The Commercial Payload Market Beyond ISS

by

With the retirement of the space shuttle and Orion relegated to an emergency role, the international space station (ISS) is poised, awkwardly, as the government-owned resource most capable of hosting commercial payload demand.

The American segment of the ISS was designated a National Laboratory with the goal of increasing its use by other federal agencies and the private sector. The NASA Authorization Act of 2010 sought to establish an independent organization to achieve this goal. For the foreseeable future, the ISS will act as an established competitor to commercial providers of space access somewhat counter to the intent of its goal to stimulate its own utilization by private enterprises.

Are there markets for commercial payloads beyond the use of the ISS? As we consider this question, the parameters of space access important to commercial users should be kept in mind: flight time, human presence, payload recovery, the local environment (e.g. orbit) and cost.

One emerging market, space tourism, is based on the human presence parameter. Dennis Tito’s self-financed visit to the ISS opened the door for this potential market. The Ansari X Prize incentivized the first privately developed and operated manned spaceflight, SpaceShipOne in 2004. Subsequently, Virgin Galactic’s Richard Branson and SpaceShipOne designer Burt Rutan announced their intentions to offer spaceflights aboard the second-generation SpaceShipTwo at $200,000 per flight. Virgin Galactic claims over 400 bookings resulting in $54 million in deposits. SpaceShipTwo offers the space tourist a cheaper deal versus an ISS stay, albeit a shorter suborbital one. Several other companies have announced their intentions to pursue a similar market, most notably Space Exploration Technologies (Space X) and Bigelow Aerospace.

SpaceX is developing the Dragon spacecraft to initially deliver cargo to the ISS under the NASA Commercial Orbital Transportation Services (COTS) contract. The crewed version is designed to carry seven astronauts with sufficient endurance to host space tourists for several orbits if not days, though no specific space tourist plans have been announced. Dragon also could serve to transport space tourists to a previously avowed destination, Bigelow’s space complex.

Bigelow is developing two commercial habitats: the three-person Sundancer and the larger BA-330. Bigelow has launched two subscale pathfinders, Genesis 1 and Genesis 2, which are operating well in orbit. The company intends to launch Sundancers in 2014 and 2015 followed by a BA-330. Portions of the habitat complex, designated Space Complex Alpha, are projected to be available for lease in 2015. Six sovereign clients have signed memorandums of understanding to utilize its complexes.

At 690 cubic meters, Space Complex Alpha will offer comparable pressurized volume to the ISS’s 837 cubic meters. With preliminary leasing costs recently quoted at $25 million for a one-month trip and annual prices that range from $144 million to $394 million, the Bigelow complex has a pricing advantage over the ISS. Both stations offer payloads extended time in space (months to years) and the operational flexibility inherent with a crew. Launch vehicle capability will limit Space Complex Alpha to an ISS-like low Earth orbit initially, although Bigelow is open to other possibilities as evidenced by discussions of Lagrangian point L1 and lunar missions.

While personal spaceflight may represent a potentially lucrative market, it is not without its inherent risks as government and public reaction to spaceflight mishaps could force delays, suspensions and even a return to prohibition of commercial operations.

Unmanned Platforms for Commercial Payloads

A less glamorous but more easily exploited source of demand for space access lies in the area of commercial payloads. This is a broad field encompassing biotechnology, pharmaceuticals, materials and industrial processing.

Access to the ISS’s National Lab is defined through the 2009 “Opportunity for the Use of the ISS by Domestic Entities Other than U.S. Federal Government Agencies” announcement. Commercial participants must enter into a Space Act Agreement that includes access to some NASA resources. Participants otherwise fund their own activities.  They must submit a proposal to be evaluated on three criteria: 1) overall merit with the highest priority placed on advancing the current state of the art; 2) anticipated development of products and services and contribution to U.S. economic growth; and 3) level of financial commitments supporting the efforts and the extent to which the space activity is targeted to an addressable market. None of the criteria is unreasonable, although a commercial provider can choose to focus on the third and perhaps present a less onerous path for payload developers. National Lab customers are allocated only excess capacity beyond NASA’s planned science program. This may constrain access to the ISS for commercial payloads despite exemplary satisfaction of the selection criteria.

The competitors for non-man-tended commercial payloads span a wide range of choices. The SpaceX DragonLab, the commercial version of Dragon, has 10 cubic meters of pressurized and 14 cubic meters of unpressurized volume. It can be launched with 6,000 kilograms of payload and return to Earth with 3,000 kilograms within the pressurized volume. DragonLab has an endurance of one week to two years. Pricing has not been made publicly available. Also being developed under the COTS program is the Orbital Sciences Corp. Cygnus resupply spacecraft. While other government-developed unmanned resupply vehicles could become competitors in this category, they currently are specifically designed to support the ISS (Europe’s Automated Transfer Vehicle) or reassigned to do so (Russia’s Progress). No commercialization plans have been announced for government-supplied vehicles.

More traditional spacecraft buses certainly will remain in the competition despite typically lacking pressurized volume or recovery options. The most cost-efficient choices within this group may reside within the NASA Rapid Spacecraft Development Office’s (RSDO) Rapid 3 catalog. By utilizing previously developed spacecraft, the RSDO approach allows for mitigation of technical risk. This model, while not currently commercialized, provides insight into what participating vendors could offer commercial customers. Ridesharing on commercial spacecraft as a hosted payload also provides a cost-efficient, albeit more constrained, niche for commercial payloads as well. The total price is far below that of deploying an independent satellite. Small payloads requiring very limited power, data resources or flight time may find a cubesat or a suborbital vehicle as their best option with costs as low as $20,000.

From the perspective of competitive or uniquely offered features, the platform options available to commercial payloads outside of the ISS are sufficient to successfully support and perhaps even stimulate private space access demand, but will a private, commercializable demand materialize, and from what segment?

Over 400 experiments have been conducted on the ISS representing over nine years of continuous research. Despite these impressive numbers, the number of commercial enterprises resulting from the research activity is modest at best. Four commercial “payoffs” have been identified to date: rapid screening of candidate vaccines (Astrogenetix Inc.), microcapsules for improved drug delivery (NuVue Therapeutics Inc.), high-quality protein crystals for drugs (Tocris Bioscience) and confirmation of denosumab’s bone loss performance (Amgen).

NASA commissioned a study to determine how to maximize the economic value of the ISS. The September 2010 report identifies missing capabilities of the ISS supply chain: awareness of benefits and opportunities, lack of connection between basic and applied research, fair prioritization and user/investor apprehension due to lack of familiarity and expertise in space. None of these should be significant obstacles to commercial providers with competent business development strategies, integrated research programs, well-defined payload priorities for shared flights and support services to aid the uninitiated customers.

America’s pharmaceutical and biotechnology companies invested a record $65.3 billion in 2009 in the research and development of medicines and vaccines. The Congressional Budget Office has said: “Pharmaceutical firms invest as much as 5x more in R&D, relative to their sales, than the average U.S. manufacturing firm.” Based on this record and the narrow field of ISS payoffs to date, pharmaceuticals and biotechnology emerge as the leading potential market. If one-half of 1 percent of the 2009 R&D investment were channeled into space-based commercial payloads, $325 million annually could flow to space access providers from American sources.

Internationally, the agribusiness aspect of biotechnology has experienced some growth in China. China conducted first-generation select breeding of 87 “space vegetables,” expected to enter the market in 2012, as a means to increase production.

The longer-duration manned platforms are well suited to the pharmaceutical/biotech market, allowing ample mission time for most biological processes to complete and offering crew support as needed.

Materials and industrial processing would seem to be a prime area for commercial exploitation, yet less than 20 percent of the ISS experiments fall within this category. The experiments tout their potential for commercial Earth applications, but there is no published indication of commercial ventures to date.

The semiconductor industry has products well suited to space processing. Semiconductor production can use the vacuum of space to mitigate its inherent susceptibility to contamination and microgravity to enable the usage of thin high-quality films of needed compounds. The high cost per kilogram of everyday Earth-produced chips could make space-based chips competitive as mass-sensitive launch, in-orbit and recovery costs are reduced.

Overall the materials and industrial processing area is in a basic research phase with little interest from potential markets like the semiconductor industry to invest in space-based enterprises. It offers little evidence of becoming a rapidly growing market in the near-term.

Early this century, satellite imagery became widely available with the advent of affordable, easy-to-use software and access to satellite imagery databases. Since then, the satellite imagery business has developed into a semi-commercial enterprise, restricted somewhat by government security concerns, and sometimes funded as a public-private partnership. While the ISS hosted an Agricultural Camera, satellite imagery has relied upon custom-designed buses, and there is little motive for this to change in the near future.

There is no way to determine the commercial potential of space with any accuracy; historically the estimates offered by industry experts have varied enormously and tended toward the optimistic. Jerry Grey of Aerospace America once predicted annual revenues for materials processing alone would account for $10 billion to $20 billion by 2000. Milton Copulos, a prominent expert on natural resource economics, wrote, “By the year 2000, those space-manufactured products already planned are expected to generate annual sales of over $65 billion.” As we now complete the first decade of the 21st century, the commercial milestones predicted for 2000 still will not be attained in the near future. But with the ISS’s National Lab stimulating basic research, a host of entrepreneurs striving to develop markets, and several market niches being efficiently filled by new and traditional vehicles, conditions are primed for significant growth in commercial payload traffic. A handful of pharmaceutical or materials processing “discoveries” could turn that growth into a real surge.

 

Walter Mirczak is an independent mission concept and systems engineering consultant with over 35 years of domestic and international experience in the aerospace industry. He served as a subject matter expert at Northrop Grumman Aerospace Systems until 2009 and will be presenting a paper at the 2011 IEEE Aerospace Conference in March.