The economics of space elevators - Are they financially feasible?

Bill White · 2003-04-22 12:19:14

clark asks:

Can gas be too cheap?

Well, yes, depending on perspectives. . .

* IF * the price per barrel for crude oil goes up an appropriate percentage, lots and lots of alternative energy schemes become viable, solar, wind, hydro, biodiesel, etc. . .

Some argue that government subsidies artificially lower the price of crude oil thereby killing off cleaner technologies.

"Too cheap" bandwidth wiped out lots and lots of telecom equity in 2000 and 2001.

SeaLaunch is already despised for undercutting the launch market and for depressing launch prices which other aerospace players say stifles R&D into lower cost lift technologies.

tim_perdue · 2003-04-22 12:38:43

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.

This is a good thread. I was having the same questions after I just read the "Space Elevator" book that recently came out.

They are saying around $6 bln for the first elevator. This can hoist 20 tons of payload @ 200 mph. Theoretically, you can launch another lifter up into space as the other one reaches 7200 miles (approximation from memory).

So this is 1 lifter every 1 1/2 days, assuming we never stop to allow lifters to come back down.

365/1.5 is 243 lifts per year, assuming perfect timing, no breakdowns, no maintenance to the ribbon, etc.

243*20 tons=4860 tons/year. Assuming a 10-year life of the elevator, you must earn $600 mln/year to simply amortize the initial elevator. So $61/pound is the ribbon amortization cost + cost of the disposable 1-way lifters + energy + staff, etc.

If you want to have the lifters going 2-ways, you must divide that cargo capacity by 4 (I believe), if you figure the amount of time to get a series of lifters up, and then back down. There's probably a good way of optimizing this, such as sending 100 lifters up in a row, then bringing them all back down at once to minimize the "down time".

Depending on the "down time", you could easily jack your costs up to $1000/pound if you include all costs, and all of a sudden you don't have as huge of a market as you thought.

Bill White · 2003-04-22 13:00:56

Depending on the "down time", you could easily jack your costs up to $1000/pound if you include all costs, and all of a sudden you don't have as huge of a market as you thought.

This gets closer to a key point I am struggling to make. Thanks, Tim. . .

We need to draw a price/demand curve and evaluate how elastic the demand for Earth to LEO travel may be. If demand is too price sensitive, then an elevator is a huge risk. If the price per kilogram is close to the market's saturation point, then a fairly small cost overrun can cause users to abandon the elevator leaving a giant white elephant.

Solar power sats seem to me to be highly price sensitive, as research labs may be. I believe the technical economics terms is price elasticity.

If lift costs are $250 per kilogram, perhaps many people invest to deploy solar power stations to beam power to Earth yet if lift costs rise to $450 per kilogram then its cheaper to try solar on Earth or wind or other alternative e energy ideas and anyone who invests in solar power sats goes bankrupt.

A Big Pharma company may gladly pay $15 million for an orbital drug lab but balk at $25 million, just because the numbers don't pan out.

Sure, there is lots of demand for space access *IF* the price gets low enough but until the low price can be guaranteed finding a demand that is price in-elastic would be very useful.

The US military is a classic price in-elastic user, by the way and "cost plus" contracts avoid elasticity curve issues altogether.

soph · 2003-04-22 13:05:59

A Big Pharma company may gladly pay $15 million for an orbital drug lab but balk at $25 million, just because the numbers don't pan out.

To a big drug company, looking at revenues of billions, a $10 million difference is peanuts.

We need to draw a price/demand curve and evaluate how elastic the demand for Earth to LEO travel may be. If demand is too price sensitive, then an elevator is a huge risk. If the price per kilogram is close to the market's saturation point, then a fairly small cost overrun can cause users to abandon the elevator leaving a giant white elephant.

Not all of it needs to be to orbit! You can launch all kinds of robotic missions and manned mission payloads to Mars or the Moon, and any number of celestial observatories, or assembly plants, and materials, to be used in interplanetary missions.

Bill White · 2003-04-22 13:10:52

To a big drug company, looking at revenues of billions, a $10 million difference is peanuts.

Do you think Big Pharma takes this attitude when they negotiate office rent, or staff salaries, or buy copy machines? They won't spend the extra $10 million unless it translates into guaranteed profits.

soph · 2003-04-22 13:14:18

Do you think Big Pharma takes this attitude when they negotiate office rent, or staff salaries, or buy copy machines? They won't spend the extra $10 million unless it translates into guaranteed profits.

The lab itself can generate enough "Wow" value for the company's advertisements to cover the costs of the lab. And the lab could test many, many drugs, any of which could be the next Prozac.

clark · 2003-04-22 13:14:56

If lift costs are $250 per kilogram, perhaps many people invest to deploy solar power stations to beam power to Earth yet if lift costs rise to $450 per kilogram then its cheaper to try solar on Earth or wind or other alternative e energy ideas and anyone who invests in solar power sats goes bankrupt.

Consider this: elevator is built. We start sending up people and projects to build in LEO, GEO and Luna. Hmm, sounds like a lot of construction to "build" anything. up the elevator is goes.

The people that will build the space infrastructure? Up the elevator.

The eevryday stuff to keep said people alive? Up the elevator.

SPS sattelites never have to sell to Earth- we would want them to becuase of the benefits. No, LEO GEO and Luna can provide all the demand neccessary for SPS sattelites (while the tech matures).

Here is the key boys, lower costs to get to space, by any factor of ten, will change the economic of space. It allows "free enterprise" to have a chance in space becuase any yahoo with enough cash and an idea can try it out.

Why don't we see all of our dreams come true? Becuase it costs too much, and the people with the money to do it don't share our brand of crazy.

The pet rock. It is a stupid idea that made someone millions. How were they able to do it? They were half-bent, and it was economically possible for them to pursue the idea.

What do we see in the way of small priavte business ventures for space? All are focused on access to LEO- why? Becuase the costs are at a point where individuals can try out their half-bent idea. No one can go and build a space shiop to mars becuase the people with the ideas can't attract enough money to realize their vision.

Now, we start reducing the cost to enter, to try out these ideas, and you will see a revolution.

Bill White · 2003-04-22 13:17:38

Not all of it needs to be to orbit! You can launch all kinds of robotic missions and manned mission payloads to Mars or the Moon, and any number of celestial observatories, or assembly plants, and materials, to be used in interplanetary missions.

Yet this is price sensitive as well. $10 million for a robot mission to Saturn? Sure thing - - $15 million? Maybe, maybe not - - $20 million? Nah! Maybe next year. . . These numbers are for illustration only.

George I's plan for $450 billion Mars mission is a classic example of the price/demand curve. Mars? Sure lets do Mars. $450 billion? Uh, no thanks!

Google price elasticity. I do not know what an LEO price/demand curve would look like but I know damn well I ain't sending HighLift a check until they give me persuasive price/demand curve.

I am not saying the elevator is a bad idea - I am only saying there is some elementary micro-economics that elevator advocates may not have fully worked through yet.

tim_perdue · 2003-04-22 13:18:01

This gets closer to a key point I am struggling to make. Thanks, Tim. . .

Yeah, this was a good exercise. If my numbers are any good, only well-managed 1-way use of the lifter, fully-saturated with cargo 24x7 can truly bring the costs down into the $250/pound range (remember the cost of each of the disposable lifters, in addition to amortization).

This requires full utilization and great logistics to keep everything moving seamlessly. Coming up with 4,860 tons of material to send up each year, plus building 243 flawless lifters a year is a big task.

Still, at $250-500 I think you have a pretty huge tourism market??

I suspect with breakdowns and ribbon maintenance (they talk in the book about the need to send up runners to "patch" the cable after a meteoroid strike), your costs are going to be more in the range of the $500 area (complete guess).

After reading the book, my greatest fear of the elevator was due to lightning. We don't know yet what happens to fully-stressed carbon ribbons when they are super-heated by a lightning strike.

A single "stalled" lifter a few thousand miles up in orbit is a disaster - you could run out of air before you can retrieve it.

Even scarier - a second rescue lifter would max out the safety margin of the cable, perhaps causing it to snap and fall to earth. The lifters above the snap point, perhaps with people still aboard, would fly out into space. The lifters below would fall and burn up in the atmosphere.

Even if that doesn't come true, you create a log-jam in your logistics chain while you solve the crisis, which could take many days, runining your optimistic cost/pound figures!

Bill White · 2003-04-22 13:22:54

Yeah, this was a good exercise. If my numbers are any good, only well-managed 1-way use of the lifter, fully-saturated with cargo 24x7 can truly bring the costs down into the $250/pound range (remember the cost of each of the disposable lifters, in addition to amortization).

This was precisely my intuition. We are talking about operational tempos like we see at O'Hare Int'l airport or the giant container ship facilities run by Hyundai.

HighLift plans on building the elevator 200 miles west of the Galapagos Islands. Seems reasonable.

How much infrastructure do you need to get thousands of people to there every week/month and fed and house them as they prepare for the elevator ride?

soph · 2003-04-22 13:25:05

How much infrastructure do you need to get thousands of people to there every week/month and fed and house them as they prepare for the elevator ride?

Probably just a passenger ship and a hotel. I mean, there's no need to overdo it. For higher end V.I.P.s, for an extra few thousand, they may be able to come on a luxurious yacht.

clark · 2003-04-22 13:27:40

How much infrastructure do you need to get thousands of people to there every week/month and fed and house them as they prepare for the elevator ride?

As Soph suggested, a cruise ship.

However, an airport/heliport to the launch area is not unreasonable. Hotel chains can set up nearby- resorts surrounding the launch area- or the pick up for the launch area.

Disney World comes to mind as a model.

Perhaps a mixed tourism approach is best, one that capitalizes on the novelty of the experience, but the profit is gained on the 'back end' in terms of lodging, food, and entertainment extras.

soph · 2003-04-22 13:28:50

I was thinking of an airport, but how would you build a commercially capable airstrip that far out into the ocean?

clark · 2003-04-22 13:31:05

Hong Kong, San Diego, and Japan have all considered such things. It can be done, but is exspensive.

soph · 2003-04-22 13:36:56

Right, but the elevator is going to be far away from any land at all, each are on a piece of land. The base of the elevator is a modified oil rig, not an island, similar to Sea Launch.

Bill White · 2003-04-22 13:41:22

In future volumes of my pending future/alternate history I predict the use of civilian versions of the V-22 Osprey tilt rotor aircraft flying to hotels built on oil drilling platforms from the coastal cities of Ecuador.

Ecuador really is the key, you see.

Similiar hotels can be built close to the Galapagos on oil rig towers and use only hydrogen fuel cells and low level CELSS to avoid human contamination of the pristine islands. Tour groups use electic boats powered by fuel cells charged with solar power for the ultimate eco-vacation.

Yet this is a HUGE operation. Hundreds of passengers will need to arrive at least 24-48 hours before their elevator car departs and they will need to be fed and housed 24/7. Hundreds of waiters/busboys/housekeeping/doctors and the like will be needed to provide 24 hour service. Can you say casino?

How may will pay $10,000 - $20,000 for a vacation and eat PB&J from a brown paper bag? Not to mention the cargo platforms to accomodate the docking of giant container ships bringing cargo for lift to LEO.

tim_perdue · 2003-04-22 13:42:00

I was thinking of an airport, but how would you build a commercially capable airstrip that far out into the ocean?

You're only talking about 93 tons/week, so a commercial airport wouldn't be viable. A cruise ship docking at the suggested oil platform (what highlift is talking about using) would release about 2,000 people, which is far too much.

Helicopters from land make perfect sense for this level of capacity, and they can land easily on the oil platform.

The more I think about the "disposable" lifters, the more elaborate they have to be. You will need thrusters and a heat shield if you want any sort of safety mechanism. You need all life-support mechanisms as well.

It would be a beautiful ride up to GEO though - I hope they have plenty of large windows.

soph · 2003-04-22 13:50:44

Yet this is a HUGE operation. Hundreds of passengers will need to arrive at least 24-48 hours before their elevator car departs and they will need to be fed and housed 24/7. Hundreds of waiters/busboys/housekeeping/doctors and the like will be needed to provide 24 hour service. Can you say casino?
How may will pay $10,000 - $20,000 for a vacation and eat PB&J from a brown paper bag? Not to mention the cargo platforms to accomodate the docking of giant container ships bringing cargo for lift to LEO.

Why not just a single day? Here's an agenda:

1. Board passenger ship two days before launch
2. Arrive at destination night before, check into hotel, eat dinner
3. Spend the day at the hotel, making arrangements, undergoing micro-G preparation, having three meals, taking photos, etc.
4. Board elevator

A single day of hotel accomodation costs, at most $500. So let's say that the entire previous day is $1000 of cost to Highlift. They can defray this by concession stands, casinos (as you mentioned), and so on.

tim: cruise ships may be better, because we are likely to have cargo as well on the elevator. Supplies and crew should also be delivered to the island. Helicopter is not as effective at cargo delivery as boat.

clark · 2003-04-22 13:51:41

What does $50,000 US by you?

How about a two week stay at a tropical resort, fully established with all the latest amenities for global networking.
Included in this package is transportation to and from the resort, lodging, and a trip to space. All requirements are provided for during the trip to space (i.e food).

Now, let's say we build this resort, and we know that our high lift will need X number of people to go on it to be profitable.
Build the resort to hold X number of people. bring people to the resort, and stagger their launch- so theyu arrive, five days later, they boost off into space. When they come back, up another bunch goes.

You keep the resort full, staggering the capacity. Since this IS a remote area, you develop other things for the guests to do- like a casino, etc.

Hmm... I think I'm a bit off my game today. See ya'll later.

tim_perdue · 2003-04-22 13:57:37

How may will pay $10,000 - $20,000 for a vacation and eat PB&J from a brown paper bag? Not to mention the cargo platforms to accomodate the docking of giant container ships bringing cargo for lift to LEO.

I think you're looking at $100,000 to put a 200-pd person in orbit, not including the cost of lifting all their supplies. This sort of clientele is going to demand 5-star treatment, which is what you are probably getting at.

You keep the resort full, staggering the capacity. Since this IS a remote area, you develop other things for the guests to do- like a casino, etc.

This is probably the idea. Build a las-vegas type hotel at the base of this thing. It's got to be nice, like the Bellagio or something for the type of people we are talking about.

soph · 2003-04-22 13:59:01

I think you're looking at $100,000 to put a 200-pd person in orbit, not including the cost of lifting all their supplies. This sort of clientele is going to demand 5-star treatment, which is what you are probably getting at.

If your costs are $250/kg, how is it $100,000 to lift a 90 kg person to orbit?

tim_perdue · 2003-04-22 14:03:21

If your costs are $250/kg, how is it $100,000 to lift a 90 kg person to orbit?

I think it's closer to the $500 figure that I mentioned as a complete guess earlier. Remember how complex these "disposable" lifters have to be, and the odds of perfectly-smooth running logistics are not very good. Every airport is always running behind and they've got more than 1 runway to work with.

Bill White · 2003-04-22 14:03:48

clark's $50,000 is much closer IMHO yet Galapagos Island tours are a possible bonus to add to luxury hotels and casinos and world class restaurants.

Several years ago I started a draft short story titled "Honeymoon in 2029" - at the bridal shower the bride receives a gift of what looks like a lace rock climbing harness only its designed for 2 people. . .

* * *

soph - we are talking a massive facility. Okay I will accept (for now) $10 billion for the ribon into space. Yet that excludes an orbital destination (a hotel up there) and elaborate ground facility down here. $10 billion buys a ribbon and an anchor point. No hotels or heli-strips, no fleet of VSTOL aircraft, no ground crew etc. . .

$100 billion to get up and running - I am back to that number.

Bill White · 2003-04-22 14:08:30

If your costs are $250/kg, how is it $100,000 to lift a 90 kg person to orbit?

soph how much structure, supplies and equipment will be needed to safely lift a 200 pound man (me!) to LEO.

I weigh rather less than 100 kg so its $25,000 for my body. What about food, water, air, habitat, safety gear. If 25% is passenger and 75% is elevator cab, structural compenents and the like that adds up to $100,000, no?

soph · 2003-04-22 14:10:10

No hotels or heli-strips, no fleet of VSTOL aircraft, no ground crew etc. . .

Ground crew is on the order of a few hundred thousand, no need for a fleet of aircraft, boat freight is cheap, and hotels cost millions, not billions of dollars.

Perhaps, a more conservative approach is to begin as a payload launch operation (perhaps with minimal, no-frills, orbital crew launches), and then using any profits, expand to accomodate people. This would ensure that the expansion is made with secured money, and that the expansion is made to support an existing base of customers.

But $100 billion is way out of sync with the real costs.

I think it's closer to the $500 figure that I mentioned as a complete guess earlier. Remember how complex these "disposable" lifters have to be, and the odds of perfectly-smooth running logistics are not very good. Every airport is always running behind and they've got more than 1 runway to work with.

Great, then it's about $45,000 per person, half of the $100,000 estimate.

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