14.6. 4 CAPITAL AVAILABILITY As discussed elsewhere in this report, the SPS program has the potential to produce power at rates economically competitive with other types of power plants projected for the 1990's. This is true even though the SPS program is very capital intensive (i. e., the major portion of the expense of the SPS program is the procurement and installation of plant and equipment). The SPS is able to economically compete with less capital intensive power plants only because the SPS is much less expensive in the operational phase of the program. However, since the funds available in the capital market are limited, the large SPS capital requirements could hamper the implementation of the program. It is somewhat analogous to the situation of the space agency in the early 1970's when comparing various space transportation options. Cost benefit analyses showed that a partially reusable space shuttle was more economical than expendable rockets and a fully reusable space shuttle was even more economical. Even though the fully reusable version was the most economical, the initial cost was simply too high for the agency budget, and the partially reusable version was chosen as a compromise. In the 1990's an SPS will probably require two to four times the initial plant and equipment expense of other types of plants. Already, even without SPS, the utility industry is concerned about the availability of funds to sustain the required growth in electrical capacity. However, the utility industry is accustomed to large capital requirements and, in fact, is the most capital intensive of all United States industries, accounting for approximately one-fifth of all United States industry plant investment. Many potential solutions to the financing problem are being investigated. These include increasing the attractiveness of external investment by such plans as tax free dividend reinvestment and increasing internal cash generation by increasing the investment tax credit, more rapid depreciation rates, allowing a tax deduction for dividends, etc. At any rate, the problem of power plant financing is not peculiar to the SPS; to supply the future electrical power needs of the nation, by whatever means, requires that ways be found to meet large capital requirements. 14. 6. 5 GENERATION COST The SPS generation cost is given in Table 14-4 and Figure 14-9 broken out by major WBS cost elements. For the typical SPS concept studied, the 1995 total generation cost in 1976 prices is estimated to be 62 mill/kWh. The largest single contributor to generation cost is the satellite itself which corresponds to 21. 9 mill/kWh or 35 percent of the total. Although not shown,
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