SAN FRANCISCO, July 30 (Reuters) - Helion Energy, a

startup backed by OpenAI's Sam Altman and SoftBank's venture

capital arm, has started construction on a site for a planned

nuclear fusion power plant that will supply power to Microsoft ( MSFT )

data centers by 2028, the company said on Wednesday.

The site in Malaga, Washington, is in the center of the state

along the Columbia River, where Helion hopes to take advantage

of grid infrastructure in place for the nearby Rock Island Dam

hydroelectric plant.

The startup still has to secure final permits from

Washington's government but said the work puts it on track to

sell power to Microsoft ( MSFT ) under a deal it struck in 2023.

Fusion generates electricity by ramming atoms into each other,

releasing energy without emitting significant greenhouse gases

or creating large amounts of long-lasting radioactive waste. But

despite billions of dollars of investment, scientists and

engineers still have not figured out a way to reliably generate

more energy with fusion than it takes to create and sustain the

reaction.

Helion is still working on how to do that with its current

prototype, called Polaris, which is housed in Everett,

Washington, where it plans to build components for the machine

to be built at Malaga, called Orion.

Orion will connect to Washington's primary power delivery

networks, David Kirtley, Helion's co-founder and CEO, told

Reuters.

"We'll actually be able to connect to the exact same grid

just upstream of the Microsoft ( MSFT ) data centers," Kirtley said.

Microsoft ( MSFT ) has for years said that nuclear energy should be

part of a mix of carbon-free energy sources and has also signed

power purchase agreements for conventional fission-based nuclear

power. Fusion is a longer-term bet, said Melanie Nakagawa,

Microsoft's ( MSFT ) chief sustainability officer.

"Over the last three, four years, you've been seeing from

across the fusion space different types of milestones being met

by other companies and peers, Helion included," Nakagawa told

Reuters. "There's a lot of optimism that this could be the

moment that fusion actually comes forward within this decade, or

near in this decade."