By Timothy Gardner

WASHINGTON, May 10 (Reuters) - Private U.S.

nuclear fusion company Helion Energy will provide Microsoft with electricity in about five years, the companies said on Wednesday, in the first such deal for the power source that fuels the sun but has been elusive on Earth.

Government labs and more than 30 companies are racing to generate power from fusion, which could one day help the world slash emissions linked to climate change.

Unlike today's fission reactors it could generate power without producing long-lasting radioactive waste.

Fusion occurs when two light atoms such as hydrogen, heated to extreme temperatures, fuse into one heavier atom releasing large amounts of energy.
So far earthly fusion reactions have been momentary and suck up more energy than they release, but companies have raised about $5 billion in private funding in the quest to achieve net energy gain.

Helion's plant is expected to be online by 2028 and will target power generation of 50 megawatts or greater after a one-year ramp up period, it said.

One megawatt can supply up to about 1,000 U.S. homes on a typical day.

"50 megawatts is a big first step of commercial scale fusion, and the revenue feeds right back into us developing more power plants and getting fusion out on the grid both in the United States and internationally as fast as possible," David Kirtley, the founder and chief executive of Washington state-based Helion said in an interview.

Polaris, Helion's seventh generation machine, should come online next year and demonstrate electricity generation, using a mix of laser and magnet technologies to achieve fusion, Kirtley said.

In 2021, Helion was the first private company to achieve 100 million degrees Celsius and the optimum temperature is about twice that, Kirtley said.

While many fusion companies are looking to tritium, a rare hydrogen isotope, to help fuel reactions, Helion plans to use Helium 3, a rare type of the gas used in quantum computing.

Helion has so far raised more than $570 million in private capital with OpenAI CEO Sam Altman, providing $375 million in 2021.

Brad Smith, vice chair and president at Microsoft, said in a release that Helion's work "supports our own long term clean energy goals and will advance the market to establisha new, efficient method for bringing more clean energy to the grid, faster."

The companies did not disclose terms of the power purchase agreement.

Helion still needs design and construction approvals from the Nuclear Regulatory Commission (NRC) as well as local permits.

But the fusion industry was cheered by NRC's decision last month to separate fusion regulation from that of fission, a move backers say could reduce time lines of license approvals.

Andrew Holland, head of the Fusion Industry Association, said nothing about fusion has been easy, but the deal shows trust is building.

"The business world is starting to understand that fusion is coming and perhaps sooner than a lot of people thought," Holland said in an interview.

"It's a vote of confidence that Helion is on its way as are other companies building their proof of concept machines now."

(Reporting by Timothy Gardner; Editing by Jacqueline Wong)