All posts by Sam Dinkin

Economics

Space Solar Support?

Taylor Dinerman calls for space solar power in this week’s The Space Review. He trots out hydrogen as an alternative energy source. No–it’s an alternative energy delivery method. Last time I checked, to get hydrogen, we had to use another fuel source and lose energy to crack the hydrogen. To make space solar power viable, we need an advance that will advantage space solar power to terrestrial solar power. Does this meet the objective:

One technology that might radically reduce the weight requirements for these systems is the technique pioneered at the University of Notre Dame where single-walled carbon nanotubes are added to a film made of titanium-dioxide nanoparticles, doubling the efficiency of converting ultraviolet light into electrons. Any solar cell technology that could reach conversion factors of over 50% or even higher would reduce the size and weight of an SPS and thus make it easier and cheaper to build and launch.

It also makes terrestrial solar power potentially reach conversion factors of over 50% too. To make space solar better than terrestrial solar, we need launch costs to be no more than 3x manufacturing costs per kg if space solar is 4x as efficient. With manufacturing costs $350/kg, we need launch costs $1000/kg to make space solar viable.

Political Commentary

Backdating

The WSJ has an article today on backdating:

Brocade Communication Systems Inc. agreed to pay a $7 million penalty to settle … the backdating scandal, according to people familiar with the matter…. Brocade first struck a deal to pay $7 million in March 2006, but the settlement was held up as the number of companies under investigation for backdating options expanded to more than 100….

Republicans, in general, oppose [fines for backdating] as a double hit to shareholders, who already have been penalized once for being defrauded. Democrats argue that penalties serve as deterrents.

There was not necessarily fraud on the shareholder because it’s in a shareholder’s interest to use backdated options to pay executives. They don’t have to use as many of them because they are intrinsically worth more (H. Jenkins), but are also not taxed as highly as more regular dated ones where the date wasn’t coincidentally the lowest price of the quarter.

Putting that aside, fines in general should not be paid by the damaged party, but should be paid as a deterrent–and as compensation! How about the following proposal: the company pays the fine to the shareholders of record on the day before the news that false accounts were filed. That way the ongoing shareholders aren’t hurt and the shareholders that sold after the bad news came out and the stock tanked will be compensated by the new ones who bought after the news. Just like how shareholders are treated when a company goes ex dividend.

Here’s another controversial idea to increase deterrence: don’t prosecute companies for common practices until you’ve given them sufficient warning to change their ways. Otherwise the prosecutors are doing what Dr. Strangelove accused the Russians of doing:

[T]he… whole point of the doomsday machine… is lost… if you keep it a secret! Why didn’t you tell the world, eh?

The Constitution guarantees no ex poste facto laws in Article I, Section 9, but we are still working on no ex poste facto judicially implemented regulation.

Who watches the watchmen? Do we need four independent judiciaries with each one’s scope determined by the others like the four redundant computers on the space shuttle? No need to curb the SEC and prosecutors of public companies–the companies are helping themselves. By going private.

Space

Treating Greg Olsen

Greg Olsen, the private sector’s number three astronaut gave some remarks to welcome the space investors and entrepreneurs to the Space Investment Summit along with Buzz Aldrin on Monday. He said, “I live in Princeton. Everyone knows everyone in Princeton. I went out to dinner and the owner of the restaurant said, ‘You’re that astronaut guy.’ I said, ‘Yes.’ He said, ‘Let me give you this bottle of wine!’ I was feeling pretty good about myself until my girl friend said, ‘If you were Buzz Aldrin, he would pay for your whole dinner.'”

Olsen was not there as an investor. His current investment fancies are energy related. We shared a cab after the event broke up. There was a bunch of road construction near the Ritz where Boeing had hosted the welcome. I asked him, “Which is rougher, a Soyuz flight or a New York City cab ride?” His answer: “Both.”

I asked him if he got a tax deduction on the flight from doing experiments. “No.”

We were both going to different Jean George’s, but Olsen tried to convince me that they had only one location in New York. It seems Olsen can still be surprised.

I explained to him that I’d spent more money than the cost a suborbital flight trying to bring space to everyone. And that Space Shot’s Latin motto, Astrae Popularetis, means, “You’ll see the Stars belong to the People.” I got off first and he said, “Don’t worry about the cab fare.” I said, “After that story you told, you have to let me pay.” I gave the cabbie $20 and said, “Driver, I want to treat this man to a cab ride!” If he was Buzz Aldrin, we would have taken a limo.

Space

Window opening and closing or just opening?

Alan Marty, an investment consultant speaking at the Space Investment Summit yesterday, drew the comparison of semiconductor fabs right before the boom and the orbital access market. That there is $500 million of government assistance reducing the barrier to entry now for launchers and then for fabs. He said he thought the window for launching an orbital company is open now but will be closing. This suggests RpK and SpaceX will enjoy a long profitable run if they are successful.

Bob Werb, co-founder of the Space Frontier Foundation, said, “The window is opening and will open again and again,” in his remarks at the closing of the event.

I don’t see a big drop in access prices if these are the only entrants. Musk and French will reduce prices enough to shut out more expensive launchers, but then split the market and prices will drop no further. But that high price will continue to attract entrants once the subsidized entrants make good.

Space

Give The Lunar Solar A Rest

One of the presentations at the Space Investment Summit was on Lunar solar power. Solar satellites were also referred to. One presentation noted that if a government agree to buy solar at $0.85/kwh (about a 900% subsidy) that space solar would pay. Great. You can make $50 billion if they give you a $70 billion subsidy. Hand me a glass of ethanol.

My previous best efforts on solar are here, here, and here.

I think there is a fairly simple case against. Grant that space solar is 4x as efficient per kilogram as Earth solar. Ignore the fact that people want more power during the day than at night. Grant that we can take raw silicon and turn it into solar cells with minimal remote human input. Grant that we can beam it. Ignore that if we import solar power in quantity that the price of coal and uranium will drop until they are competitive again as fuels.

Can’t we just set one of the ‘bots that will build the cells loose in an Earth desert? Doesn’t it require the transportation cost to space be on the order of 4 times the manufacturing cost for space solar to be economically effective? Even if we are just talking about the regolith eating robot, don’t we have to get transportation cost down to three times the cost of producing a sand eating robot and letting it loose in the desert? Am I missing something? I think this argument means space solar will never be competitive.

Space Science

Space Science Bull

Thomas B. Pickens III gave the luncheon speech at the Space Investment Summit yesterday. He thinks that SpaceX and Rocketplane-Kistler are the “Toyota trucks” of the space infrastructure and that Space Hab will make a good business of packing science payloads to send to the Space Station. He is interested in ISS racks but can do free floating experiments and also work with Bigelow. I asked him afterwards if doing his “due diligence” as a board member before taking over as CEO he talked to the customers. He said that every customer said that they were interested if it were cheaper, more reliable and standardized.

I think that this market may not be as big as Bigelow and Space Hab are hoping. It remains to see if a business can be made. The Bull I prefer is Space Tourism. Space Hab did say they could do logistics missions too. Glad to have you as part of the industry, Thomas B. Pickens. Best of luck.

Economics

Free Market for Loans

New York Times says in an editorial that student loans should be subject to sunshine laws, careful policing and ethics rules that make it a crime to take money for access to colleges. This is misguided. Colleges will voluntarily step forward to show that their processes are clean now that there is focus on the issue. Those that don’t should be spared the regulatory burden. Students will go to the school that gives them the best overall package. Competition will steer students to the schools with the best policy–taking into account both student loan rates and what the school does less of due to the way it administers the loans.

Space

Aldrin Announcement

“I’ve decided to launch an effort through my Share Space Foundation….Share Space Stakes! A sweepstakes or raffle. Proceeds benefit space related and scientific and educational goals. Donations open possibility of winning prizes. Starting with parabolic flights. Expanding to suborbital flights.

“Soyuz costs…millions of dollars…. The cost could be paid for by hundreds of thousands of people donating $50.

“We have not yet developed the rules, but it will be posted on our Share Space web site. Share Space Stakes is scheduled to be launched this year.

“Winners will have to be 18, satisfy certain health restrictions. This will be non-transferable.

“Space travel is poised to go from the few to the many. I hope to play a role with Share Space Foundation…. Who knows who will be one of the lucky winners about to take their own space adventure.”

—

Thanks Buzz! Welcome to the party.

Space

Vacate Space Liability

Art Dula speaking at the Space Investment Summit in Manhattan today called for Congress to reform the Outer Space Treaty to cap the unlimited liability that signatory countries have for their nationals’ space accidents. “They don’t have this for oil tankers or airplanes.”

[Update by Rand Simberg]

One of the reasons they don’t have it for airplanes is the Warsaw Convention. Did he propose extending that to space?

[Update by Sam Dinkin]

He proposed getting an act of Congress passed to unilaterally limit the US federal government liability.