Trade-Off Analysis of ROI for Capability Stepping-Stones to a Lunar Habitat

1. 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

2. Agenda • Context • Need & Problem Statements • Design Alternatives • Models • Results • Trade-Off Analysis • Findings & Recommendations

3. Context

4. 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

5. 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

6. 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 % US Federal Budget allotted to NASA 1st Man on Moon Space Shuttle ISS Year NASA Annual Budget statistics. The World Almanac and Book of Facts 1960 through 2001.

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

9. Limiting Factors for Investment • Launch Costs • Too high • Insurance Costs • Debris • Failures in technology • Too much risk • Probability of negative ROI very high

10. Historic Trend of $/lb to LEO www.Spacex.com Space Transportation Costs: Trends in Price Per Pound to Orbit 1990-2000.” Futron. 06-Sep-2002

11. 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

12. Launch Failure Rate

13. “Optimal” Coordinated Stakeholders Provide Launches Space Habitats Launch Services Demand for Launches Habitat leasing Regulation, Demand for Habitats Demand for Habitats Clean LEO Habitats Clean LEO Debris Collection Government Funding, Regulation Clean LEO Clean LEO High-Altitude/ Space Tourism Satellite Companies Regulation Civilian Space Travel Demand for Trips Earth’s Population

14. Reality #1: Debris Collection Underfunded Space Habitats Launch Services No Funding Earth’s Population Clean LEO Clean LEO Debris Collection Government No Funding Negligible Funding Clean LEO Clean LEO No funding High-Altitude/ Space Tourism Satellite Companies

15. Debris Collection Tension

16. Reality #2: Space Habitats need Bootstrap Funding Government Launch Services Demand for Launches Habitat leasing No Funding No Funding Space Habitats Habitat Leasing No Funding Debris Collection High-Altitude/ Space Tourism Satellite Companies Earth’s Population

17. Reality #3: High Cost of Launch Services Government Launch Services Demand for Launches Habitat leasing Demand for Habitats, Regulation Provide Launches Space Habitats Launch costs remain high because there is no consistent demand Habitat Leasing Demand for Habitats High-Altitude/ Space Tourism Debris Collection Satellite Companies Earth’s Population

18. Major Stakeholders Private Industry Investors

19. Disinvestment Cycle

20. Need & Problem Statements

21. 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.

22. Problem Statement Evaluate the costs and revenues of space markets to develop synergy in investments of capabilities that will break the disinvestment cycle.

23. Design Alternatives: Stepping-Stone Capabilities

24. Project Scope • Stepping-Stones to a lunar Habitat • Focus on combining existing solutions to address: • Launch • Debris • LEO Habitats • Lunar Habitats • Single String design

25. Capability Stepping-Stone 1 Stepping-Stone 1: High-Altitude Tourism Virgin Galactic Tourism Trips (2013) Capability: Commercial Tourism to Space Focus: Encouraging seed funding

26. 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

27. Capability Stepping-Stone 3 Stepping-Stone 3: LEO Habitats Bigelow Aerospace Capability: LEO Life Sustainability Focus: Reduces Launch costs

28. 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

29. 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

30. 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 Reverse the Trend Reverse the Trend Reverse the Trend Interest & Investment Interest & Investment Interest & Investment Interest & Investment

31. 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 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 Interest & Investment

32. 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 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 Interest & Investment

33. 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 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 Interest & Investment

34. 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.

35. Design Thesis Statement It is feasible to break the disinvestment cycle using capability stepping-stones.

36. Models

37. Top Level Model Goal: To create a positive feedback loop for stepping-stones investment

38. Stepping-Stone 1: High Altitude Tourism Financial Model • Focus: Finding best ROI given: • Equation: Profit = Initial Investment ROI Virgin Galactic Ticket Price Number of trips Development Costs = Cost of Ship Maintenance Costs Decommissioning Cost

39. Stepping-Stone 2: High-Altitude Tourism + Debris Collection • Input/Output Diagram • Limitations • No crashing • Assumption • Debris collected is not salvaged Initial Investment ROI Virgin Galactic+ Debris Removal Number of trips Ticket Price Reduced Insurance Costs Current Debris Quantity 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

40. 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

41. Efficiency of Debris Collection _

42. Stepping-Stone 3: LEO Habitats • Focus: LEO Sustainability • Input/Output Diagram • Modeling from the perspective of Bigelow Aerospace Profit = Initial Investment ROI LEO Habitats Demand People in space 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

43. 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 Launch Cost Reduction Curve

44. 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 Initial Investment ROI Hub & Moon Base # of Habitats comprising Hub # people travelled to the Moon Demand Hub traffic and commerce

45. 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 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

46. Stepping Stone 5: Permanent Lunar Base • Input/Output Diagram • Limitations • Mining is limited to the Moon • Assumption • Water, Oxygen and Nitrogen are harvested through regolith processing Initial Investment Sustainable? PermanentLunarBase ROI # of people living on Moon Tons of Water, Oxygen Processed • What the model shows: • ROI • Feasibility of Sustainability on • the Moon

47. 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

48. 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

49. Results

50. Disinvestment Cycle