Back in October, after the last session of the ACES conference, I bumped into Gene Meyers of the Space Island Group. He had given a brief talk during the conference about some of what his company was up to, including some more recent developments. At the time, I thought I had some timely and relevant news, but due to the schedule pressures of building and testing rocket hardware, I wasn’t able to post anything more than a teaser. Now that two months have gone by, I’m no longer sure if the information is still timely, or particularly relevant anymore, but I promised several commenters that I’d eventually talk about it, so here goes…
For those of you not familiar with them, the Space Island Group (SIG for short) has been pushing various Shuttle-Derived space station ideas for a decade or more now. Most of these revolve around using modified Shuttle External Tanks in a “wet-workshop” type setup, like what was originally planned for Skylab. Their more recent ideas have involved Shuttle-Derived Heavy Lift Vehicles, that would put both a fully-outfitted station module, an empty tank ready for wet-workshop fit-out, and a reusable reentry vehicle patterned after DC-X, as shown in the picture. Since the reusable Crew Transport Vehicle only needs enough delta-V for OMS, deorbit, and landing, it would theoretically be able to provide a truly enormous amount of down-mass.
The interesting nuance that SIG introduced to the idea was that of providing the launch portion for free, and making their money off of leasing space on the space stations. The rate would be something like $25/cubic-foot/day (which is something like an order of magnitude or two cheaper than ISS). The launch vehicle would still be ridiculously expensive (on the order of $200-400M per flight), but the amount of available space and mass was enough that if they could keep it fully occupied for several months they could make a profit. The idea, while not impossible, seemed like a bit of a stretch. Particularly with the amount of flights they wanted to work up to. I can see dozens or even hundreds of flights per year on a small TSTO RLV, but monthly or weekly flights of something this big? I’m not going to say it’s impossible, but up to that point in the presentation I wasn’t particularly convinced. The idea seems like just too much of a huge leap, with no intermediate steps.
Gene then talked about the idea of using these vehicles to put together a Solar Power Satellite system. They would launch a ratio of one commercial station launcher for every one or two SPS hardware launches. The cost of the earth-to-orbit launch for the SPS would be partially subsidized by the station users.
He mentioned that while he had had some severe problems trying to sell it to the US, he was getting a lot of serious interest in India. The project would be structured as an electricity infrastructure project. They were planning to sell 2 Trillion kW-hr of delivered electricity over something like 10-15 years or so (at $.10/kW-hr that is nearly $200B total), with a presell of about $2B/year for development. When you’re talking about that much power (I ran the numbers back then and it came out to about the power generated in California at peak load), that big of financial numbers isn’t unheard of at all. Power infrastructure projects regularly spend hundreds of millions to tens of billions of dollars on long-term projects. Anyhow, I went into more detail on all this background stuff in my ACES writeup, now on to what I actually got out of Gene after the conference.
So, at this point I was curious, but still rather skeptical. For that sort of a project, those numbers weren’t unrealistic at all, and it is possible to make big deals like that…but as I said, I was still skeptical. So I walk up to Gene, and mention the fact that the company I’m with is working on commercial VTVL spacecraft, and that if we can work the bugs out of our project, that we’d probably be able to offer them a much better deal than Boeing could for a DC-X derivative. I know, rather cocky seeing as how we haven’t flown a thing yet (but we have had several succesful test firings on our first rocket engine…), but I figured it would be interesting to hear if they were even interested in more entrepreneurial contractors than he had been talking about so far.
Interestingly enough, he said that if they sealed this deal with India, that they were actually planning on funding through development reusable vehicles from several different companies. Basically, while the whole “fly-em-for-free, make-money-on-leasing-space” idea looked good in the near-term, they’d prefer at some point to be able to move to a situation where lower-cost delivery to orbit would allow them to not have to subsidize stuff that much anymore. If they could still lease space at $15-20/cubic-foot/day, they could make a lot more revenue if the initial payload was orbited on someone else’s vehicle. That was a potentially huge source of funding for alt.space companies. I don’t recall the exact numbers he was talking about at the time, but it was more than $100M/company. Even with the waste of going with a Shuttle Derived lifter for the station hardware, by subsidizing that lower cost launch development, they might actually be able to make the numbers connect sooner.
The other interesting tidbit he mentioned was that while at the conference, he got approached by a NASA scientist with contacts in the Chinese government. He suggested that while India was a far better candidate for selling the SPS power to (both from financial and from political standpoints), that by also talking with China, and particularly letting India know they were also talking with China, that they might have a better chance at getting at least one of them to go along. Kinda like the whole 6+ vs. Moka-Cola trick that D.D.Harriman used in Heinlein’s book The Man Who Sold the Moon.
I was hoping to leak that news about them talking with China right around the time it was happening, in the hopes that with some luck it could get wider press notice, and hopefully make SIG’s sell a bit easier. But since I wasn’t able to, and since we haven’t really heard anything new from them about the progress of the deal, I’m wondering how much of a chance it really has. It still is possible, these deals can take a while to put together. But with oil prices going back down, the impetus for funding such a project also goes down with it.
Where to Go From Here?
Back when I was at BYU one of my favorite classes was an MBA elective titled “Entrepreneurial Perspectives”. This course was team-taught by a BYU MBA professor and a local enterpreneur: Larry H. Miller. For those of you not familiar with him, Larry owns a small sports team or two out there in Utah, as well as a couple of car dealerships and other odds and ends. Most of the class consisted of Larry and other entrepreneurs (like the CEO of Franklin-Covey) telling their life stories, talking about the various deals they made, things they learned, the personal and family impacts of entrepreneurship, words of wisdom, stuff like that. Basically, it was a semester long core-dump of far more sound business wisdom than a 22-year old brain could handle at that point. If I get the chance to dig out my notes, there was a lot of really important lessons learned, but for now, one of the overarching themes I noticed from Larry’s experience was that a lot of business revolves around deal-making. I’m not talking so much about individual sales, though those are quite important, but higher level deal-making and project financing.
The point of that digression was that I think there may be ways to structure a deal that would have a much higher chance of getting funded. While SIGs current plan seems like quite the long-shot, there may be a way of making it more feasible.
I’m not a business genius by any stretch of anyone’s imagination (especially my own), but here are a few unpolished thoughts:
- Vendor Financing–Boeing, Lockheed, ATK, the SPS hardware manufacturers, and several others stand to make billions of dollars of revenue if SIG succesfully closes this deal. While they have letters of intent signed, get them to sign conditional MOUs that commit them to investing their own money for most (if not all) of the initial SDV development if the rest of the deal can be closed. That would greatly reduce the amount of up-front capital needed to get the first part of the business off the ground.
- NASA Partnership–Convince NASA to adjust their space transportation architecture to be able to leverage off of each other. If NASA decided to switch from using one Stick launch and one Longfellow launch to two SIG Dual-Launcher launches per lunar shot, they could likely save a lot in vehicle development. The nice thing about doing it this way is that it meets all the disgusting pork-requirements by keeping a lot of the Shuttle personnel employed, it would provide ATK and BloMart plenty of revenue, and would create a vehicle that wasn’t just used for NASA launches, and would thus be closer to being economically sustainable. Since its development would be funded both by both SIG and NASA, neither of them would have to spend as much individually, and both of them would benefit from each others efficiencies of scale. Maybe if the deal could get put together quick enough, they could retire the Shuttle early as well, and launch the remaining modules on the SIG Dual Launcher. That would free up enough money that NASA could return to the moon much sooner, and less expensively (as well as putting more funding into the useful parts of NASA).
- RLV Funding–The sooner SIG can transition to having more of their SPS hardware, space station customers, and station resupply mass launched on commercial reusable launch vehicles, the quicker their business case will close. They estimated $650M+ per year per station of revenue if they could keep half of the station booked. If they didn’t have to fork out $400M of that to launch the stuff in the first place, it might actually come closer to happening. The good news though, is that if they can close their financing deal, they are then in a position to provide guaranteed demand (enough to keep several RLV companies busy), which should make it easier for them to raise capital. If they combine that with providing some seed money (like Gene mentioned in our conversation) and possibly some prizes, that should be able to seriously stimulate orbital commerce.
- Subsidize Demand–This sounds counterintuitive, but it actually might make sense. If SIG could roll some of their initial money into helping give seed money to potential customers (space manufacturing, research, space hotels, orbital depots, etc) to develop flight hardware, it might make it easier for them to get funding to bring their systems into operational status, and start buying time on SIG’s facilities. This wouldn’t be the first time something like that worked.
- Pilot Plant/Microwave Thermal Rockets–One of the big problems with Space Solar Power is the difficulty in doing pilot plants. Due to the physics, you can’t really build a tiny GEO plant and actually have it be able to deliver enough energy density at earth to work, while an LEO plant wouldn’t be able to stay over one point on earth long enough to give useful energy. This not only makes demonstrators difficult, but it also makes it so there aren’t any convenient, profitable, intermediate steps. Ie it’s hard to bootstrap. However, if you could use a 100MW LEO plant located in say an equatorial orbit as a microwave emmitter to power microwave thermal LEO-to-GEO tugs, that would be potentially very useful (and potentially profitable). Of all the beamed-propulsion ideas, Microwave Thermal seems to be the simplest, and most near-term feasible (ie it doesn’t require any technological breakthroughs to occur). Even if you only used the Microwave Thermal Rockets for the LEO to GTO boost, that would cut the amount of propellants needed in orbit in half. If the first 50MW or so of SPS hardware placed in GEO was setup to perform a similar function to power the GTO-to-GEO circularization burn, and the GEO-to-aerocapture burns, you could slash the required tug and propellant masses even further. Not to mention potentially opening up a large revenue stream for deliveries of satellites to GEO, and hardware and people to L1, LUNO, Mars, and other destination. This is an interesting idea that I want to write more about some other time.
Anyhow, I don’t know if these ideas will really make the difference in making SIG’s plan workable, but I figured it might be worth bringing up. Even if the wunderkinden in charge of our foreign policy don’t screw things up again enough to get the gas prices to go back up, some combination of these ideas could possibly be weaved into a deal that might work.