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Summary form only given:In November 2006, ministers representing the world's major fusion communities signed the agreement formally establishing the international project ITER. Sited at Cadarache in France, the project involves the European Union, China, India, Japan, the Russian Federation, South Korea and the United States. ITER is a critical step in the development of fusion energy: its role is to confirm the feasibility of exploiting magnetic confinement fusion for the production of energy for peaceful purposes by providing an integrated demonstration of the physics and technology required for a fusion power plant. The ITER tokamak is designed to achieve a fusion amplification factor, Q, of 10 for several hundreds of seconds with a nominal fusion power output of 500MW. It is also intended to allow the study of steady-state plasma operation at Q=5 by means of non- inductive current drive, in anticipation of a requirement for fusion power plants to operate continuously. Accompanying the ITER engineering design activities, an extensive international physics collaboration has addressed the key physics issues for ITER and has assembled a comprehensive physics basis which supports the design. Nevertheless, several key operational aspects remain the subject of focussed R&D activities which aim to ensure the reliable operation of the device at or beyond its design capability. These include control of plasma-wall interactions to ensure that plasma facing components achieve their design lifetime under the stationary and transient loads expected in ITER, the mitigation or stabilization of mhd instabilities to guarantee long duration operation, and the development of candidate steady-state regimes towards ITER-relevant parameters. Operation of ITER will open new frontiers in fusion research involving the influence of a significant a-particle population on plasma heating, confinement properties and stability. Studies in steady-state scenarios will be of particular sign- - ificance and should provide access to novel aspects of non-linear phenomena in magnetically confined plasmas. To develop plasma scenarios in which high fusion power production is combined with high confinement and plasma pressure, control of heat and particle fluxes, active control of mhd stability and fully non-inductive current drive, the fusion community will need to confront a range of challenges involving plasma physics understanding, plasma measurement techniques, auxiliary heating and current drive systems, and plasma control. The presentation will summarize the current status of the project, discuss key physics issues which are the subject of ongoing R&D, and review the opportunities and challenges involved in successful operation of ITER.