graphite fiber could become one of the highest material cost contributors to the SPS. Although no insurmountable materials problems are currently evident, materials definition for the SPS (both as to quantities and specific kinds) is in a fairly primitive state. Similar analyses will be required as the detailed materials requirements become better defined. B. INSTITUTIONAL ISSUES The objectives in assessing institutional issues related to SPS have been to (1) define key institutional interfaces, (2) determine how institutional mechanisms would have to change to permit SPS development and (3) establish an information base on these issues. Four major issue areas— financial and management scenarios, regulatory issues, utility integration and insurance for development and operations—were identified as reflecting major institutional interfaces which would clearly influence the SPS, or which would be most directly impacted by SPS. 1. Financial and Management Scenarios16 30 The financial attractiveness of a project depends on the relationship between anticipated rewards and expected risks. Potential problems, or the downside risk, would play a major role in SPS project financing, and at this time is considered high. Four categories of downside risk that have been considered are: • SPS malfunction • Potential international repercussions • Opportunity costs associated with alternative systems • Engineering costs/overruns The SPS Reference System scenario assumes implementation of 60 units in the 2000-2030 time period. Cash flow analyses under several sets of assumptions (including power demand and availability, price of electricity, and R&D costs) produced preliminary "best estimate” returns on investment ranging between four and fifteen percent. The cost of electricity at the entry point
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