Fusion power startup Type One Energy recently raised $87 million, TechCrunch has learned from sources familiar with the deal.

The new funding is a convertible note that brings the total venture investment in the startup to more than $160 million. Type One is also in the midst of raising a $250 million Series B at a $900 million pre-money valuation, according to sources and later confirmed by the company.

Like other energy startups, Type One has benefited from a surge in demand from data centers and the broader electrification of the economy. Data centers are expected to use nearly three times more electricity by 2035, while overall electricity demand is forecast to grow by 4% annually through next year.

Fusion power could deliver gigawatts’ worth of nearly limitless clean power. The reactors work by fusing atoms, which release tremendous amounts of heat and energy in the process. Power plants harvest that heat to spin turbines, similar to today’s fossil fuel facilities, but without the pollution.

Unlike fission, fusion reactors don’t produce significant amounts of radioactive waste. They also don’t pose a risk of catastrophic meltdowns.

There are two main approaches to fusion power: magnetic confinement and inertial confinement. In the former, magnets compress and control plasma, the superheated particles that ultimately fuse into new atoms. In the latter, fuel pellets are compressed until they fuse, most often using lasers.

Type One will employ magnetic confinement, and the design is what’s known as a stellarator. In a stellarator, magnets are arranged in a doughnut shape that’s twisted and turned according to the demands of the plasma. Previously built stellarators have been able to control plasma for long periods of time, though none have been built yet with the intention of producing power.

Last year, Type One signed deals with the Tennessee Valley Authority (TVA) to place the startup’s first commercial power plant at the site of the former Bull Run Fossil Plant, a coal-fired power plant that was retired in 2023. Infinity Two, as the power plant is called, is expected to generate 350 megawatts of electricity and could come online in the mid-2030s, the company has said.

Unlike many other startups, Type One isn’t planning to build the power plants or reactors itself and sell the power. Instead, the company will sell key technology to the TVA and power providers, who will build, own, and operate the plants. 

Type One had previously raised a $29 million seed round in 2023 that was extended to a total of $82.5 million in 2024. Investors in that round included Bill Gates’ Breakthrough Energy Ventures, Doral Energy-Tech Ventures, and TDK Ventures.