Trade-Off Analysis of ROI for Capability
Stepping-Stones to a Lunar Habitat
By: GMU SEOR 2012 Senior Design Students:
Daniel Hettema
Scott Neal
Anh Quach
Robert Taylor
Agenda
•
•
•
•
•
•
•
2
Context
Need & Problem Statements
Design Alternatives
Models
Results
Trade-Off Analysis
Findings & Recommendations
CONTEXT
Benefits of Space
• Next Step for humanity
– New unique opportunities
• Many new spin-off technologies
invented
– Space Race
• The space race during the cold war
provided incredible technological advances:
–
–
–
–
4
CAT and MRI machines
Freeze dried foods
Scratch resistant lenses
Eventual development of PCs
Benefits of Space
• Large New Market:
– Jobs, new technologies and capabilities
• Stimulate economic growth
• Military
– Strategic defense capabilities
“(Space programs are) a force operating
on educational pipelines that stimulate
the formation of scientists,
technologists, engineers and
mathematicians…They’re the ones that
make tomorrow come.”
-Neil deGrasse Tyson
5
Investment Below
“Critical Mass”
• Critical Mass: investment threshold
which, once surpassed, irreversibly
begins the development of space
• When spending was sufficient,
progress was made.
– Currently not enough investment
– Slow progress and inefficient spending
results
6
Government Funding
• Decline in US government investment
% US
Federal
Budget
allotted
to NASA
1st Man on Moon
Space Shuttle
ISS
Year
7
NASA Annual Budget statistics. The World Almanac and Book of Facts 1960 through 2001.
Past and Current
Investments
• Governments • Private Industries
Currently investing:
– USA
– China
– Russia
– Brazil
– India
8
• SpaceX ($100M)
• Bigelow Aerospace
($180M)
• Virgin Galactic ($100M)
• Many others
Limiting Factors for
Investment
• Launch Costs
– Too high
• Insurance Costs
– Debris
– Failures in technology
– Too much risk
• Probability of negative ROI very high
9
Historic Trend of $/lb to
LEO
25000
23800
20000
Cost ($/lb)
15470
15000
16500
10490
"Historic Trend of $/lb to
LEO (all values global
average unless denoted)"
10000
5000
2010
2005
2000
1995
1990
1985
0
2015
1000 (SpaceX
projected)
Year
10
www.Spacex.com
Space Transportation Costs: Trends in Price Per Pound to Orbit 1990-2000.” Futron. 06-Sep-2002
Debris Growth Over Time
Debris Growth Over Time
60000
Objects of Debris
50000
40000
30000
20000
10000
0
1960
1970
1980
1990
2000
2010
2020
2030
2040
2050
2060
Year
J. Pearson, E. Levin, and J. Carroll. “Active Removal of LEO Space Debris: The ElectroDynamic Debris Eliminator (EDDE).” August 31, 2011.
http://www.washingtonpost.com/wp-dyn/content/article/2009/11/06/AR2009110603555.html?wprss=rss_nation/science
11
Launch Failure Rate
Launch Failure Rate to LEO
60
% of Failure Rate
50
40
30
Failure Rate
20
10
0
1950
1960
1970
1980
Years
12
1990
2000
2010
“Optimal” Coordinated Stakeholders
Provide Launches
Space Habitats
Demand for Launches
Launch Services
Habitat
leasing
Demand for Habitats
Clean LEO
Habitats
Debris
Collection
Clean
LEO
HighAltitude/
Space
Tourism
Civilian
Space
Travel
13
Regulation,
Demand
for
Habitats
Clean LEO
Government
Funding,
Regulation
Clean LEO
Satellite
Companies
Demand for Trips
Earth’s Population
Regulation
Reality #1: Debris Collection
Underfunded
Space Habitats
Launch Services
No Funding
Earth’s Population
No Funding
Clean LEO
Debris
Collection
Clean
LEO
HighAltitude/
Space
Tourism
14
Clean
LEO
Clean LEO
Government
Negligible
Funding
No funding
Satellite
Companies
Debris Collection Tension
15
Reality #2: Space Habitats need
Bootstrap Funding
Government
Launch Services
Demand
for Launches
Habitat
leasing
No Funding
Space Habitats
Habitat Leasing
Debris
Collection
Satellite
Companies
Earth’s Population
16
No Funding
HighAltitude/
Space
Tourism
No
Funding
Reality #3: High Cost of Launch
Services
Government
Launch Services
Demand for
Launches
Habitat
leasing
Provide Launches
Launch costs remain high
because there is no
consistent demand
Satellite
Companies
Earth’s Population
17
Space Habitats
Habitat
Leasing
Demand
for
Habitats,
Regulation
Demand for Habitats
HighAltitude/
Space
Tourism
Debris
Collection
Major Stakeholders
Stakeholder
Objective
Issues
High Altitude Tourism
Foster/maintain interest in space
Feasibility
Debris Collection
Clean LEO
Lack of funding
Satellite Companies
Lower orbital costs, increase
satellite lifetime
High, increasing orbital risk,
launch costs
Space Habitats
Inhabit LEO, provide research
environment
Lack of interest, launch costs
Launch Services
Provide competitive launch cost
Launch costs decrease with
frequency, but not enough
demand
Space Tourism
Sustainable space-based tourism
Insufficient technology,
exposure, capability
Government
Regulation, Funding, Strengthen
economy
Focused on near-term
Earth’s Population
Better life
Focused on near-term
Private Industry
18
Investors
Disinvestment Cycle
space
habitats
launch
frequency
_
launch
costs
Space
Activity
_
investment
_
space
tourism
Debris
collection
_
amount of
debris
19
_
orbital
insurance
NEED & PROBLEM
STATEMENTS
Need Statement
There is a need to break the
disinvestment cycle, by focusing on
reducing launch costs, and insurance
premiums, that will lead to a profitable
development of space.
21
Problem Statement
Evaluate the costs and revenues of
space markets to develop synergy in
investments of capabilities that will
break the disinvestment cycle.
22
DESIGN ALTERNATIVES:
STEPPING-STONE CAPABILITIES
Project Scope
• Stepping-Stones to a lunar Habitat
• Focus on combining existing
solutions to address:
– Launch
– Debris
– LEO Habitats
– Lunar Habitats
• Single String design
24
Capability Stepping-Stone 1
Stepping-Stone 1:
High-Altitude Tourism
Virgin Galactic Tourism Trips (2013)
Capability: Commercial Tourism to Space
Focus: Encouraging seed funding
25
Capability Stepping-Stone 2
Stepping Stone 2:
High-Altitude Tourism and Debris Collection
Capability: Reduce risk in space by lowering
the amount of debris in space.
Focus: Reduces insurance rates
26
Capability Stepping-Stone 3
Stepping-Stone 3:
LEO Habitats
Bigelow Aerospace
Capability: LEO Life Sustainability
Focus: Reduces Launch costs
27
Capability Stepping-Stone 4
Stepping-Stone 4:
LEO Hub and Moon Base
Capability: Extension of tourism to the Moon,
Development of space-exclusive personnel ships
Temporary Habitation of the Moon
Focus: Reduce launch costs & space exclusive ship
28
Capability Stepping-Stone 5
Stepping-Stone 5:
Permanent Lunar Habitation
Capability: Lunar life sustainability
Lunar Mining & Manufacturing
Foundation for delving further into space
Focus: Sustainability
29
Building Block Diagram
High-Altitude Tourism serves as the catalyst to incite
the interest, and therefore the investment, of the
Earth’s population in space.
Debris Collection serves to reverse the trend
of declining conditions in LEO
Interest &
Investment
30
Reverse
the
Trend
Reverse
the
Trend
Reverse
the
Trend
Interest &
Investment
Interest &
Investment
Interest &
Investment
Building Block Diagram (cont’d)
LEO Habitats
-LEO sustainability
-Increased Frequency of launches = Decreased Launch Costs
-Interest from government/private industry
-Environment to conduct research in space
Interest &
Investment
31
Launch Costs
Launch Costs
Gov’t/Private
Interest
Gov’t/Private
Interest
Reverse
the
Trend
Reverse
the
Trend
Reverse
the
Trend
Interest &
Investment
Interest &
Investment
Interest &
Investment
Building Block Diagram (cont’d)
Hub & Moon Base
-Temporary presence on the Moon
-Continued Decrease of launch costs
-LEO & Lunar Tourism
-Space-exclusive Ships
-Extension of Sustainability into space
Interest &
Investment
32
Launch Costs
Extension of
sustainability
Launch Costs
Launch Costs
Gov’t/Private
Interest
Gov’t/Private
Interest
Reverse
the
Trend
Reverse
the
Trend
Reverse
the
Trend
Interest &
Investment
Interest &
Investment
Interest &
Investment
Building Block Diagram (cont’d)
Permanent Moon Base
-Permanent Presence on the Moon
-”Live off the Land”
-Lunar Mining and Manufacturing
-Platform for delving further into space
Interest &
Investment
33
Launch Costs
Extension of
sustainability
Launch Costs
Launch Costs
Gov’t/Private
Interest
Gov’t/Private
Interest
Reverse
the
Trend
Reverse
the
Trend
Reverse
the
Trend
Interest &
Investment
Interest &
Investment
Interest &
Investment
Decision Support Tool: ROI Calculator
• Each capability stepping-stone will be
evaluated in terms of investment and
return on investment for the industries
involved
• Users will be able to vary inputs into
each capability stepping-stone to see
how adjusting the price of a ticket will
affect the rate of return.
• Allow companies to identify minimum
selling prices for commodities to attain
ROI in a specified number of years.
34
Design Thesis Statement
It is feasible to break the disinvestment
cycle using capability steppingstones.
space
habitats
launch
frequency
_
launch
costs
Space
Activity
_
investment
_
space
tourism
Debris
collection
_
amount of
debris
35
_
orbital
insurance
MODELS
Top Level Model
Seed Funding
Stepping Stone
Capabilities
Investment
Lunar Habitat
ROI Calculator
ROI
Goal: To create a positive feedback loop for stepping-stones investment
37
Stepping-Stone 1: High Altitude
Tourism Financial Model
• Focus: Finding best ROI given:
Initial Investment
ROI
Virgin Galactic
Ticket Price
Number of trips
• Equation: Profit =
=
38
Development Costs
Cost of Ship
Maintenance Costs
Decommissioning Cost
Stepping-Stone 2:
High-Altitude Tourism + Debris Collection
• Input/Output Diagram
Initial Investment
Virgin Galactic
+
Current Debris Quantity Debris Removal
Ticket Price
• Limitations
– No crashing
• Assumption
– Debris collected is not salvaged
39
ROI
Number of trips
Reduced Insurance Costs
New Debris Quantity
•Validation
•Based on Star Tech Inc
Debris collection model
•Purpose of model:
•To show the effect of debris
collection on insurance rates
Stepping-Stone 2:
High-Altitude Tourism + Debris Collection
• Major Equations:
– High Altitude Tourism ROI equation
(SS1)
– Debris Collection Equation
•
–
–
–
–
–
–
40
xi = debris in the atmosphere
xi+1 = debris in the atmosphere after time step
d = amount of debris added per time step
n = number of debris collectors (12, variable)
r = rate of collection
e = efficiency of collection
Efficiency of Debris Collection
_
41
Stepping-Stone 3:
LEO Habitats
• Focus: LEO Sustainability
• Input/Output Diagram
Initial Investment
Demand
ROI
LEO Habitats
People in space
• Modeling from the perspective of Bigelow Aerospace
Profit =
P = habitat lease price
CMH= Maintenance cost for habitat
Ch= cost of habitat
Lh = lifetime of habitat
CLH= cost to launch habitat
MTBFH = estimated habitat failure rate
CLP= cost to launch people to habitat
n = number of habitats
42
Launch Costs Reduction
through Scale
•
Stepping Stone 3 & 4 involve the launching of habitats, as well as launching
inhabitants, and maintenance personnel for the habitats
Launch Cost Reduction Curve
•
43
The frequency of traffic to and from LEO increases, which translates to
reduced launch costs
Stepping-Stone 4: LEO Hub & Moon Base
• Input/Output Diagram
Initial Investment
# of Habitats comprising Hub
Demand
ROI
Hub
&
Moon Base
# people travelled to the Moon
Hub traffic and commerce
• Capabilities obtained:
– Space-exclusive ships
–
• No re-entry
• Solar or nuclear powered (non-chemical)
Temporary Colonization of the Moon
• Assumption
–
Capacity of 10 for both ship types (Earth-Hub, Hub-Moon Base)
• Purpose of Model:
– Investment in longer-term tourism in space, both to the hub and the Moon
44
Stepping-Stone 4 Equation
• Model from the perspective of generic Tourism Company
Profit =
TH = Tickets to Hub
PTH = Price of ticket to hub
TM = Tickets to Moon Base
PTM = Price of tickets to Moon Base
CH = Cost of hub
CMB = Cost of Moon base
LMB = Lifespan of Moon base
MTBFMB = Failure rate of Moon Base
CM,MB = Cost to maintain Moon Base
LH = Lifespan of Hub
MTBFH = Failure rate of Hub
CM,H = Cost to maintain Hub
45
x = Earth-Hub Ships y = Hub-Moon base Ships
Cx = Cost of Earth-Hub Ship
Cy = Cost of Hub-Moon Base Ship
Capx = Capacity of Earth-Hub Ship
Capy = Capacity of Hub-Moon Base Ship
Lx = Lifespan of Earth-Hub Ship
MTBFx = Failure rate of E-H Ship
Ly = Lifespan of Hub-Moon Base Ship
MTBFy = Failure rate of H-MB Ship
CM,X = Maintenance cost for E-H Ship
CM,Y = Maintenance Cost for H-MB Ship
Stepping Stone 5:
Permanent Lunar Base
• Input/Output Diagram
Sustainable?
Initial Investment
# of people living on Moon
Permanent
Lunar
Base
• Limitations
ROI
Tons of Water, Oxygen Processed
•What the model shows:
– Mining is limited to the Moon
• Assumption
– Water, Oxygen and Nitrogen
are harvested through regolith processing
46
•ROI
•Feasibility of Sustainability on
the Moon
Stepping-Stone 5 Equation
Profit =
R = Average Regolith Payload
n = Number of Payloads
CB+E = Cost of Base & Equipment
Co = Operating Costs/year
Cm = Maintenance Costs/year
Ct = Travel Cost on Moon/lb
P = Average Payload
T = Number of Trips/year
47
Models
• Each capability stepping-stone has an
independent model
• Constructed using SPEC Innovations NimbusSE
– Can utilize database capabilities to do traceability,
track changes
– Allows users to observe the effects of changes on
the model
– Provides visual clarity in constructing parallel
processes
• All cost calculations are using NPV
• p = inflation = .03 k = rate if saved = .04
48
RESULTS
Disinvestment Cycle
space
habitats
launch
frequency
_
launch
costs
Space
Activity
_
investment
_
space
tourism
Debris
collection
_
amount of
debris
50
_
orbital
insurance
Investment Cycle
space
habitats
launch
frequency
_
+
launch
costs
Space
Activity
+
investment
_
+
space
tourism
Debris
collection
_
+
amount of
debris
51
_
+
orbital
insurance
Overall Results
Stepping-Stone
52
Breakeven Investment
Point (yrs)
Revenue
ROI after
10 yrs
High-Altitude
Tourism
4.5
$111M
$230M
182%
Debris Collection
None
NA
NA
None
LEO Habitat
10
$1.35B
$1.3B
98%
LEO Hub &
Moon Base
8
$3.7B
$4.43B
118%
Permanent
Lunar Habitat
22
$17B
$13.4B
79%
Capability Stepping-Stone
Stepping-Stone 1:
High-Altitude Tourism
53
Stepping-Stone 1
Initial Investment: $100 million
Direct mission costs: $400 thousand
Insurance premium percent: 10%
Ticket price: $200 thousand
People per ship: 6
54
Stepping-Stone 1
• Key Output Assumption:
– Doing space tourism increases interest
in space, thus increasing investment
– This interest & investment is key to
having the other stepping-stone become
more viable
55
Capability Stepping-Stone
Stepping Stone 2:
High-Altitude Tourism + Debris Collection
56
Stepping-Stone 2
57
Stepping-Stone 2
• Key Output:
– Without a continuing debris collection
there is an increasing extra cost
associated with LEO habitation from
collision risk
58
Capability Stepping-Stone
Stepping-Stone 3:
LEO Habitats
59
Stepping-Stone 3
Initial Investment: 200 million
Lease cost over 5 years: 120 million
Percentage up front: 50%
Cost to build 1 habitat: 75 million
MTBF: 2.5 years
Lifecycle: 10 years
60
Stepping-Stone 3
• Key Outputs:
– Continuing interest generation and
investment increases
– Shifts focus from increasing launch
capability to life sustainability
61
Capability Stepping-Stone
Stepping-Stone 4:
LEO Hub and Moon Base
62
Stepping-Stone 4
Stepping-Stone 4:
Investment & Revenue
4500
2012 NPV in Millions
4000
3500
3000
2500
2000
1500
Investment
1000
Revenue
500
0
0
1
2
Initial Investment: $200 M
Starting Habitats: 8
Ticket price to LEO: $50 K
Ticket price to Moon: $200 K
63
3
4
5
Time in yrs
6
7
8
9
Stepping-Stone 4
• Key Outcomes:
– Are making frequent trips to Moon
– LEO infrastructure is built
– “Pure” space travel vehicle (does not
enter Earth’s atmosphere)
• Reduces travel costs by relying on nonchemical propulsion
64
Capability Stepping-Stone
Stepping-Stone 5:
Permanent Lunar Habitation
65
Stepping-Stone 5
Stepping-Stone 5:
Investment & Revenue
2012 NPV USD in Millions
25000
20000
15000
10000
Investment
5000
Revenue
0
0
1
2
3
4
5
6
7
Time in yrs
8
9
10
Initial Investment: $8 B
Amount of Regolith removed per quarter: = 40,000 tons
Operational Costs: ~$1B/yr
People: 50 start, growth of ~20
66
11
12
13
TRADE-OFF ANALYSIS
67
SS 5 Cost Reduction
Stepping-Stone 5:
with 20% cost reduction
18000
16000
2012 NPV USD Millions
14000
12000
10000
8000
6000
Investment
4000
Revenue
2000
0
0
1
2
3
4
5
6
7
Years
68
8
9
10
11
12
13
SS 5 Cost Reduction
• Travel costs: $100/lb to ~ $45/lb
• Increase removed regolith: 160,000
tons to ~ 248,000 tons
• People:
– Start: 50 to 25
– Growth: 20 to 5
• Operational Costs: $1B to $650M
69
Investment Required based
on Debris Removal
Effect of No Debris Removal on SS 3
3E+09
Revenue
Investment without Debris
2.5E+09
Investment with Debris
2012 NPV USD
2E+09
1.5E+09
1E+09
500000000
0
0
1
2
3
4
5
6
Years
7
8
9
10
11
12
Potential Investment for SS 4
Effect of Launch cost on SS 4
4500
4000
2012 NPV USD in Millions
3500
3000
2500
$1000
Launch Cost
2000
Revenue
1500
Expected
(Curve)
1000
$1 Launch
Cost
500
0
0
1
2
3
4
5
Time in yrs
71
6
7
8
9
Effect of No Mining On Moon
• Have to Launch ALL materials from
Earth
– Structure, life essential elements,
provisions
• Ignoring Earth based purchase costs
• Using same launch cost as in SS. 5
($250 / lb)
72
Effect of No Mining On Moon
Stepping-Stone 5:
Mining vs No Mining
35000
30000
2012 NPV USD in Millions
25000
20000
15000
10000
No Mining Investment
Mining Investment
5000
0
0
73
1
2
3
4
5
6
7
Time in Years
8
9
10
11
12
FINDINGS &
RECOMMENDATIONS
Findings
Thesis Statement: It is feasible to break
the dis-investment cycle using
capability stepping-stones.
The capability stepping-stones
adequately address the issues of
launch cost, insurance cost, and
investment below critical mass.
75
Recommendations
• To make LEO Habitats economically
feasible, debris collection must have
already begun
– Cost savings of $1 Billion over 10 yrs
• Unless total launch cost are reduced
to $100/lb, a space exclusive vehicle
is beneficial to keep future cost low
– Cost savings of $800 Million over 8 yrs
76
Capability Investment
Rank-List
77
Investment Order Capability
Savings
1
Debris Collection
$1 Billion
2
Launch cost
$800 Million
3
Habitats
NA - Necessary
4
Space exclusive ship $800 Million
5
Life sustainability
NA - Necessary
Recommended
Capability
Stepping-Stone
Timeline
Each stepping-stone
starts when the
previous steppingstone has reached
80% ROI
78
Continuing Work
• Gain access to industries’ data
private cost and performance values
• Expand the depth of each of the
stepping-stones, focusing on:
– Debris Collection
– LEO Habitats with Lunar Trips
79
“I haven’t seen this level of analysis on this topic before. This
analysis and outcome is a very useful “stepping-stone” for policy
decisions and next level of analysis. Well done!”
- Dr. Steven Dam, President, SPEC Innovations
QUESTIONS
80