Maximising the economic opportunities of deep space
Dylan Taylor Colliers International, USA
For a successful economic ecosystem to thrive, two things must be present — supply and demand. Supply in a deep space economy is a complicated input due to the extreme costs of bringing economic inputs into space and the lack of existing in-space infrastructure. Therefore, in order to build a successful deep space economy, the key first step will be to address these two areas.
Not surprisingly, the most notable deep space companies to date have been the so-called asteroid mining companies: Planetary Resources (PRI) and Deep Space Industries (DSI) being the most prominent. Previously, Kepler Energy and Space Engineering (KESE) announced plans for asteroid mining as well, but they appear to have stalled due to a lack of available funding. Both PRI and DSI seem to have pivoted from pure play asteroid mining to position themselves as space resource companies, focusing in the near term on identifying sources of water that could be made into fuel in-space. This pivot could be why they have been more successful in attracting capital.
The Duchy of Luxembourg has famously put capital behind this category and seems committed to ensuring that the industry develops. Earlier in 2017 it invested US$29 million in Planetary Resources and also agreed to fund a spacecraft for Deep Space Industries under certain unspecified conditions. The motivation appears to have been two-fold: to create jobs in Luxembourg and to continue to accentuate its brand as a pioneering, forward-looking sovereignty that helped launch the global satellite industry. But short of a sovereign nation, time frames for financial returns far exceed more typical investors such as Angels and Venture Capitalists (VCs), limiting the capital available for such opportunities.
Since in theory all of humanity would benefit from an in-space resource mining capability, a look to history could perhaps better inform us of successful models in the past. For example, when the trans-continental railroad was being contemplated in the United States, a classic chicken and egg scenario emerged.
Space resources and space manufacturing are promising areas for deep space investment
Regional rail providers had limited and isolated markets that were successful but not scalable.Their costs of operation were plagued with inefficiency due to a lack of standards and scale. To solve these issues, the regional providers required national standards and national connectivity which everyone agreed would be a boon for all involved.
However, how could each regional provider possibly pay to connect large swaths of land with essentially zero population and no hope of recouping their individual investments unless all the other players opted in as well? No one provider could justify it, even though each provider would benefit dramatically.
In 1863, the US government realised that it could dramatically accelerate its emerging economy and structured a unique financing programme. Under the proposal, the US Government did not fully donate money for the transcontinental railroad but provided money for completion of each mile, while simultaneously underwriting bonds that were sold in the private market for the construction of each mile. The underwriting was in the form of mortgage bonds, issued by the railroad but guaranteed by the US government. The programme was a combination then of strategic investment at a scale no one investor could possibly put together, and the creation of a railroad bond market underwritten by credit superior to any private institution.
Once the financing was in place, the railroad rapidly took off and remarkably, was completed less than six years later. While the 1870s were characterised by stagnant economic growth as the ravages of the civil war were repaired, the 1880s and 1890s represented the largest economic expansion in percentage terms in the history of the US.
Much of this economic growth has been attributed to the completion of the railroad and the foundation it laid for truly national commerce. This example is useful in that it demonstrates that capital alone doesn’t necessarily need to be gifted by sovereigns in order for infrastructure to be built. Rather, with sovereign credit, underwriting the riskiest time frame of investments, and/or underwriting at a massive scale, they can create the impetus for large projects to become viable.
Given the need for large scale infrastructure in space, leveraging in space mining, as well as other capabilities necessary to a deep space economy, I would like to suggest a new term, ‘Deep Space Posts’ (or DSPs). Similar to any frontier that has been settled by humanity in the past, DSPs are the modern day trading posts. They are one part ‘pick and shovel’, meaning in-situ resources to enable exploration, and one part gathering points in the frontier for refuelling and commerce.
Given the vastness of deep space and the enormous benefits to scale, DSPs are practically the only way that a deep space economy can emerge. They are the necessary enablers. I would suggest that DSPs are the types of large scale projects that sovereign nations should consider supporting and/or underwriting. Their benefits downstream to a vibrant deep space economy can’t be underestimated.
Next, let us discuss a few of the key enablers for DSPs to both emerge and to be successful.
Space manufacturing
The commercialisation of non-chemical propulsion could happen sooner than expected
In addition to space resources, space manufacturing appears to be another promising area for deep space investment. Space manufacturing has been pioneered by the additive manufacturing demonstrated in microgravity on the International Space Station (ISS) by NASA partner, Made in Space.
What remains to be demonstrated is to refine the material used and scale up this technology, such that building blocks for habitats as well as functional machines can be manufactured. This will require refinements to 3D printing technology to enable additional materials, such as metals and ceramics, to be used but just as importantly it will require a resource mining capability to augment supplies brought to space from Earth.
Forms of self-replicating machines, as envisioned by Eric Drexler and Richard Feynman, would vastly accelerate the deep space capability. These wouldn’t be autonomous, of course, but rather 3D printers capable of creating component parts for additional 3D printers and only being modestly supplemented by highly specialised parts from Earth.
Given the rapid progress 3D printing has already shown in a very short period of time, there is optimism this could be a larger sector than even in-space resource mining in the medium term. For example, it has been widely reported that optical cable can be manufactured in micro-gravity and yield superior transmission capabilities. Since optical cable is a multi-billion euro market it could lead to a very large funding mechanism to dramatically enhance in-space manufacturing capabilities.
Deep space propulsion
With respect to deep space propulsion, SpaceX seems to be keenly focused on pioneering a Mars-based propulsion system and, to do so, it will likely need to raise even more third party capital on the order of several billion dollars. It remains to be seen if this investment can be recouped with the fees paid by future Mars settlers. There is likely to be a crossover point for deep space propulsion whereby chemical rockets give way to ion and/or nuclear based propulsion.
The impracticality of chemical rockets for travel anywhere more than 100 astronomical units (AU) from Earth is well understood. However, for the foreseeable future, the economics of space resource mining will allow for relatively easy and inexpensive refuelling. This, coupled with gravity assists, could allow for chemical based deep space propulsion to be practical for the next 20–30 years. However, with the recent advances in ion based propulsion, the commercialisation of non-chemical propulsion could happen sooner than expected.
Recently, a ‘nested’ Hall Effect design has been demonstrated at scale by the NASA Glenn Research Center, breaking previous thruster force records. While the impulse generated by the so-called ‘X3’ is still appreciably small, the nested design allows for multiple thrusters and is potentially scalability to large spacecraft designs.
Given the high specific impulse and the persistence of the acceleration, ion based deep space propulsion seems to be a leading candidate for commercialisation. Recent start-ups focusing on ion based propulsion in LEO include Accion Systems, a spin-off from MIT that has received US$7.5 million in venture funding from well-known VCs such as Shasta Venture, RRE, Slow Ventures and Founder Collective. Accion had previously secured several million dollars in financing from partnerships with the US Department of Defense. More exotic forms of propulsion such as nuclear and matter/anti-matter appear to be in the distant future from a commercial space perspective.
In-space communication networks
The Moon allows for the consolidation of space infrastructure at a fixed point in space
As deep space becomes more prevalent and additional infrastructure is created, in-space communication will be even more critical. Currently, deep space communication is constrained by ground station bottlenecks and frustratingly narrow bandwidth.
New protocols are emerging, the most promising of which are laser-based systems. A spin-off from Harvard called Analytical Space is focused on demonstrating this capability from LEO. The technology, however, could be used to build a laser-based deep space communications network that could be used for everything from data transmission, to positioning and navigation. This could even be leveraged by the scientific community on an outsourced basis for planetary science.
As we have seen with the terrestrial economy, all commerce is being converted to ones and zeros, including even manufactured items. It is clear that in-space bandwidth will have to be dramatically improved and that the economic viability for such a network, given the demand for its capability, is not too far distant.
Natalya Bailey, CEO of Accion Systems, holds one of the company’s propulsion systems for small orbiting satellites. With her is co-founder Louis Perna (left) and engineer David Tovani.
The Moon
With the US recommitting to the Moon in the re-launch of the US National Space Council, and the emergence of private companies, such as Moon Express and Astrobotic, coupled with plans announced by China, Japan and Russia, it is likely the Moon will be a large focus in the near term.
Many have argued that the Moon is critical to success in deep space. While I agree with that premise, I do so based upon the same arguments made for the emergence of DSPs. The Moon allows for the consolidation of space infrastructure at a fixed point in space. Given its proximity to Earth, and its own resources, it is likely the Moon will emerge as both the first DSP as well as the largest DSP as deep space becomes more prevalent.
I don’t see settlement being focused on the Moon however. The impetus for space settlement seems to be strongly focused on both exploration and diversification of humanity from a risk perspective. Other than for more tourist based ambitions, the Moon doesn’t really qualify on either dimension. I would expect Moon settlements to be organised around the DSP model and tourism, but not long term settlement.
With the Moon emerging as a DSP, a cislunar return capability will be critical. SpaceX announced last year its intention to fly private passengers on a cislunar return at an unspecified future date. Bigelow aerospace also recently announced its intention for a lunar orbiting hotel for tourists.
Given the need for both tourism and shuttling of people and resources to the Moon, I would expect an economically viable cislunar capability to emerge by the early 2020s. The most likely leader in this space should be SpaceX but certainly SLS and other deep space rockets could service this demand as well.
In conclusion, there is little doubt that deep space will be the ultimate destination of humanity’s compulsion to explore space. In order to create a deep space economy, the first key step will be to enable in-space resources and in-space manufacturing.
As the demand for deep space services increase, a virtuous cycle that funds additional supply should emerge
Space resource companies are likely to focus on prospecting and mining of water, and in-space manufacturing should allow for rudimentary parts manufacturing. These two capabilities should in turn lead to the establishment of DSPs and the coagulation of basic infrastructure in-space. From there, refinements to deep space propulsion, deep space communication and in-space mission capability can be better established. This should enable even bolder visions for both space resource mining and space manufacturing capability, which should in turn make space settlement both desirable and practical.
As the demand for deep space services increases, a virtuous cycle that funds additional supply should emerge. I would expect this to play out in the 2020s and early 2030s. This, coupled with a Moon-based economy, should lead to a multi-trillion euro off-world economy by the end of the next decade and an economy on par with the European Union or the North American Free Trade Agreement (NAFTA) region by the end of the following decade.
In order for this vision to become a reality, however, sovereign nations will have to continue to play a role in underwriting some of the very long time frames involved in order for a return on invested capital to be realised. This could come in the form of direct investment or guaranteed underwriting of financing.
About the author
Dylan Taylor is an investor and thought leader in the space industry. A founding partner of the Space Angels Network, Dylan speaks regularly on matters regarding the future of the space industry and the space economy. He is a Crown Fellow of the Aspen Institute, Delphi Fellow of Big Think and a Young Global Leader of the World Economic Forum. He holds an MBA from the University of Chicago.
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