As the 'new space' marketplace spins up, its trajectory is still largely undefined
Ultimately, it still comes down to launching.
Rockets defined the Space Age in the past century, and they will continue to shape the course it follows as commercial spaceflight takes over from governments in the new one.
The first 100 km (62 mi.) is still the hardest. How that hurdle is jumped will determine how soon, how much—and potentially even whether—private industry can make profits in orbit without a massive input of public money. If the cost of launch comes down, the “new space economy” will grow. And if that orbital marketplace grows, economies of scale should drive down the cost of launch.
It is clear that a strong U.S. government push has cracked open the door to a true off-planet economy.'s commercial-cargo effort already has delivered, and private companies are making serious progress in following up with, human spaceflight.
In their wake a new startup sector is arising, with innovative ideas for making money in orbit and beyond (see p. 60). Military planners around the world also are conceiving new ways to accomplish their missions by using the “high ground” of space (see p. 59).
But it still takes rockets to get there. Wayne Hale, a formerspace shuttle program manager, illustrated the problem recently by comparing it to a truly commercial mode of transportation—the .
A shuttle orbiter is about the same size as a 737, Hale says. The airliner's structure is about 40% of its weight, with the remainder divided roughly equally between payload—the crew, passengers and baggage—and fuel. Therequires enough fuel to keep the airliner loitering for 45 min., and then to fly to an alternate field if it still can't land because of weather.
“The total shuttle launch weight [is] 4.5 million lb., of which 85% is propellant, about 14% is vehicle structure and about 1.5% is the payload,” Hale says. “That's pretty typical for orbital space-launch vehicles. The propellant reserve for managing cutoff of the space shuttle was 0.06% of the total load, or about a third of a second of run time on the main engines. That's the reserve you've got to work with.”
Using what he calls “high school physics,” Hale says it takes 1,000 times more kinetic energy to reach orbit than to fly a commercial jetliner. That is significant, because that energy must come out of the system if the spacecraft reenters.
Hale was speaking at a symposium commemorating the 10th anniversary of the Columbia disaster, which tragically demonstrated what can happen if the spacecraft can't protect itself and its crew from that kinetic energy.
To date onlyhas managed the physics of getting cargo to the International Space Station (ISS) and bringing it back to Earth. . is in the running for the up part of the trip, but has passed on the reentry challenge. Four U.S. companies—Blue Origin, , Sierra Nevada and SpaceX—are working with NASA to expand commercial capability to deliver astronauts to the space station and bring them home safely.
So far NASA has funded 80-90% of the cost of development across the commercial companies, according to William Gerstenmaier, associate administrator for human exploration and operations. The space agency figures it saved $1 billion getting the SpaceX Falcon 9 developed for orbital missions. The company is now working through its 12-flight, $1.6 billion commercial resupply services contract to deliver cargo to the ISS and return scientific samples and other “down mass” with its Dragon capsule.
Gerstenmaier's mission directorate is spending another $1.1 billion to help Boeing, Sierra Nevada and SpaceX build human-rated commercial spacecraft to deliver crews to the space station on a timetable that is highly dependent on the amount of money Congress appropriates for the task (AW&ST Aug. 6, 2012, p. 22). Blue Origin, endowed by Amazon.com billionaire Jeff Bezos, has stopped taking NASA funds.
That kind of government spending means it remains the largest customer for spacecraft—hardly the truly commercial marketplace NASA is trying to stimulate. But the numbers are going down. Driving the commercial push, Gerstenmaier says, is research on the ISS.
Without NASA's need for commercial cargo and crew transport to cover its share of station support, there is no market. Even with NASA as an anchor tenant, the pace of market growth will not meet the rapid-return-on-investment expectations typical in most corporate boardrooms.
“We've got to be very careful that we don't say tomorrow we're going to find the big eureka in space,” Gerstenmaier says. “I don't think it's going to come. [First are] small, slow steps, and then eventually we'll cross some tipping point [and everyone will wonder] why in the heck weren't we doing research in space all along.”
Even that won't necessarily generate a dramatic new upsurge in launch demand for SpaceX and United Launch Alliance, the companies supplying it. But it can start moving the government out of the equation, Gerstenmaier says, as more customers appear with station-bound payloads and—eventually—passengers to conduct research there.
“At some point there may be enough of a commercial market generated independent of NASA,” Gerstenmaier says. Beyond the ISS end-of-life in 2028, microgravity research probably will be conducted on a commercial orbital facility, he says. His directorate already has an agreement with Bigelow Aerospace to install a small inflatable structure on the station to support that company's plans to build stand-alone inflatable research facilities in orbit.
SpaceX also has plans to use Dragon as the basis for commercial “Dragonlabs,” and there are other private proposals as well. “Our job is to use [the ISS] to essentially provide the proof that that market is there,” Gerstenmaier says.
Cost-conscious lawmakers are resisting NASA on funding multiple vehicle developments, while agency managers say it is in the government's interest to stimulate competition now because it will hold down costs later.
“We think it's good for everybody, the private sector and the government,” says Phil MacAlister, director of NASA's commercial spaceflight development effort. “And not just in terms of cost. It's also good in terms of safety. We see these companies all trying to outdo each other in terms of safety and performance.”
SpaceX posted a $54 million “paid-in-full standard launch price” for the Falcon 9 in 2012, and carries 24 flights of the new rocket on its manifest through 2017, not counting the ISS missions with Dragon. So far, most of its revenue has come from NASA for the Dragon flights, and it remains to be seen what will happen to the overall cost of launch-to-orbit on traditional one-flight rockets as the competition does (or does not) develop.
Former NASA Administrator Michael Griffin, who holds an MBA as well as multiple engineering degrees, calculated for a 2011 International Astronautical Congress paper that “existing market incentives are insufficient to bring about human space development by private enterprise, even under very optimistic assumptions. The ISS logistics market is too small, no single competitor can expect to capture it all, the rate of return is low in relation to other investments having less risk, and in any case that market is temporary.”
Griffin's analysis was based on a hypothetical human-rated traditional system able to deliver 9,000 kg to the ISS, developed at a cost of $700 million. Reusable launch vehicles could dramatically change the equation, in theory, and some of the new space entrepreneurs—SpaceX founder Elon Musk, Bezos at Blue Origin and Mark Sirangelo at Sierra Nevada—are working to build launch vehicles that are at least partially reusable without the huge turnaround costs NASA experienced with the space shuttle.
At least two commercial reusable spaceplanes are gearing up to begin suborbital flights with paying passengers in the next year or two. Ultimately the lessons they learn may play into reusable commercial flight to orbit, with all that implies in terms of market growth.
“There has been a technical problem, and there is a market problem,” says Jeff Greason, CEO and a founder of XCOR. “The technical problem is how do you do a reusable orbital system where the frequency of flight is high enough, and the maintenance man-hours per flight are low enough that the economics of reusability really work.”
Reusable suborbital spacecraft like XCOR's Lynx spaceplane can validate orbital technologies, and Greason says his design team has worked with an eye to orbit from the beginning. The market problem is bigger “in many ways,” he says.
“If you're going to make a vehicle that flies 50 or 100 times a year, and you build a couple of them so you don't have just one, you need a few hundred things a year to launch. Some of those things will be satellites or, more likely, components of satellites that you launch and put together for larger on-orbit platforms. Some will be resupply to on-orbit facilities of one kind or another—ISS, Bigelow, satellite assembly nodes. Some of those will be tanks of propellant . . . and some of it will be people.”
Greason, a long-time new-space guru, has pushed for orbital fuel depots as a way to enable off-planet business. “Tanks of propellant have the great virtue that with no change in the mission, the consumers of the propellant do not have to care whether it comes up in three large tanks, or 30 medium-size, or 300 small tanks,” he says. “It's an open architecture. Once you divorce the launching of the propellant from the launching of the mission, you can change how you launch propellant with the vagaries of what is cheap this year.”
Other destinations could underpin a space launch market, regardless of the degree of reusability of the launch vehicle and the function of the destination. In his 2011 paper, Griffin lays out a detailed calculation—based on the same cost assumptions—that a government-backed lunar base, supplied commercially, would be a realistic incentive for a private cargo business. A 15,000-kg/year cargo market on the Moon for a station-sized six-person crew would generate an internal rate of return (IRR) of more than 27%, he estimates. It could begin with pre-positioned cargo as soon as there is a firm decision to build a lunar outpost, and it could be supplemented for more return on investment with cargo missions to the ISS and other destinations. NASA's Gerstenmaier says an outpost at the second Earth-Moon Lagrangian point under consideration as a gateway deeper into space also could be supplied commercially to spur the industry. By comparison, the ISS mission alone would generate an IRR of just 13%, Griffin calculates.
There is an old joke, which SpaceX founder Musk has been known to repeat, that the best way to make a small fortune in the space business is to start with a big one. Certainly the commercial route to orbit is as littered with bankruptcy filings as with rocket-failure debris.
In April 1999, Kistler Aerospace submitted an unsolicited proposal to NASA for commercial resupply of the nascent space station, according to Debra Facktor Lepore, a Ball Aerospace executive who was vice president of business development and strategic development at Kistler. Eventually the company joined SpaceX as a NASA-backed competitor in the Commercial Orbital Transportation Services seed-money effort Griffin launched to develop private cargo vehicles, but it couldn't meet its milestones and eventually failed.
“I was there in kind of the heyday, when we were starting the LEO [low-Earth observation] telecommunications,” says Lepore, who left long before the successors to Kistler filed for Chapter 7 bankruptcy in 2010. “The whole motivation then was on the LEO-type communications satellites that needed to have lower-cost access to space to really make its business plan. We were raising money, and we had lots of investors. There were lots of ups and downs in the process—the market crashed, Asian flu, dot-com/dot-bomb. The challenges [involved] really bad financial timing. It never was a technical issue. It was more an idea before its time.”
It is still far from clear whether the time has come today, even with the big U.S. government push. Indeed, many investors see that as an obstacle.
“They have absolutely no interest, mostly because they've all done one investment and gotten burned because Congress changed its mind, or there was one big program that they thought was going to go for 10 years and it got canceled,” says Hoyt Davidson, founding and managing partner of Near Earth—an investment bank that specializes in commercial satellites, aerospace and wireless telecom. “They just don't like government as a customer.”
Congress may have realized that when it set up the commercial space office at the FAA to regulate and promote commercial space travel. The office is moving into the new space era proactively, with programs to accommodate new space-business ventures, and it is seeing a dramatic increase in its activities. In 2012, the office oversaw three licensed or permitted launches, and this year it has already handled 13, says George Nield, associate administrator for commercial space transport.
In general, neither business nor investors like uncertainty, Nield says. “Whether they like the regulations, or not, or they like your policies or they'd rather have different ones, 'just tell me what you want us to do.' You hear that refrain over and over again. I think one of the most important things government can do is be clear on those rules.”
One long-time student of the kind of commercial space activities the government is trying to promote today is Charles Miller, president of NexGen Space in Arlington, Va., who was NASA's senior adviser for commercial space from February 2009-January 2012. A strong advocate for private-sector launch, he says a lot of the perceived hurdles are really nothing more than excuses.
“Trillions of dollars are washing around the world, looking for good investments, where there's a real business and a real market,” Miller says. “For people who are complaining that there isn't enough investment, there's usually something wrong with the business opportunity, so the investment is going elsewhere.”
Tap on the icon in the digital edition of AW&ST to see some space entrepreneurs' ideas for generating profits beyond the Earth's atmosphere, or go to AviationWeek.com/newspace