value per satellite. This is accomplished by disounting the salvage value and disposal ’’cash flow” stream back to the date of initial operation of the first full-scale satellite yielding a present value of the net program salvage values. (A component of this cash flow stream is the present value of the disposal cost, of $0.03 billion, associated with each satellite that is not salvaged.) There are 26 full-scale satellites that are salvaged over a 30-year period in the indicated scenario and 34 full-scale satellites that have to be disposed of. The present value of the ’’salvage value cash flow stream" (at a 4% discount rate) is approximately $22 billion. An equivalent annuity may be established which over the 30-year time period (60 satellites) has the same present value as the salvage value cash flow stream. This annuity, approximately $0.64 billion per satellite or about 6 percent of the satellite capital cost, corresponds to the average net salvage value per satellite. It should be noted that this value could increase substantially if salvage uses are found for the 34 satellites that are disposed of in the scenario presented. 5.3 Programmatic Implications There are two significant programmatic implications of positive SPS demonstration satellite and full-scale satellite salvage values. The first deals with the salvage value of the demonstration satellite. Although the salvage value of the demonstration satellite is very much smaller than the salvage value of the full-scale SPS satellites, it is probably a more important consideration from a programmatic standpoint. The second programmatic implication deals with the effects of salvage value upon the cost of SPS-generated electricity and hence on the perceived benefits that development of the SPS concept would provide. The implications of the demonstration satellite salvage value are shown in Figure 5.2. In advance of performing the demonstration research phase, it cannot be known that this effort will be successful; that is, that upon completion of the
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