Trade-Off Analysis of ROI for Capability Stepping-Stones to a Lunar Habitat
Daniel HettemaScott Neal
Anh QuachRobert Taylor
By: GMU SEOR 2012 Senior Design Students:
Agenda
• Context• Need & Problem Statements• Design Alternatives• Models• Results• Trade-Off Analysis• Findings & Recommendations
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CONTEXT
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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:
– CAT and MRI machines– Freeze dried foods– Scratch resistant lenses– Eventual development of PCs
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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
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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
7
Government Funding• Decline in US government
investment
% USFederalBudget allotted to NASA
Year
NASA Annual Budget statistics. The World Almanac and Book of Facts 1960 through 2001.
1st Man on Moon
Space Shuttle
ISS
8
Past and Current Investments
• Governments– USA– China– Russia– Brazil– India
• Private Industries Currently investing:
• SpaceX ($100M)• Bigelow Aerospace
($180M)• Virgin Galactic ($100M)• Many others
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Limiting Factors for Investment
• Launch Costs– Too high
• Insurance Costs– Debris– Failures in technology– Too much risk
• Probability of negative ROI very high
10
1985
1990
1995
2000
2005
2010
2015
0
5000
10000
15000
20000
2500023800
16500
15470
10490
1000 (SpaceX pro-jected)
"Historic Trend of $/lb to LEO (all values global av-erage unless denoted)"
Year
Cost
($/l
b)
Historic Trend of $/lb to LEO
www.Spacex.comSpace Transportation Costs: Trends in Price Per Pound to Orbit 1990-2000.” Futron. 06-Sep-2002
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Debris Growth Over Time
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
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Launch Failure Rate
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“Optimal” Coordinated Stakeholders
Provide Launches
Demand for Launches
Clean LEO
Clean LEO
Clean LEO
CleanLEO
Funding,Regulation
Demand for Trips
Regulation
Regulation,DemandforHabitats
Habitatleasing
CivilianSpaceTravel
High-Altitude/
SpaceTourism
DebrisCollection
Space HabitatsLaunch Services
Demand for Habitats
Habitats
Government
SatelliteCompanies
Earth’s Population
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Reality #1: Debris Collection Underfunded
Clean LEO
Clean LEO
Clean LEO
CleanLEO
NegligibleFunding
High-Altitude/
SpaceTourism
DebrisCollection
Space HabitatsLaunch Services
Government
SatelliteCompanies
Earth’s Population
No funding
No Funding
No Funding
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Debris Collection Tension
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Reality #2: Space Habitats need Bootstrap Funding
No Funding
Demand for Launches
NoFunding
Habitatleasing
DebrisCollection
No FundingHabitat Leasing
SatelliteCompanies
Earth’s Population
High-Altitude/
SpaceTourism
Launch ServicesGovernment
Space Habitats
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Reality #3: High Cost of Launch Services
Provide Launches
Demand for Launches
DemandforHabitats,Regulation
Habitatleasing
High-Altitude/
SpaceTourism
DebrisCollection
Space Habitats
Launch Services
Demand for HabitatsHabitatLeasing
Government
SatelliteCompanies
Earth’s Population
Launch costs remain highbecause there is no consistent demand
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Major StakeholdersStakeholder Objective IssuesHigh 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
Investors
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Disinvestment Cycle
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.
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Problem Statement
Evaluate the costs and revenues of space markets to develop synergy in investments of
capabilities that will break the disinvestment cycle.
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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 design24
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Capability Stepping-Stone 1
Stepping-Stone 1: High-Altitude TourismVirgin Galactic Tourism Trips (2013)
Capability: Commercial Tourism to Space
Focus: Encouraging seed funding
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Capability Stepping-Stone 2
Stepping Stone 2: High-Altitude Tourism and Debris Collection
Capability: Reduce risk in space by loweringthe amount of debris in space.
Focus: Reduces insurance rates
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Capability Stepping-Stone 3
Stepping-Stone 3:LEO HabitatsBigelow Aerospace
Capability: LEO Life Sustainability
Focus: Reduces Launch costs
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Capability Stepping-Stone 4
Stepping-Stone 4:LEO Hub and Moon Base
Capability: Extension of tourism to the Moon,Development of space-exclusive personnel shipsTemporary Habitation of the Moon
Focus: Reduce launch costs & space exclusive ship
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Capability Stepping-Stone 5
Stepping-Stone 5:Permanent Lunar Habitation
Capability: Lunar life sustainabilityLunar Mining & ManufacturingFoundation for delving further into space
Focus: Sustainability
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Building Block DiagramHigh-Altitude Tourism serves as the catalyst to incitethe interest, and therefore the investment, of the Earth’s population in space.Debris Collection serves to reverse the trendof declining conditions in LEO
Interest &Investment
Reversethe
Trend
Reversethe
Trend
Reversethe
Trend
Interest &Investment
Interest &Investment
Interest &Investment
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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
Reversethe
Trend
Reversethe
Trend
Reversethe
Trend
Launch Costs
Gov’t/PrivateInterest
Launch Costs
Gov’t/PrivateInterest
Interest &Investment
Interest &Investment
Interest &Investment
Interest &Investment
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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
Launch Costs
Gov’t/PrivateInterest
Launch Costs
Gov’t/PrivateInterest
Reversethe
Trend
Reversethe
Trend
Reversethe
Trend
Launch CostsExtension of sustainability
Interest &Investment
Interest &Investment
Interest &Investment
Interest &Investment
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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
Reversethe
Trend
Reversethe
Trend
Reversethe
Trend
Launch Costs
Gov’t/PrivateInterest
Launch Costs
Gov’t/PrivateInterest
Launch CostsExtension of sustainability
Interest &Investment
Interest &Investment
Interest &Investment
Interest &Investment
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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.
Design Thesis Statement
It is feasible to break the disinvestment cycle using capability stepping-stones.
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MODELS
Top Level Model
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Goal: To create a positive feedback loop for stepping-stones investment
Stepping-Stone 1: High Altitude Tourism Financial Model
• Focus: Finding best ROI given:
• Equation: Profit =
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Virgin Galactic
Initial Investment
Ticket Price
ROI
Number of trips
Development Costs= Cost of Ship
Maintenance CostsDecommissioning
Cost
Stepping-Stone 2: High-Altitude Tourism + Debris Collection
• Input/Output Diagram
• Limitations– No crashing
• Assumption– Debris collected is not salvaged
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Virgin Galactic+
Debris Removal
Initial Investment ROINumber of tripsTicket Price
Current Debris Quantity New Debris Quantity
Reduced Insurance Costs
•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
• – 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
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Efficiency of Debris Collection_
Stepping-Stone 3: LEO Habitats
• Focus: LEO Sustainability• Input/Output Diagram
• Modeling from the perspective of Bigelow AerospaceProfit =
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LEO Habitats
Initial Investment ROI
Demand People in space
P = habitat lease price CMH= Maintenance cost for habitatCh= cost of habitat Lh = lifetime of habitatCLH= cost to launch habitat MTBFH = estimated habitat failure rateCLP= cost to launch people to habitat n = number of habitats
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
• The frequency of traffic to and from LEO increases, which translates to reduced launch costs
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Launch Cost Reduction Curve
Stepping-Stone 4: LEO Hub & Moon Base
• Input/Output Diagram
• 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
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Hub&
Moon Base
Initial Investment ROI
# of Habitats comprising Hub
Demand # people travelled to the Moon
Hub traffic and commerce
Stepping-Stone 4 Equation
• Model from the perspective of generic Tourism CompanyProfit =
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TH = Tickets to HubPTH = Price of ticket to hubTM = Tickets to Moon BasePTM = Price of tickets to Moon BaseCH = Cost of hubCMB = Cost of Moon baseLMB = Lifespan of Moon baseMTBFMB = Failure rate of Moon BaseCM,MB = Cost to maintain Moon BaseLH = Lifespan of HubMTBFH = Failure rate of HubCM,H = Cost to maintain Hub
x = Earth-Hub Ships y = Hub-Moon base ShipsCx = Cost of Earth-Hub ShipCy = Cost of Hub-Moon Base ShipCapx = Capacity of Earth-Hub ShipCapy = Capacity of Hub-Moon Base ShipLx = Lifespan of Earth-Hub ShipMTBFx = Failure rate of E-H ShipLy = Lifespan of Hub-Moon Base ShipMTBFy = Failure rate of H-MB ShipCM,X = Maintenance cost for E-H ShipCM,Y = Maintenance Cost for H-MB Ship
Stepping Stone 5: Permanent Lunar Base
• Input/Output Diagram
• Limitations– Mining is limited to the Moon
• Assumption– Water, Oxygen and Nitrogenare harvested through regolith processing
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PermanentLunarBase
Initial InvestmentROI
# of people living on Moon
Sustainable?
•What the model shows:• ROI• Feasibility of Sustainability on
the Moon
Tons of Water, Oxygen Processed
Stepping-Stone 5 Equation
Profit =
R = Average Regolith Payloadn = Number of PayloadsCB+E = Cost of Base & Equipment
Co = Operating Costs/year
Cm = Maintenance Costs/year
Ct = Travel Cost on Moon/lb
P = Average PayloadT = Number of Trips/year
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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
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RESULTS
Disinvestment Cycle
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Investment Cycle
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Overall Results
Stepping-Stone Breakeven Point (yrs)
Investment Revenue ROI after 10 yrs
High-Altitude Tourism
4.5 $111M $230M 182%
Debris Collection None NA NA NoneLEO 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%
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Capability Stepping-Stone
Stepping-Stone 1: High-Altitude Tourism
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Initial Investment: $100 millionDirect mission costs: $400 thousandInsurance premium percent: 10%Ticket price: $200 thousandPeople per ship: 6
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
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Stepping-Stone 1
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Stepping Stone 2:High-Altitude Tourism + Debris Collection
Capability Stepping-Stone
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Stepping-Stone 2
• Key Output:– Without a continuing debris
collection there is an increasing extra cost associated with LEO habitation from collision risk
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Stepping-Stone 2
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Stepping-Stone 3:LEO Habitats
Capability Stepping-Stone
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Initial Investment: 200 millionLease cost over 5 years: 120 millionPercentage up front: 50%Cost to build 1 habitat: 75 millionMTBF: 2.5 yearsLifecycle: 10 years
Stepping-Stone 3
• Key Outputs:– Continuing interest generation and
investment increases– Shifts focus from increasing launch
capability to life sustainability
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Stepping-Stone 3
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Stepping-Stone 4:LEO Hub and Moon Base
Capability Stepping-Stone
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Stepping-Stone 4
Initial Investment: $200 MStarting Habitats: 8Ticket price to LEO: $50 KTicket price to Moon: $200 K
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
non-chemical propulsion
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Stepping-Stone 5:Permanent Lunar Habitation
Capability Stepping-Stone
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Initial Investment: $8 BAmount of Regolith removed per quarter: = 40,000 tonsOperational Costs: ~$1B/yrPeople: 50 start, growth of ~20
Stepping-Stone 5
0 0.5 1 1.5 2 2.5 3 3.5 4 4.5 5 5.5 6 6.5 7 7.5 8 8.5 9 9.5 1010.5 11
11.5 1212.5 13
0
2000
4000
6000
8000
10000
12000
14000
16000
18000
20000
Stepping-Stone 5:Investment & Revenue
Investment
Revenue
Time in yrs
2012
NPV
USD
in M
illio
ns
TRADE-OFF ANALYSIS
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SS 5 Cost Reduction
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0 0.5 1 1.5 2 2.5 3 3.5 4 4.5 5 5.5 6 6.5 7 7.5 8 8.5 9 9.5 1010.5 11
11.5 1212.5 13
13.50
2000
4000
6000
8000
10000
12000
14000
16000
18000
Stepping-Stone 5:with 20% cost reduction
Investment
Revenue
Years
2012
NPV
USD
Mill
ions
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
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Investment Required based on Debris Removal
Potential Investment for SS 4
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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)
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Effect of No Mining On Moon
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0 0.5 1 1.5 2 2.5 3 3.5 4 4.5 5 5.5 6 6.5 7 7.5 8 8.5 9 9.5 1010.5 11
11.5 1212.5 13
0
5000
10000
15000
20000
25000
30000
35000
Stepping-Stone 5:Mining vs No Mining
No Mining Investment
Mining Investment
Time in Years
2012
NPV
USD
in M
illio
ns
FINDINGS & RECOMMENDATIONS
FindingsThesis 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.
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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
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Capability Investment Rank-List
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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
RecommendedCapabilityStepping-StoneTimeline
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Each stepping-stone starts when the previous stepping-stone has reached 80% ROI
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
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QUESTIONS
“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
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