The Economic Development Of LEO

Yesterday, Deputy NASA Administrator Dava Newman announced with a blog post a new publication by NASA. I haven’t had a chance to read it yet, but given that one of the authors is Alex McDonald, I expect that it will be very good.

Speaking of which, I’m heading down to San Diego in a few minutes to attend at least the first day of the annual ISS R&D conference. So blogging may be light.

[Update Thursday morning]

I’m back from the conference. Meanwhile, I still haven’t looked at the publication, but Leonard David has.

15 thoughts on “The Economic Development Of LEO”

  1. Since we’re constantly hearing that “ISS is finally showing a return on investment,” I would like to see a NASA report on how revenues from ISS research compare to development and operating costs. I would wager we won’t see any such cost/benefit analysis in this or any other other NASA report.

    1. It’s a little unfair to expect them to turn a profit when they aren’t a business. It is pretty apparent that they mean a non-monetary return on investment. This is especially true because much of the R&D that takes place isn’t conducted with the intent to earn money but rather just to learn, part of a political program, or to subsidize education.

      What would be interesting is a report on how R&D on the ISS has led to making money here on Earth and perhaps something similar for researchers impact on businesses. We get examples from time to time but is there ever a report, that is more scholarly and isn’t a purely PR endeavor?

      Such a report may not look good for the ISS because people might start asking why companies making so much money aren’t paying more money, or the reverse could be true, but it could be great market analysis for the viability of private space stations.

      I bet Futron, Bigelow, or some other company has studied this.

      1. I think it would be a bad idea to look at the ISS economics in detail and correlate that to how a private space station would work. The ISS is kind of a basket case scenario for a space station to begin with. You would be better of looking at Skylab, Salyut or Mir data as a starting point if that is available.

        The fact is the ISS is there already and the facilities have plenty of margin as it was massively overbuilt and over engineered for the current uses it has. So it is pretty straightforward to use it to study the economics of commercial modules attached to it and then extrapolate from that basis to compute the costs for a wholly commercial station. When sharing services with the commercial part of things it can also bring overall ISS running costs down.

        For example Dragon and Dragon 2.0 as well as Falcon 9 were funded via COTS for the ISS but they can be re-purposed for private space stations. Same thing for Bigelow (BEAM) and NanoRacks (CubeSat Deployer). These do not provide for a whole system. You still need EVA facilities, life support, workshops, etc. I think NASA efforts to standardize docking interfaces like IDA will also be economically relevant for a commercial space station.

        With all this work in like 5-8 years it will be possible to make a plan to launch a standalone space station using these commercial components. Then Falcon-9 Heavy will be available concurrently with Falcon-9 and larger station modules will also be possible.

        1. None of those things required ISS. The Federal government could have incentivized Dragon and Falcon through various types of market-based incentives, rather than direct development funding. Those would have achieved the end you desire without the degree of micromanagement (“1000 separate requirements”) and associated costs, which come with NASA development contracts. And the beneficiaries would not have been limited to SpaceX and Boeing.

          Even if you reject the market-based approach and insist on direct NASA funding, there is no logical reason why funding a few-billion dollar rocket and capsule requires building a $100-billion space station.

          The fact that you even bother to mention CubeSat deployment shows how poor the case for ISS really is. No one in his right mind would have said, “Let’s go out and build a $100-billion space station so we can launch $10,000 satellites.” There are *far* more cost-effective means of doing that, if you haven’t already sunk your money into the space station. But NASA has so much money tied up in ISS and other boondoggles that it can’t afford simple projects like the CubeSat launcher Centennial Challenge (which was announced and then cancelled).

          Trying to rationalize ISS by saying it can launch CubeSats is like rationalizing the F-35 by saying it can fly some Air Force Academy student experiments. The fact that ISS defenders resort to weak arguments like that merely underscores the fact that you don’t have any really good arguments.

          Yeah, it will “be possible to make a plan to launch a commercial space station in 5-8 years.” Guess what? It was possible to make such plans 5-8 years ago. Or 40 years ago. The problem is how to make money off a commercial space station, and ISS isn’t helping there. Anyone who tries to build a commercial space station will have to compete with an International Socialist Space Station that has access to a nearly unlimited pool of government funds. NASA can afford to give away free launches, free astronaut time, and anything else it needs to undercut the competition. A privately owned space station can’t. NewSpacers used to complain about the Space Shuttle undercutting private launch systems but you love the fact that ISS is undercutting private space stations. I just don’t get it.

          1. Well the Cubesats are a start. At one point Space Station Freedom was supposed to be able to construct and service satellites and spacecraft and I think this is a better business model for a space station than many others I’ve seen bandied around here. It could be as simple as refueling satellites or changing packages. The Hubble servicing missions have shown it can be done.

            One can easily claim the ISS should have been built differently (I did call it a basket case didn’t I). However back then we did not have SpaceX and we did not have (still don’t have until Falcon 9 Heavy is working) a launcher with as much capacity as Shuttle to launch large modules for the station.
            At best you had Orbital but they have no in-house engine design talent. They are great at systems integration. However if you use expensive engines you will get an expensive rocket.

          2. ISS was not used (and could not be used) for servicing Hubble. If that’s your argument, then NASA should have kept Shuttle and gotten rid of ISS.

            No, ISS should not have been built differently. It shouldn’t have been built at all. It’s not NASA’s job to be the Department of Housing and Urban Development. Harry Stine told us long ago — we need space stations that are designed to commercial standards, not government standards. Contrary to Tumlinson and other “New Space” leaders, there is a difference — it’s not “just a matter of where the money comes from.”

            And you don’t need giant modules to build a space station. When Von Braun was designing his big rotating wheel in the 1950’s, he was calling for a “heavy lifter” with a capacity of 10 tons! Gerard O’Neill showed how it was possible to build giant space stations from payloads weighing only a few pounds. The mere fact that NASA did something a certain way does not mean it’s the only way it can be done.

          3. “a launcher with as much capacity as Shuttle to launch large modules for the station.”

            The shuttle wasn’t the ‘heavy lifter’ for ISS at any point, was it?

            A simple table with “Module Name” and “-Mass-” didn’t turn up immediately when I searched, but both Proton and Progress were launching -larger- modules, yes? And … first?

            IMNSHO most every cargo mission should simultaneously be an ‘enlarge the station’ mission. If that’s not possible, then you have a fatal flaw in the entire process. (Why waste/land mass you spent a lot of money to lift unless you -need- to.)

          4. The Shuttle launched most (all?) of the non-Russian segments in the ISS (e.g. Destiny, Harmony, Tranquility, Columbus, Kibo, the large PV arrays). At the time the US had no higher capacity launch system. I think even Delta IV Heavy wasn’t available at the time some of the modules were put up.

            There was Proton and Ariane 5 I guess but Proton was only used in the Russian segments and Ariane 5 was only used to launch a couple of capsules to service the ISS. Even the ESA Columbus module was orbited with the Shuttle. Progress is a rather small capsule. It’s basically a Soyuz capsule (launched on a Soyuz rocket) modified for automated cargo flights.

            It wouldn’t be impossible to make a space station without the Shuttle but the design would have to be considerably different with less hands-on on-orbit assembly and more automated dockings with smaller modules and more launches. AFAIK even the Soviet Salyut was launched with a Proton. The Chinese Tiangong was launched on Long March 2 though which has much less launch capacity. However the Chinese seems to be delaying their multi-module space station until they can get the larger Long March 5 rocket.

            A lot of the initial Von Braun plans required a lot of flights and on-orbit assembly with relatively small vehicles (e.g. his first Mars launch plan). On-orbit assembly turned out a bit too expensive in practice to do constructions like that though.

            Yes the Hubble was serviced with the Shuttle. I was talking about proposals for Space Station Freedom which actually predate the ISS. Back then there were plans to use the Shuttle, Space Station Freedom, and a Space Tug and eventually build further ahead to the L points and the Moon. But with that technology and business model such a system was just too expensive. I have seen people argue that Freedom would have been a lot cheaper than the ISS and there would have been money for the other things though and that is a possibility. But with Falcon 9/Heavy, Dragon 2, and the inflatable modules the whole plan can be done much cheaper if there is a will to do it.

        2. So, how long will it be before someone stands up at NewSpace and says that SLS is a great commercial success because it’s deploying CubeSats?

          1. The ISS is already there so we might as well use it. At least its not a disintegrating totem pole like the SLS.

          2. Hasn’t that already happened? Perhaps not at NewSpace and perhaps not a commercial success but I have heard the claim already that SLS launching cubesats shows a successful program.

        3. You and Edward Wright both make some good points here.

          Going forward, a public/private partnership could work but as Edward Wright points out, there is the real danger that government subsidy could kneecap businesses.

          Something else could happen, a private company could still out compete the government on any number of factors, making a private station more appealing to customers. Timely access being one of them.

  2. No $150 billion station can ever justify itself. Bigelow’s Alpha (2 BA330 and sundries) will cost about $300 million to orbit. That can be justified by rent revenue… two Dragons per month to occupy it (12 crew at $20m per) another $10m per crew for a months stay. That shows a profit in three months and customers (both govt. and private) are already lined up. SpaceX just has to demonstrate its Dragon crew capability to make it real. No need for NASA at all. SpaceX profit doesn’t take three months. It happens with each launch.

  3. Even going forward and counting the cost of building the ISS as a sunk cost, it cannot be justified. It costs $3 B per year to run it. So consider the opportunity cost of $3 B year after year ever extending that budgetary item into the future. Extending it by eight years means $24 B. Consider that Dave Masten estimates that it should take no more than $200 M to modify a Centaur upper stage to become a reusable lunar lander. Are there any plans to resolve the artificial gravity and deep space radiation issues with the ISS by 2024? The sooner we transition away from the ISS and towards a much lower cost commercial station the sooner the money would be freed to spend towards BLEO missions.

    1. My numbers were a bit off on my earlier post (not that much) but the operating cost of ISS would put about 6 Alpha stations in orbit and they each probably show a profit in perhaps a year from their launch.

      Before Bigelow realized he could make more money by not selling his BA330, but just renting them, he offered them for $100m which means their cost had to be much less. Falcon Heavy might be able to launch two BA330 at a time (or not, the mass is 23ton each, but I can’t say otherwise.) So $300m wasn’t too far off, but $500m should certainly cover it. That’s 300 Alpha stations in orbit for the price of the single ISS. Can’t any of ‘our’ elected officials do grade school math?

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