Fusion power startups, which have traditionally relied on climate tech investment to fund their pursuit of grid electricity, are increasingly forging partnerships with the defence industry as venture funding for climate technology has slowed. This marks a return to the sector's origins, as fusion research began decades ago with physicists seeking peaceful applications of thermonuclear science, and defence-related work has long run alongside efforts to generate power. The shift matters because it offers fusion firms an alternative funding stream while giving the military access to powerful new laser technology at a time when drone warfare is exposing the limitations of costly traditional air defences.

Laser-based fusion startup Xcimer recently announced a partnership with and investment from RTX, the conglomerate that owns defence contractor Raytheon, allowing RTX to explore military uses for Xcimer's lasers, which the company says form the largest privately owned laser system in the world. Separately, Pacific Fusion signed a memorandum of understanding with the National Nuclear Security Administration last month to collaborate on high-energy-density fusion experiments at a new demonstration facility in New Mexico, near the Sandia and Los Alamos national laboratories. Both companies' technologies stem from lasers powerful enough to compress fuel targets until atoms fuse, a capability also useful for cheaper, rapid-fire laser weapons capable of countering drones more efficiently than costly missiles such as the $3 million Patriot system once used against a $200 consumer drone.