in much-needed revenue.

“It’s the largest deal of this kind to date for CFS,” Rick Needham, the company’s chief commercial officer, told reporters on a call. Commonwealth Fusion Systems, or CFS, previously sold magnets to the WHAM experiment at the University of Wisconsin, with which fusion startup Realta collaborates closely.

The physics behind WHAM underpins Realta’s approach to fusion power, which is known as a magnetic mirror reactor.

In a magnetic mirror, plasma is confined into a shape that resembles two 2-liter soda bottles connected at the base.

On each end, powerful magnets punch the plasma and force it back toward the center. Weaker magnets encircle the middle of the bottle shape.

To make a more powerful reactor, Khosla-backed Realta would only need to expand the middle section, and because those magnets are less powerful, they’re cheaper.

Per kilowatt-hour costs should fall as Realta’s reactors increase in size.

CFS is pursuing another form of magnetic confinement fusion called a tokamak.

In a tokamak, D-shaped magnets cast powerful fields to keep plasma circulating in a doughnut-like shape inside. Over the years, the company has refined its magnets in pursuit of putting electrons on the grid from Arc, its future commercial-scale reactor that’s slated to be built in Virginia.

Both CFS’ and Realta’s existence stem from the magnets themselves.

CFS was founded in 2018 after scientists at MIT realized that a new class of commercially available high-temperature superconductors could underpin a viable tokamak design. Realta was founded a few years later when physicists at the University of Wisconsin “saw that there was a new technology, a game changer that would enable us to go back to the [magnetic] mirror and avail of those engineering advantages that the concept has,” co-founder and CEO Kieran Furlong said.

In addition to the Realta and WHAM deals, CFS has also licensed its high-temperature superconducting magnet technology to Type One Fusion, which is working on a third type of reactor design known as a stellarator.

While the latter deal doesn’t include CFS building actual magnets for the company, it could lead to that one day, Christine Dunn, CFS’ head of external communications, told TechCrunch.

The deals will help CFS pay off its investment in magnet manufacturing.

The startup spent seven years and hundreds of millions of dollars building a factory capable of producing high-temperature superconducting magnets designed to fusion-power specifications. So far, that has gone toward building Sparc, the company’s demonstration reactor, which won’t turn on until later this year.

“With Sparc now 70% complete, it was excellent timing to start supporting Realta with our magnet manufacturing,” Needham said.

Because Realta and Type One are pursuing different reactor designs, CFS apparently doesn’t view them as directly competitive at the moment.

In the marketplace, Realta and CFS are even further apart, with the former focusing initially on industrial applications that need large amounts of heat.

To date, CFS has raised nearly $3 billion — a large chunk of all venture dollars raised by fusion startups.

That’s put the company in an enviable position, giving it the means to build key facilities like its magnet factory before competitors can.

The startup pitches these deals as a service to the broader fusion industry, making available technologies that would cost many millions to replicate.

That’s certainly true, but it also gives it access to even more venture investment, even if it’s in a roundabout way.

Update 1:45 pm ET: CFS’s manufacturing facility makes HTS magnets, not tape, and it won’t be idled but will be making additional magnets for Sparc.

The article also misstated Rick Needham’s role as COO; he is CCO

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