Gerstenmaier: LEO Commercialization Requires Space Industry to Be Innovative, Nimble

Gerstenmaier: LEO Commercialization Requires Space Industry to Be Innovative, Nimble

NASA’s Bill Gerstenmaier said on Wednesday (February 3) that the key to successful commercialization of low Earth orbit (LEO) is for the space industry to become more innovative and nimble.

Commercial satellite systems like Iridium that were intended to provide voice and data services to underserved parts of the globe lost out to undersea fiber optic cables and terrestrial cell phone towers because the aerospace industry moved too slowly, he argued.   “We have to be extremely nimble. … We as an industry were so slow in doing that we got whacked by a terrestrial market that could turn and deliver faster.”

The same threat hangs over potential use of the near-zero gravity environment available in LEO for applications in areas such as pharmaceuticals.  Electrophoresis was once envisioned as a promising area for space commercialization because without gravity much purer substances can be produced.  However, back on Earth, genetic engineering advances made it possible to do almost as good a job.  “We could create a 99% pure insulin on orbit, [but] they could create a 98% pure insulin through genetic engineering.  That won because they could turn to the market faster and be responsive.”

Gerstenmaier, the head of human exploration and operations at NASA, reiterated two points that he and other NASA officials have been stressing in recent months.  First, it is the commercial sector’s responsibility, not NASA’s, to find the demand for future LEO space stations.  Second, future LEO space stations are not likely to resemble the International Space Station (ISS), but be smaller facilities with narrower purposes and they could build on existing or planned spacecraft.

For example, spacecraft that deliver cargo to the ISS can continue to perform additional missions once they depart, he suggested.  Russia’s Progress cargo spacecraft are already used in that manner, sometimes remaining in orbit for days or weeks after undocking from ISS to perform remote sensing or other tasks.  Similarly, U.S. commercial cargo and crew vehicles — Cygnus, Dragon, Dream Chaser, and CST-100 Starliner — could do that or perhaps two such spacecraft could be docked together to serve as a mini-space station.

Decisions on what is needed should be based on what the commercial market requires.  “Don’t assume what we need. … listen to the demand” and be creative in meeting it, he urged.

The panel discussion at the second day of the FAA’s Commercial Space Launch conference, moderated by Michael Lopez-Alegria, focused broadly on commercialization of LEO.  George Washington University professor Henry Hertzfeld reviewed the “waves” of interest and investment in LEO space commercialization since the 1980s that fell victim to the space shuttle Challenger accident and the “technology bust” at the turn of the century.  “We’re in a new wave” now, he said, “let’s hope it continues.” “We’ve been riding these waves and, even if they stagnate, every new one has been larger and bigger and I think that will continue into the future.”

Tauri Group Managing Partner Carissa Christensen explained that investment, supply and demand are the three critical elements of a LEO economy.  She delineated the types of investors interested in commercial space – “advocacy” or “affinity” investors with personal enthusiasm; “strategic” investors with a related business looking for associated or aligned benefits like improvement of an existing product; and “financial” investors looking for return on their investment.  The supply and demand of commercial LEO activities contemplated today vary widely.   Overall, the challenges of this emerging economy are more business than technical, she concluded.

John Elbon, Vice President and General Manager for Space Exploration at Boeing, discussed some of those business challenges.  Boeing was the prime contractor for building ISS and supports it today through an engineering services contract.  It is also building one of the two commercial crew vehicles (CST-100 Starliner) that will begin taking crews back and forth in another year.

To illustrate what it would take to have a commercial space station, he postulated building a comparatively simple station, more akin to Skylab than ISS.  He theorized that it might cost about the same as Starliner ($2.5 billion) to which operations costs would have to be added.  He put the annual cost of operating ISS at $4 billion a year ($2.7 billion from NASA plus $1.3 billion from the other partners).  Imagining those costs could be cut in half, he used $5 billion as the amount Boeing would have to invest.  “If I took that to the Boeing board and said I want to invest $5 billion in building this station, they would look at me…” and want to know where the return on that investment would come from.  They would want a minimum of a 15 percent return, which would be $750 million, plus annual operating costs of perhaps $2 billion a year, meaning revenue of $2-3 billion per year would be needed, he continued.   He listed a number of experiments being conducted on ISS today that have promise, but not enough without more R&D investment than is likely to come from the corporate world.  The possibilities need to be pulled together to  “create a revenue stream that’s single digit billions as a minimum to close a business case that would allow us to then put a capability like this in orbit.”  He added that tax credits could make a significant difference.

Gerstenmaier also used the opportunity to argue in favor of extending ISS beyond 2024.  The Obama Administration proposed extending ISS operations from 2020 to 2024 in 2014.  Congress agreed and codified it in the November 2015 Commercial Space Launch Competitiveness Act.  Most of the other ISS partners — Russia, Canada and Japan — have agreed, but the European Space Agency (ESA) is still considering the matter. 

Getting agreement on operating ISS beyond 2024 may be challenging.  As Elbon said, it costs $4 billion a year to operate ISS.  How long the ISS partners are willing to invest that level of resources in ISS is questionable.   For example, aerospace industry expert Tom Young said at a congressional hearing that was taking place at the same time as the panel discussion that he does not think NASA can afford to both operate ISS and move forward with human exploration beyond LEO.

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