The race is on to build the world's first commercial fusion power plant — and one of Europe's leading contenders in the field has just received a boost.

Munich-based Proxima Fusion signed memoranda of understanding with two Japanese industrial partners, Fujikura and Kyoto Fusioneering, in Tokyo on Oct. 28. Japanese Prime Minister Sanae Takaichi and German Chancellor Friedrich Merz — who was visiting in a bid to deepen trade ties — were both in attendance.

Ann Mettler, president of Catalyse Europe, a Brussels-based clean-energy think tank, and a former vice president of Breakthrough Energy, said developing the technology should be a strategic imperative for Europe.

"Europe is a resource-poor geography and we are very dependent on China. The world is in competition for technological supremacy — this is a zero-sum game," Mettler told CNBC, speaking in a personal capacity.

"Fusion is a silver bullet because the promise is abundant, clean, limitless energy."

Fusion energy seeks to replicate the way the sun produces power, using super-heated plasma to fuse two light atomic nuclei into one heavier one, releasing vast amounts of energy in the process.

There are two main approaches: one uses high-powered lasers, while the other uses powerful magnets to confine the plasma. Proxima is developing a type of magnetic device called a stellarator, which is designed to hold the plasma in place for long periods.

The agreement with Kyoto Fusioneering will expand existing work on next-generation gyrotrons — devices that generate high-power microwaves used to heat the plasma.

Why HTS tape matters

Proxima's agreement with 141-year-old Fujikura will explore plans for industrial-scale manufacturing in Germany of high-temperature superconducting, or HTS, tape, a specialized metallic tape that is superconducting at relatively high temperatures and can carry electrical current with virtually no resistive losses.

The tape is wound into coils to form powerful magnets that confine and control the heated plasma inside the stellarator.

Francesco Sciortino, CEO and co-founder of Proxima Fusion, told CNBC that Fujikura, which employs over 50,000 people worldwide, was a leader in manufacturing high-temperature superconductors, having built its reputation in optical fibers. "They think this tape has the potential to be the next optical fibre," he said.

He said Proxima, which is studying plans to build a manufacturing facility in Lower Saxony, hoped to make around 5,000 kilometers, or 3,100 miles, of tape annually by 2030.

The 140 million euro ($160 million) facility would be financed partly by the proceeds of a $468 million funding round in July, which valued Proxima, whose backers include Alphabet-owned Google, at $2.7 billion.

Proxima expects to need around 20,000 kilometers (12,400 miles) of the tape for its "Alpha" fusion demonstrator and a further 40,000 kilometers (24,900 miles) for its planned "Stellaris" fusion power station.

Europe’s fusion supply chain

Sciortino said that establishing production of the tape in Germany was crucial as it would help Europe create the expertise and supply chains needed to turn its fusion research leadership into industrial capability.

This is where Europe has historically struggled, according to Catalyse Europe's Mettler.

If Europe is first to develop this technology, it will give us a huge advantage, but key to that will be building the supply chainAnn MettlerCatalyse Europe

"Every geography wants to turn leadership in science into industrial leadership and this is where Europe has traditionally been not so good — turning that scientific leadership into euros," she said.

While Europe had industrial giants to be proud of, disruptors tended to be more successful in frontier technologies, according to Mettler.

"If Europe is first to develop this technology, it will give us a huge advantage, but key to that will be building the supply chain," she said.

Commercial fusion competitors

Sciortino said he remains confident Proxima will be the first company to turn on a pilot plant — but stressed the key to profitability would be making that plant as simple as possible to operate.

"You can have complexity in the design, manufacturing and operation of the plant," he said. "We can take care of the complexity in the design and manufacturing, but our view is that there needs to be simplicity in the operation. We are aiming for net energy gain during the early 2030s."

But Proxima has some well-heeled competitors. They include U.S.-based Commonwealth Fusion Systems, which is also backed by Google, and Helion Energy, as well as Canada's General Fusion. China has a number of state-backed players, most notably China Fusion Energy Co., while Tokyo-based Helical Fusion leads Japan's push.

"The supply chain in fusion energy needs to be built years before — people often think of frontier technologies as a switch that can be thrown," Mettler said. "That is not the case here."