Contracting on nuclear fusion projects: what you need to know

Fusion v fission

Nuclear fusion is the process that powers the sun. In simple terms, it involves combining the nuclei of two atoms (such as hydrogen) to make a bigger one, a process that releases enormous amounts of energy. Fission is the reaction which produces the nuclear power consumed today. In contrast to fusion, it involves splitting an atom (such as uranium) into smaller atoms, in the process releasing energy, but also producing nuclear waste.

Fusion offers immense promise: virtually limitless energy without the risk of an uncontrolled chain reaction, and no radioactive waste, which is long-lived and hazardous. As the global race to deliver commercially viable fusion energy intensifies, major public and private investment is flowing into fusion demonstration projects, such as ITER, STEP (UK), and numerous private ventures.

As the science evolves, so too does the regulatory framework, and contracting in the fusion sector raises a number of unique legal considerations.

1. Regulatory ambiguity – a new legal frontier

Fusion does not necessarily fall within the scope of conventional nuclear regulation, primarily because:

• it does not involve chain reactions or a critical mass;
• it typically uses lighter isotopes (such as deuterium and tritium) with lower radiological risk.

However, the landscape is changing, and regulators are moving toward bespoke fusion safety regimes.

In the United Kingdom, for example, the Energy Act 2023 has confirmed a distinction between how fusion and fission projects are to be regulated. In the legislation, fusion facilities are excluded from the nuclear site licensing regime, and are instead governed by the Health and Safety Executive and Environment Agency, reflecting fusion’s lower hazard profile[1].

The UK is also a developing a National Policy Statement for Fusion Energy (NPS EN-8), which will designate fusion as a Nationally Significant Infrastructure Project. NPS EN-8 will look to contractors to bear a responsibility for managing safety risks, since they best understand the science. Further regulatory developments will inevitably follow.

Key considerations:

• Consider whether fusion is treated as “nuclear” under your local laws.
• Safety and environmental rules may evolve mid-project – build in clear mechanisms to respond to regulatory change over the life of what could be a long-running design programme.

2. Technology uncertainty

Fusion projects are still largely Research & Development-focused or demonstration-scale. Designs are evolving rapidly and unforeseen scientific breakthroughs – or failures – can reshape the entire project scope, and the anticipated outcome, in time and money.

Key considerations:

• Expect frequent design changes – contracts should contain robust change control mechanisms, including clarity on what triggers the mechanism and how the schedule and prices are to be adjusted.
• Consider target cost or reimbursable models to mitigate performance and delay risk tied to scientific unpredictability.

3. IP and innovation risk

Fusion projects are not just construction projects; parties in the sector are in a race to make key breakthroughs, and establish market share, first. They are therefore in a highly competitive, IP-driven field. Contractors working with start-ups or state-backed labs may be handling proprietary designs, advanced superconducting magnets, plasma-facing materials and other state of the art innovations.

This makes ownership of intellectual property a critical issue, and one that will likely be heavily negotiated.

Key considerations:

• Clearly define ownership of improvements or inventions developed during the course of the work.
• Include robust non-disclosure, data security, data handling, and cyber protection clauses.
• Consider patent infringement indemnities carefully.

4. Insurance and risk gaps

Since fusion does not (yet) fall under conventional nuclear liability conventions, the scope of insurance coverage may be uncertain. That could lead to disputes on policy wording and, potentially, gaps in coverage.

Key considerations:

• Confirm whether your policies cover work at a fusion facility – some may exclude any “nuclear activity” even if not fission-based.
• Consider bespoke project-specific insurance, particularly covering:
  • Construction and plant damage;
  • Delay in start-up (DSU);
  • Contamination (e.g., tritium releases);
  • Cyber or data loss incidents.

5. Long-term collaboration and adaptive contracting

Fusion projects often require deep, ongoing collaboration between contractors, scientists, engineers, and public institutions over timeframes that can span a decade or more.

Key considerations:

• Expect collaborative contracting models (e.g., NEC4 Option C, alliance contracting).
• Be prepared for embedded teams or secondments – ensure legal readiness around secondment agreements, site access, export controls, and cross-border HR compliance.

Position your business for success in Fusion Energy Projects

Fusion projects are an exciting frontier, but require contracting parties to be agile, cautious, and cognisant of the risks. With long timelines, regulatory change, and a technically evolving environment, early legal engagement is critical – both to protect your business and to position yourself as a trusted partner in a transformative sector.

At Beale & Co, we understand that contracting for nuclear fusion projects is unlike any other construction or infrastructure venture. It requires a deep understanding of not just construction law, but also regulatory nuance, scientific uncertainty, and innovation risk.

We advise clients operating at the cutting edge of the energy sector – helping them navigate evolving safety regimes and build adaptive, future-proof contracts for complex fusion programmes.

If your business is involved in a fusion energy project – or planning to be – our specialist and experienced team can support you from project inception through to delivery.

[1] The Energy Act 2023 (Commencement No. 2) Regulations 2024  specifically, Section 156 of the Energy Act 2023, which amends the Nuclear Installations Act 1965 to exclude fusion energy facilities from the nuclear site‑licensing regime and stipulates that such facilities instead fall under the jurisdiction of the Health & Safety Executive (HSE) and Environment Agency (EA), came into force on 10 September 2024