Microsoft AI demands more power. Can a WA fusion company supply it?

MALAGA, Chelan County - On the banks of the Columbia River, two companies are rushing to build two technologies they say will power the future.

Microsoft is constructing a sprawling data center campus that could cover more than 24 football fields, part of the company's rapid build-out in a global arms race to control artificial intelligence. But this one site could demand as much electricity as a medium-sized city - at a time when power is increasingly scarce.

A couple of miles away, on another dusty construction site, is a potential solution.

Last summer, Helion, an Everett-based startup, broke ground on what it hopes becomes the world's first commercial fusion power plant, designed to deliver the same clean, steady energy that powers the sun.

It faces a fast-approaching contractual deadline: to help power Microsoft's data centers next door by 2028, using a technology nobody has successfully harnessed.

If Helion succeeds, it could help Microsoft overcome the biggest constraints for its AI goals: a shortage of electricity and a rising resistance to its build-out of power-hungry data centers.

Nuclear experts are doubtful Helion will fulfill that promise soon. Some skeptics say that fusion, in the near term, is more about generating goodwill for data centers than about generating electricity.

Microsoft says that even if fusion doesn't pan out, "we are bringing all of our own power" to Chelan County, as the company promises its data centers won't raise local electricity rates.

Although that may soothe concerns in Chelan, utilities elsewhere in the state could be forced to compete for power with trillion-dollar companies - driving up the cost of electricity for residents in places farther away like the Puget Sound area.

Will fusion step up?

Even though Helion has yet to construct the building it plans to house its fusion power plant in Malaga, CEO David Kirtley insists the 2028 deadline to deliver power for Microsoft is real.

"Right now, we're on track for it, Kirtley said. "But I worry about it."

Fusion has been achieved plenty of times before, including by Helion at its Everett headquarters. But no device has produced more electricity than it consumes.

A handful of other U.S. companies and the Chinese government say they're closing in on that threshold, as the demands of AI have helped drive billions of dollars into the potential climate and energy solution. No one has set as ambitious a target as Helion.

Nuclear fusion is the process of joining atoms together through extremely high temperatures and pressure, which releases a tremendous amount of energy. It happens naturally in stars, where hydrogen is essentially squeezed into helium, releasing light and heat. On Earth, labs typically create those conditions using lasers or - as in Helion's case - magnets to heat and compress particles until they combine.

Helion has attracted $1 billion in funding since it was founded in 2013, including from OpenAI CEO Sam Altman and other Silicon Valley titans like Peter Thiel, and it recently announced its latest prototype reached 150 million degrees Celsius - 10 times the temperature of the sun's core - but short of the 250-300 million degrees the company says it needs for commercial operations.

Kirtley said the company is racing toward its 2028 deadline partly because it has to pay penalties to Microsoft if it fails, but mostly because of how critical its mission is.

"We know the world needs clean, safe, baseload power at large scale," Kirtley said. "We're pushing as fast and as hard as possible to get there."

But some critics say it's so clear Helion won't hit its goal that they call Microsoft's deal with the company deceptive marketing.

"It's a remarkably clever new form of greenwashing," said Tom Lyon, a corporate sustainability media strategy researcher at the University of Michigan. "It's this really creative way to look like you've made a commitment without a commitment."

Helion has also drawn doubt from some scientists who say the company has released very little technical detail about its approach and progress compared with its competitors.

"Helion plays it pretty close to the chest," said George Tynan, a fusion plasma physics researcher at the University of California, San Diego. "That's what makes me skeptical, is just the lack of transparency."

Even if fusion produces net-positive electricity, research shows it could take a while before it becomes cheap enough to be commercially viable.

"I am skeptical of their timeline," said Paul Wilson, chair of the University of Wisconsin-Madison‘s nuclear engineering department. "It would be surprising to me if they're delivering electricity on a routine basis in 2028."

Microsoft said Helion is a tiny fraction of its clean energy contributions, pointing to the 40 gigawatts of clean energy, mostly solar and wind, it has contracted around the world - enough to power about 32 million homes.

"Fusion is definitely part of it, but it's by no means the only solution that we're supporting," said Melanie Nakagawa, Microsoft's chief sustainability officer.

New rules to hook up

Microsoft's deal with Helion could help it navigate new limits utilities are placing on data centers, as existing customers increasingly push to restrict those facilities.

Nearly half of the world's proposed data center projects are delayed largely due to power constraints, according to Sightline Climate. At the same time, growing local opposition blocked or delayed about $156 billion worth of projects in the U.S. in 2025, according to the research firm Data Center Watch.

In Seattle, a proposal to add five large data centers generated such a strong backlash that Mayor Katie Wilson announced she was considering a moratorium on new projects.

Even in Central Washington, long known for hydropower from Columbia River dams, excess electricity is now largely spoken for - much of it by data centers. In Grant County, utility staff warned last year that continued data center growth could increase the risk of outages and voltage instability.

In Chelan County, a wave of proposed data centers aiming to follow Microsoft could together demand nearly as much as Seattle uses on an average day.

"I'm not sure that everyone's necessarily aware of how hard it is to get the energy today," said Brett Bickford, a managing director at Chelan County Public Utility District.

Dozens of Chelan County residents wrote to utility officials last year expressing concern about the impacts of Microsoft's data centers, which at max capacity could use as much electricity as a third of Seattle.

In a meeting last June, utility staff said they heard the message "loud and clear" and promised their deal with Microsoft wouldn't increase costs for other customers.

The utility would put the data centers on their own grid infrastructure, make Microsoft pay to build it, keep its rates separate and, after a temporary period, require the tech giant to generate or import its own power.

Even though Microsoft's data centers in Malaga will sit less than 5 miles from Chelan County's Rock Island Dam, a company spokesperson confirmed, "We are bringing all of our own power."

Helion's fusion project would be one way to do that. Microsoft is also exploring other options. In West Texas, the company is negotiating a deal with Chevron to build a huge natural gas-fired power plant to supply electricity for its data centers. Although Microsoft has pledged to become carbon-negative by 2030, its emissions have risen 23% since 2020 due to AI and cloud-computing expansion, according to its 2025 Environmental Sustainability Report.

With Chelan County requiring data centers to bring 80% carbon-free power, that largely leaves the option of buying renewable energy from other places. That may shield local ratepayers' bills, analysts say, but not the broader region's.

Competing for energy

Some ratepayers in Washington have been watching their bills increase by double-digit percentages - about 60% over the past three years for Puget Sound Energy customers.

That's in large part because utilities are scrambling to buy new renewable energy to power electric vehicles, heat pumps and air conditioners while meeting the state's clean energy mandates. And they're finding prices have soared in recent years.

That increase comes amid supply chain issues, tariffs and regulatory challenges, but analysts say utilities are also now competing against AI companies that are snatching up new projects in staggering volume and driving up prices, like when Amazon outbid PSE earlier this year in an auction for a solar farm in Oregon.

"Microsoft and Chelan and Puget and Bonneville and everybody else are all competing," said Arne Olson, a senior partner at consulting firm Energy and Environmental Economics. "That's going to be the primary impact that the data centers have on people's electricity bills."

And since wind and solar aren't enough to power data centers 24/7, Microsoft is filling in the gaps with Canadian hydropower in East Wenatchee. Olson said that means there's less hydropower for sale on the wholesale market, which could make the volatile price spikes in recent years even worse.

As Chelan County's utility reassures residents that data centers won't increase their rates, Puget Sound utilities are asking their customers to turn down the heat at times to save on market power costs. Some say that's not right.

"The data centers have sucked the energy right out of this state," said Alan Smith, a PSE customer in Skagit County. "They're trying to make us solve the problem and they're looking at it the wrong way."

Chelan County PUD Chief Operating Officer Dan Koch says it's clear the energy shortage across the country isn't sustainable. And he's hoping Helion's fusion power plant is the solution.

"At some point, there needs to be a technological breakthrough in the industry, Koch said.

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