Trade-Off Analysis of ROI for Capability Stepping-Stones to a Lunar Habitat Daniel Hettema Scott...

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

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

% 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

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

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

13

“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


No funding

No Funding

No Funding

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Debris Collection Tension

16

Reality #2: Space Habitats need Bootstrap Funding

No Funding

Demand for Launches

NoFunding

Habitatleasing

DebrisCollection

No FundingHabitat Leasing

SatelliteCompanies


High-Altitude/

SpaceTourism

Launch ServicesGovernment

Space Habitats

17

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


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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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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Stepping-Stone 3:LEO HabitatsBigelow Aerospace

Capability: LEO Life Sustainability

Focus: Reduces Launch costs

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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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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




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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






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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


Launch Costs


Reversethe

Trend

Reversethe

Trend

Reversethe

Trend

Launch CostsExtension of sustainability





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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


Launch Costs


Launch CostsExtension of sustainability





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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


• 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


• 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


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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


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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


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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


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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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Trade-Off Analysis of ROI for Capability Stepping-Stones to a Lunar Habitat Daniel Hettema Scott...

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