The economics of space elevators - Are they financially feasible?

Bill White · 2003-04-22 08:47:46

Let us assume space elevators become technologically feasible. I have no interest in discussing carbon nanotubes right now. Would a space elevator be financially feasible?

Let us assume that the elevator will cost $100 billlion to R&D, build and deploy. I believe this is wildly optimistic yet lets use $100 billion as the price tag for a functional space elevator. (Most of the cost of the elevator will be the launch capacity needed to loft the carbon nanotubes into orbit - a space elevator must be built top down not bottom up like a skyscaper - multiple the weight of teh cable by the cost per pound to get into LEO - even if carbon nanotube cable were itself free, lifting it to LEO will be very expensive.)

Let us also assume that the target ticket price is $10,000 for a single person to ride up into space. More or less comparable to the soon to be retired Concorde SST.

How many people need to ride each year if we also assume the need for 12% return to cover interest or capital costs and operating costs? To cover the need for 12% return on the $100 billion the elevator operators will need to generate $1 billion per month in revenue.

If tickets are $10,000 apiece we would need 100,000 riders per month. Right? If tickets were $100,000 we would need 10,000 riders per month. Using the $10,000 ticket price that would mean over 3000 people per day, 365 days per year, start their journey into space. Any fewer and the ticket prices start going up. . .

Where would 100,000 riders go once they got up into space? Where would 10,000 riders per month go?

Also, don't we need two space elevators? One going up and one going down? Don't forget cars going up cannot pass cars going down. How many people can be riding up at the same time? Another car sets off every 15 minutes? Can the cable carry that extra weight?

Or do the cars go one way up and either stay in space or return like Apollo by simply dropping into the atmosphere?

Curiously, the high price of space may well be due to a lack of sufficient demand to spread the costs out over enough people.

soph · 2003-04-22 09:07:47

Let us assume that the elevator will cost $100 billlion to R&D, build and deploy. I believe this is wildly optimistic yet lets use $100 billion as the price tag for a functional space elevator.

Your problem is right there. According to reasonable numbers, the first elevator will cost $10 billion to R&D and deploy.

Since there is no real fuel, only a laser array, per kg costs are $100/kg. So let's say it costs a person $200/kg to go up (at a huge profit). The average person is ~65 kg. It will cost them about $10,000-12,000 (as you estimated).

If 833,000 people a year went up, the costs would be covered. This is only 54,000 tonnes of "payload." The first Highlift elevator is designed for 30 tonnes a shot, at least twice a week.

We could generate at least $12,000,000 a month in revenue sending people up. In 100 months (~9 years), the costs would be covered, with a bit extra.

But people is not where the initial revenue of the elevator will come from. It will come from satellites, and similar objects. Companies currently pay $5,000/kg and up to send things to orbit. So we charge $500/kg. This is more than double the "people" cost, so we would have a profit within 5 years.

Subsequent elevators would cost on the order of $1 to $2 billion to deploy. These costs may be lessened by joint contracts and so on. These could see profits much sooner, as the R&D would be complete, and the capacity would be higher.

Remember, the only real R&D left is the CNT.

Bill White · 2003-04-22 09:12:33

Your problem is right there. According to reasonable numbers, the first elevator will cost $10 billion to R&D and deploy.

How much does the elevator weigh? How do you get that weight up to LEO?

But people is not where the initial revenue of the elevator will come from. It will come from satellites, and similar objects. Companies currently pay $5,000/kg and up to send things to orbit. So we charge $500/kg. This is more than double the "people" cost, so we would have a profit within 5 years.

I thought the satellite market was already glutted with excess capacity. How many LEO sats does humanity really need? Besides won't people command the highest price per pound for lifting to LEO? Won't people be the most lucrative cargo?

But okay, soph, lets use the $10 billion to deploy the elevator. You still need $1.2 billion per year to cover the interest or $100 million per month - not $12 million per month.

soph · 2003-04-22 09:18:54

How much does the elevator weigh? How do you get that weight up to LEO?

I don't have a figure off-hand, but CNT is extremely light (I know this isn't a CNT topic, but it almost has to be considered), and is thousands of times longer than it is thick. The ribbon would be extremely light. The Highlift estimate is 7 booster launches to deploy the ribbon, which is then extended by their own capsule launches.

I thought the satellite market was already glutted with excess capacity. How many LEO sats does humanity really need?

Observatories, ISS cargo, new modules, perhaps (due to the lower cost) private orbital development. The problem is we don't know what extent that an immense drop in payload costs like this will spur the market.

Is the market weak because it is too expensive, or is it weak because there is no interest (which may be because of the cost)?

Bill White · 2003-04-22 09:23:15

Observatories, ISS cargo, new modules, perhaps (due to the lower cost) private orbital development. The problem is we don't know what extent that an immense drop in payload costs like this will spur the market.

Build it and they will come. . .

Maybe we should read about the finances of new sports stadiums. That is exactly what I am doing right now, by the way.

Bill White · 2003-04-22 09:28:19

I don't have a figure off-hand, but CNT is extremely light (I know this isn't a CNT topic, but it almost has to be considered), and is thousands of times longer than it is thick. The ribbon would be extremely light. The Highlift estimate is 7 booster launches to deploy the ribbon, which is then extended by their own capsule launches.

Assume limitless FREE carbon nanotubes -- you can't get more optimisic than that, right?

Assume $1000 per pound lift to LEO (buy Zenit/Energias or Titans or Deltas or Ariannes in great volume for lower price) - besides if you go lower than $1000 per pound for rocket launch to LEO why would you need the elevator?

Calculate the total weight of the cable and multiple by $1000 and you have minimum cost. 12% per year is the minimum return to cover capital costs with NO profit.

clark · 2003-04-22 09:31:52

My understanfing of the elevator concept would have most of the difficulty in establishing the first few ribbions. Once those are complete, runners go up and down the exsisting threads, adding more strength to it.

The number of actual lift platforms that will do the lifting of cargo though is less clear in my mind.

Is the market weak because it is too expensive, or is it weak because there is no interest (which may be because of the cost)?

There is interest. Thousands of people willing to plunk down hundreds of thousands for a trip to space.

However, the elevator open up space even further. It does become possible to have multiple entitites building various structures (destinations) for would be space travellers.

If I was highlift, I wouldn't worry about getting enough people onto the elevator to cover costs. I wouldn't care about people period. A basic cable to get tons into space is everything they need.

Imagine Mariott with a Hotel in space. great. but there big problem is getting their customers to the hotel. As time and technology progress, there will be different ways to achieve this. However, as a hotel- as a possible tourist attraction, I would want to secure seating for my would be customers.

Now, those companies that bought space on the highlift to build their hotels will by space on highlift to bring the people to fill their hotels. It will be by far the cheapest, and thus most profitable, way to get people into space.

Now, everyone has an interest in keeping the Elevator going.

Of course, government backed bonds would ensure investment.

soph · 2003-04-22 09:35:36

Bill, I just did some research, and according to the NASA elevator report, the CNT weighs 7.5 kg/km. This means the ribbon is 750,000 kg. However, a large portion of that is deployed, as clark mentioned, by the runners themselves. It would only take 7 boosters to deploy the ribbon until the rest could be completed by the elevator itself.

Bill White · 2003-04-22 09:53:43

My understanfing of the elevator concept would have most of the difficulty in establishing the first few ribbions. Once those are complete, runners go up and down the exsisting threads, adding more strength to it.
The number of actual lift platforms that will do the lifting of cargo though is less clear in my mind.

I had forgotten this part - a cable capable of carrying a 200 kg robot comes first and runs the remaining cable up in a boot strap style operation. Okay, I am being too negative. . .

Still, assume $10 billion in construction costs - you need a billion per year in revenue to cover your investment (and does the $10 billion cover accrued interest during the 2 or 3 years the runners are ading cable?) - and even HighLift is only talking about a 20,000 kg lifting car which could 200 people at most if you include life support and machinery. 100 people seems more reasonable if you add beds and lavatories and food. . .

It takes two days to travel to LEO via elevator, right?

Okay assume one way trips (riding the cable down makes NO economic sense to me because it just ties up the cable for 48 hours and it seems to be way cheaper to just fall into the atmosphere using ablative "use once" heat shields)

IMHO, people will be the "best case" cargo in terms of price per pound charged - but lets look at cargo - 20,000 kg of cargo every two days for 3.65 million kg per year, right? - divide 3.65 million into $1 billion in annual interest and that is $275 per kilogram as the best possible price for cargo, assuming 100% of the 20,000 kg car is useful payload.

Why would humanity ever want to move that much mass into LEO? IMHO, only massive emigration or migration could create sufficient demand to utilize the capacity of an elevator.

soph · 2003-04-22 10:01:32

To put that into perspective, Bill, the Shuttle launch system is over 2 million kg, only 33% less mass than what you are talking about sending up to orbit.

And the elevator also has the potential to send cargo to other celestial bodies as well (anything in the solar system, in fact).

In addition, I would charge more for cargo, because companies are already spending $5,000/kg and up to send their cargo to orbit. Let's say a biotech company decided to launch a 20 tonne lab to orbit (20,000 kg). Then, they need to supply it with people and supplies. The lab itself would cost $10 million to launch. Then, charge $20,000 round trip per person, who could possibly stay up for months. Our real business is supplying the crew with food, clothes, etc, which we charge $500/month for.

clark · 2003-04-22 10:07:02

Perhaps we are not considering some financial implications of this project?

One, the system would *radically* alter the price of access to LEO or GEO in all weight sizes.

<poof>

What was that sound?

The entire launch industry imploding becuase they are simply unable to compete economically. If the economics are true for this system, it *can't* be beat.

Now, the elevator can just eat up market share at its hearts content- whatever it chooses to handle, it automaticaly becomes the defacto winner.

Yet these same aerospace comapnies are going to look for ways to divest out of the industry and into a new phase (case in point is the oil industry changing to *energy* industry).

An elevator solves how to get to LEO and GEO cheaply. Now comes the next part- going *somewhere* in space.

Anybody who puts up the first destination has total market share. You want to go to space? Okay, but there is only ONE place to go to.

It takes two days to travel to LEO via elevator, right?

I thought only one, but I am probably mistaken. It's been awhile since I went through the concepts. I think GEO may be longer, but again, I am not sure.

Even if it is two days- that makes a round trip 4 days. How much would you spend for one day in space? Trips up and down the elevator could be how it starts. Think of it as the most elaborate roller coaster ever devised...

Why would humanity ever want to move that much mass into LEO?

To build SPS sattellites.

soph · 2003-04-22 10:13:19

Or to construct interplanetary spaceships that don't have to waste fuel getting past the gravity well of Earth. Or to launch telescope arrays to the Moon and to the deep Solar System.

Or to launch payload for launch missions repeatedely, and cheaply, so the initial launch doesn't have to be the only source of materials the mission has to deal with.

There are any number of applications for the space elevator.

Bill White · 2003-04-22 10:17:13

Why would humanity ever want to move that much mass into LEO? IMHO, only massive emigration or migration could create sufficient demand to utilize the capacity of an elevator.

Soph - the comsat market is way over saturated. Iridium has already lofted more bandwidth to LEO than will be needed for a long time to come. Long duration unmanned aircraft flying at 100,000 feet can provide cellular bandwidth at a fraction of the cost of a comsat, even with an elevator.

As micro-processing improves the demand for comsats will fall to minimum number. . .

LEO labs? To make what? ballbearings?

Solar power sats with microwave relays? If this were viable, why aren't the corporate conglomerates pouring money into this already?

Tourism? Sure, this will indeed help finance settling space but tourism can't do it alone. In the 1920s the great cruise lines folded (White Star - Cunard) Why? Not for a lack of 1st class passengers but a lack of 3rd class and steerage passengers after the USA closed Ellis Island to immigration.

soph · 2003-04-22 10:20:43

LEO labs? To make what? ballbearings?

First of all, the elevator could launch to any orbit. Second of all, biotech labs in orbit would be extremely useful to do studies of diseases and treatments in zero-G. A lot of companies would probably kill for the chance to do this. Remember that Columbia's treasure on board before the tragedy was the cancer samples that it had studied.

There are likely many other fields of science that would also love to study phenomena in zero-G as well.

Orbital shipyards are another possibility, as well as the materials to get there.

Bill White · 2003-04-22 10:23:46

The entire launch industry imploding becuase they are simply unable to compete economically. If the economics are true for this system, it *can't* be beat.
Now, the elevator can just eat up market share at its hearts content- whatever it chooses to handle, it automaticaly becomes the defacto winner.
Yet these same aerospace comapnies are going to look for ways to divest out of the industry and into a new phase (case in point is the oil industry changing to *energy* industry).

Seriously, I have been reading about the finances of Major League Baseball. If I can figure out how MLB has gotten so many governments to build so many ballparks at such great public expense with so little assured civic return on investment maybe I can help figure out how to finance a space elevator.

Anyway - the issue of MLB contraction is interesting concerning how a monopoly can maximize profits for team owners even if such contraction is bad for "baseball" as a generic entity.

It seems to me that HighLift will face some very serious political opponents from the major aerospace companies. HighLift will have to win on Capitol Hill with some very rich people standing to lose big bucks IF HIghLift wins. . .

Bill White · 2003-04-22 10:26:46

soph - calm down - with me you are preaching to the choir. . .

Yet, if these things are so valuable, and so obvious WHY hasn't HighLift already raised $100 billion in venture capital?

soph · 2003-04-22 10:29:32

I'm calm

Yet, if these things are so valuable, and so obvious WHY hasn't HighLift already raised $100 billion in venture capital?

Because the elevator is complicated, people have never seen anything like it, and don't think that it will ever exist outside of science fiction.

Think about it: the stock market is a risky investment, what does that make the elevator?

In addition, people don't want to wait 10-20 years for a return on their investment, on a concept that they're not sure of.

clark · 2003-04-22 10:30:53

LEO labs? To make what? ballbearings?

To do scientific research (university); R&D in controlled micro-gravity (corporate & university); military applications; government funded manned research.

With cheap access to LEO and GEO, there is no longer a justification, or need, for government involcement in LEO or GEO research- the cost becomes affordable for non-government entitites. This will allow for a shift in focus- think Mars, Moon, Venus, etc.

Cheap, small probes can litterlay be launched in mass- every PHD wannabe can develop a nano sat to do whatever they need- the cost to do so approaches levels of funding that these organizations and individuals can achieve.

the comsat market is way over saturated. Iridium has already lofted more bandwidth to LEO than will be needed for a long time to come.

Perhaps, but as technology develops, and is utilized by more people, this supply will quickly fall. Growing expansion of human presence in LEO, GEO, and LUna will require more communication abilities. Increases in personal computing power will require greater bandwidth to utilize the extra power, as well as extra communication features (like video confrencing, etc).

Solar power sats with microwave relays? If this were viable, why aren't the corporate conglomerates pouring money into this already?

Becuase the cost to LEO and GEO is so absurdly high. Couple this with a lack in ability to replace such sats cheaply and routinely. The cost of getting into LEO and GEo- the economic, and physical requirements has effectively curtailed any realistic private approach to space.

This all changes with an elevator and cheap launch costs.

In the 1920s the great cruise lines folded (White Star - Cunard) Why? Not for a lack of 1st class passengers but a lack of 3rd class and steerage passengers after the USA closed Ellis Island to immigration.

Various fares can solve this situation. Imagine First class and economy on these trips. Imagine a ticket for a ride up and down, and another that allows you to depart- and stay in space for a bit.
Want a priavte ride up for you and your friends? Another ticket cost.

Hell, just start a lottery and sell tickets at a buck each. Call the winning numbers, put them on a ride, rinse, repeat.

Imagine a monthly lottery of 20 opportunities for a ride of a life time. I would imagine that each month you could clear well over 50 million dollars at a buck a piece.

soph · 2003-04-22 10:36:26

Oh, right, and Bill commented on a "down" elevator.

I imagine it would be possible to connect a second ribbon to the anchor station and counterweight. You may even be able to deploy the ribbon using the first elevator. You could have separate up and down ribbons. The ribbon wouldn't be very expensive at all, once the CNT is ready. It would probably be about as expensive as the anchor and counterweight, so a second ribbon using the initial infrastructure (as opposed to a whole new elevator) may cost in the hundreds of millions.

clark · 2003-04-22 10:38:17

I think the elevator coming down is integral to powering the up elevators.... i think there are some weight issues too.

soph · 2003-04-22 10:40:38

clark: the spent capsules could stay up at the top as a counterweight, further increasing the capacity of the elevator.

The use for a down elevator would be practical, not imperative.

clark · 2003-04-22 10:52:25

I suppose we should include this obligatory link:

http://www.highliftsystems.com/

select "downloads", then scroll down to:

The Space Elevator Final report to NIAC
The NIAC Phase I Report: The technical result of the initial 6 month study for NASA.

This is the final report given to NASA at the end of the 6 month proof of concept study. I believe another report will be coming out soon, a follow up to this study.

Lots of stuff to wade through...

Bill White · 2003-04-22 11:19:11

Lets postpone actually "doing homework" for a bit and engage in some more wild speculation. . .

What if soph is right and after the first 3 or 4 elevators are deployed then follow on elevators cost merely 2 or 3 billion US dollars. Won't we see space elevator proliferation?

What sovereign nation can hold its head up without a space elevator? Even if they bankrupt each other by fighting for market share and survive on government or military subsidy? The EU, China, Russia, India, Japan, Korea, Brazil, Saudi Arabia, etc. will all need their own elevator, right? At only $2 billion what political leader could resist?

Can the per kilogram cost of travel from Earth to LEO go "too low?"

Does this have implications for US national security?

Is there a limit to the number of space elevators that can be built based on geography and orbital mechanics?

Elevators are physically restricted to the equator, by physics, right or wrong?

clark · 2003-04-22 11:30:11

What if soph is right and after the first 3 or 4 elevators are deployed then follow on elevators cost merely 2 or 3 billion US dollars. Won't we see space elevator proliferation?

No. As more are created, competition increases to the point where it drives down what price can be demanded. Eventually the economics are against new production of Elevators.

Look at power production as a similar model.

What sovereign nation can hold its head up without a space elevator?

None. Whoever controls the elevator, controls space.

The EU, China, Russia, India, Japan, Korea, Brazil, Saudi Arabia, etc. will all need their own elevator, right? At only $2 billion what political leader could resist?

Even at 10-20 billion, who can resist? There are technological hurdles still- their design is based on a carbon nano tube that hasn't even been made yet, let alone near commerical production.

an intial 20 billion dollar investment would turn into a multi-trillion dollar industry. Space based power production, and the utilization of space resources for construction would assure this.

Can the per kilogram cost of travel from Earth to LEO go "too low?"

Can gas be too cheap?

Does this have implications for US national security?

It has implications for every nations security. However, I think the US would only utilize this as a means to achieve its ends.
A space elevator would meet every conceivable requirement for our future military space based aspirations.

Is there a limit to the number of space elevators that can be built based on geography and orbital mechanics?

I would imagine that we are restricted to 'prime' locations. Sort of like the Panama canal... yeah, we could have placed it elsewhere- but...

Bill White · 2003-04-22 11:43:43

Elevator proliferation would not be privately financed because every sovereign nation would "need" one. No need for private finance once the first few are built, government money would flow like water.

Ready access to elevator technology would deny the US its hegemony of LEO. A very dangerous question I have wondered about for years is whether low cost access to LEO is something the Pentagon would favor or disfavor. Fewer nations having access to space seems to serve US interests just as dissolution of the Montreal Expos serves the interests of Bud Selig.

Does the US have de facto control over nanotube research?

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Re: The economics of space elevators - Are they financially feasible?

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