development costs, even in the event that the SPS program does not continue into an implementation phase. This effect becomes very dramatic when one reaches the decision to proceed with the demonstration phase. At this point the net cost of the demonstration is CD - BLTS rather than CD. The difference which the term BLTS ma^es *n the decision to pursue the SPS concept through the demonstration phase is profound indeed, especially as the magnitude of is on the order of 80 percent of the magnitude of C^. Finally, the salvage value of full-scale SPS satellites can have a strong impact on the perceived benefits of development of the SPS concept. For example, assume that without salvage the levelized cost of power from an SPS is 50 mills/kWh. Assume also that the cost of power from alternative energy sources is 55 mills/kWh. One would then perceive that a cost savings benefit to society would obtain from the use of SPS-generated energy versus alternative sources with a magnitude of 5 mills/kWh. If, however, the SPS has a salvage value equal to 10 percent of its capital cost, this salvage value will reduce the levelized generation costs for the SPS system by about 5 percent, resulting in a net 50 percent increase in the perceived benefit of the SPS. Although it may not be prudent from the point of view of a regulated utility to reduce its energy rates in accordance with the expected salvage value for SPS, incorporation of this value in the federal government’s planning process is entirely appropriate.
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