11 Finance________________________ Finance and cost constraints play a key role in the realization of any project. The high costs and low revenues of existing space programs mean that few commercially viable space enterprises exist today. These facts mean that most of the worlds space projects are funded from governmental funds on political, science, or military grounds. Power generation produces huge revenues and could be one area where space projects could justify their high costs. This chapter aims to analyze the financial scenarios whereby a space solar power program could be a viable business proposition, and outlines how this scenario could be achieved. The main questions answered by this chapter are: 1. What are the costs of such programs? What are the cost sensitivities ? 2. Are there commercially viable markets for space solar power? What is their estimated value? 3. Where can we get the funds necessary to realize such programs? 4. What are the major factors which could affect investors confidence in the Intematioanal Solar Power Organization? 5. How can ISPO stage programs to maximize investor confidence? 6. Which sources of finance should we utilize for different ISPO programs? 7. Under what conditions will space solar power be economically viable? 8. When will such programs break-even? 11.1 Costing and Economic Analysis This section undertakes a general costing and sensitivity analysis of first: early commercial uses of beamed power for space based users, and second: full scale space to Earth commercial power beaming. Since space based early commercial uses stand alone as a beamed power application independent of space to ground power programs, the analysis extends to consider the commercial viability of such projects, and the factors important to such viability. 11.1.1 Space Based Early Commercial Uses - Costing and Viability This section analyses in broad terms the cost and viability of some of the early commercial uses of beamed power identified in Chapter 3. Unfortunately, the scope of this summer's study does not allow a detailed analysis of each market identified, its value and possible revenue flows, since the market research data is broad based and largely conceptual. Therefore, this section assumes a baseline value for power delivered to a customer in space of $1000 per kilowatt-hour (kWh) in the near term, at present day US dollars. This is based on an analysis by Karl Faymon of NASA Lewis Research Center, giving the cost of power in 1989 dollars at just under $800 per kWh, and other higher figures quoted in the literature (up to $4000 per kWh has been quoted). Where further analysis of a given space power market is warranted or possible, this baseline figure is adjusted: it is certain that some power markets are considerably more valuable than others. In particular, the value for the mid to long term is taken to be $200 per kWh, since technological advance will undoubtedly lessen the cost of space power subsystems. The Net Present Value Given the uncertainty inherent in the market data and other cost parameters to be used for this analysis, the absolute value of the output or Net Present Values (NPV) of any costing model will be unreliable. Moreover, the models we will use will necessarily be simplistic due to the potential scope of this summer's study. However, we may usefully use these models and approximate figures to calculate the NPV for die commercial project, and then to analyze the results in terms of sensitivity of the output NPV versus the various input parameters, in order to draw general conclusions about commercial viability.
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