Launch Cost and Cadence Are Key Enablers for the New Space Economy
Journey through the history of rocket technology to build excitement for the future of the space economy
TL;DR — God bless Elon for being the driving catalyst behind the New Space Renaissance. Reusing the Falcon 9 first stage DID deliver on the promise of dramatically lower launch costs. Reduced launch prices have opened the New Space frontier of proliferated LEO small satellite mega-constellations that provide “Space for Earth” services. There are debates about the next major enabling technology — is it super heavy-lift (scale efficiencies in weight delivery) or a 10x more frequent launch cadence with aircraft-like operations (and of course a reusable second stage)? We believe the next decade will catalyze the tipping point to grow the “Space for Space” economy beyond the realm of governments and science missions. Join me as we walk through the history, the science and current technologies, and finally the interesting bets to make in an expansive future on the final frontier.
Expendable vs Reusable Rockets
The cost per kilogram in delivering payloads safely to orbit lay at the heart of the friction that prevented private industry from commercializing space. Reusable rockets emerging victorious in the great debate on cost was not always a foregone conclusion. Two decades ago, vigorous discussion abounded regarding the performance hit of designing for reusability, canceling any cost benefits. Let’s unpack that statement a little. The “performance hit” of optimizing a design for reusability translates into less payload and/or a lower orbit. A reusable rocket engine design will carry more safety margin. Whereas an expendable rocket engine design can be pushed to its limits, operating at much higher temperatures and stresses. Why? It’s only got to hot fire 4 times in its life! (“Hot fire” is the vernacular for lighting a rocket engine combustor. In this example, it’s shorthand for saying the engine will turn on for 3 qualification tests and once at lift-off.). That’s to say nothing of the fuel used to decelerate a returning booster that would have otherwise been used to reach a higher orbit (or carry more payload). On top of all those design considerations, many doubted the lower cost projections for reusable rockets were real.
Approximately fifteen years ago this great debate manifested itself into one partnership (United Launch Alliance) born to service one government program (Evolved Expendable Launch Vehicle) vs. one scrappy startup (SpaceX). The goals of the EELV program were two-fold: make expendable launch vehicles that were affordable and reliable. When it comes to reliability, ULA has hit it out of the park — the Atlas V is the only rocket ever manufactured to boast a 100% mission success rate. That reliability is why the US government continued to pay handsomely for ULA’s services. The old design paradigm for satellites was multi-year, billion-dollar, school bus-sized projects going to geosynchronous orbit. Losing one satellite would be devastating for national security capabilities. And so the ULA monopoly persisted with very little incentive to innovate. While many point to NASA’s Commercial Orbital Transportation Services (COTS) program as what enabled SpaceX to keep going during the early years, it’s worth noting that SpaceX did compete with ULA for launching DOD payloads too. Aerospace professionals were skeptical of SpaceX’s cost numbers because the only reusable launch vehicle they had data for was the space shuttle — as seen in the chart below, reusable rockets weren’t always cheap!
The first reusable rocket was the space shuttle. Technically considered a “stage and a half” design thanks to the solid rocket boosters, the shuttle was supposed to be an evolutionary step towards the ultimate goal of a single-stage-to-orbit space plane. The notable technology achievements for the shuttle include the first ceramic tile-based heat shield and the first oxygen/hydrogen fuel-rich staged combustion cycle engine, the Space Shuttle Main Engine (SSME).
Performance vs Cost
The shuttle was a performance-oriented design. For 30 years, NASA flew an expensive (high maintenance) marvel. For example, the propulsion had a requirement of a 50 mission life, yet the original Rocketdyne engines were replaced every one to two missions due to issues with the turbopumps. In the ’90s, Pratt Whitney redesigned the turbopumps and improved life to 10–12 missions. The top two failure modes were addressed: the bearing technology was upgraded (ceramic ball bearings) and the high-pressure fuel turbine blades were hollowed out to deal with thermal shock induced cracking from the start transient (-400°F to 2,000°F in a half-second).
The key innovation that enabled the space shuttle to be reusable was also the reason it was so complex to maintain. The heat shield tiles required meticulously detailed inspection, taking hundreds of hours to complete. Many of the tiles had a unique geometry, and all were distinctly numbered. If one needed repair, it was done by hand.
The operational costs of dismantling the engines for check-out, combined with the detailed thermal protection system maintenance and repair, meant the fastest turn-around-time between launches for the Space Shuttle was ~3 months. (By comparison, the Falcon 9 turn-around-time is ~1 month.) All those “hidden cost” personnel hours to refurbish contribute to 90% of a reusable vehicle’s launch costs, as shown in the famous “iceberg chart” below.
If you made it through all that rocket history, you might be asking yourself the following — how did SpaceX do it? How were they able to make an affordable reusable launch vehicle? Like any great entrepreneur, Elon prioritized where to focus R&D spend to get to a minimal viable product. One of the best early design decisions was to down-select the simplest rocket cycle, the gas generator (GG). And instead of developing the Merlin engines from clean-sheet, SpaceX leveraged an existing NASA design: the Fastrac engine. Designed by NASA to be low-cost and reusable, it was the perfect starting point. (Of course, SpaceX has since redesigned the engine to increase performance and for further improvements in manufacturability and cost.) Engine development is the highest risk part of a new rocket design. SpaceX chose to minimize that risk so they could focus all of its R&D on developing the technology necessary to vertically land the booster stage. The critical cost inflection point was nailing the technology for vertical landing of the rocket. Per today’s stats on SpaceX’s website, they have flown the Falcon 9 rocket on 125 missions, with 85 booster landings and 67 re-flown rockets.
Pumping Up Earth’s Launch Numbers
Last year, globally, there were 114 total rocket launches [per BryceTech’s 2020 Orbital Launch Year in Review report]. Of those, 32 launches were American and 26 belonged to SpaceX’s Falcon 9 (in its most prolific year yet). And still, as a species these are rookie numbers. Humans need to pump these numbers up!
Believe it or not, taxpayer-funded R&D laid some of the groundwork for high operability rockets. Many space enthusiasts will cite the McDonald Douglas Delta Clipper (DC-X) program as the first vertical rocket landing. They are technically correct, but one of the real goals of the program was demonstrating a quick turn-around-time and aircraft-like operability. In 1996, the DC-XA demonstrated a 26-hour turn-around time. (For comparison, the Shuttle’s turn-around time was 2–4 months.) To be fair, the Delta Clipper was a hopper vehicle to demonstrate feasibility for reusable vertical landing rockets – it did not reach altitudes or speeds anywhere near those of launch and re-entry. But it did fire its rocket engines many times without maintenance and it demonstrated the controls algorithms necessary for vertical landing. In 2021, there are three companies that have successfully flown vertical landing rockets: SpaceX (orbital), Blue Origin (suborbital), and Masten Space Systems (winner of lunar lander XPRIZE).
Not all booster stage reusability concepts require vertically landing the rocket. In fact, as announced earlier this week, RocketLab plans to catch Electron first stages with helicopters soon! ULA is also considering a modular reusable design for Vulcan. The booster engine pack would jettison from the stage, deploy an inflatable re-entry heat shield, and eventually pop a parachute for helicopter recovery. This plan is a few years down the line, as NASA is gearing up to test the inflatable heat shield in 2022. (#Patreon4NASA. ULA is probably giving them funds for this, but the cool factor alone makes me want to chip in too!)
Onward and Upward
Is SpaceX’s next launch vehicle, a fully reusable super heavy-lift, poised to become the dominant business model framework? Starship offers a dramatic increase in capacity and an associated predicted decrease in cost. Betting on Starship is a bet the space industry will move further towards the ride-share model. The contrarian argument would be that SpaceX is building the Airbus A380 of launch vehicles — impressive engineering that no one wants to fly. Is further launch cost reduction worth sitting in a holding pattern for many months while enough ride-share partners join?
Below, I’ve taken the data from the launch cost chart and included a new point estimating Starship’s cost [Ref]. There are three other changes: I’ve included medium-lift launch vehicles, made the y-axis a log-scale, and changed the SpaceX-related data points to orange. What’s striking is that SpaceX is the only rocket company thus far to appreciably drop the cost of launch by over an order of magnitude. What’s exciting is that they are working to do that again!
Of course, SpaceX has a goal for increased repetition rate with Starship, but to get there will require improvements in its tile thermal protection system. Like the shuttle, Starship’s tiles will require detailed inspection before each launch. Will an automated inspection solution be enough to increase its launch cadence? (They need to launch an orbital mission first before any future conjecture on the design is warranted!)
Is there another model for how to think about the future of launch? Seattle-based startup STOKE Space Technologies thinks so. I had an engaging conversation with STOKE co-founder and CEO Andy Lapsa who said the framework they use is “low-cost on-demand access much closer to final orbit.” They plan to deliver this capability for customers through an actively cooled thermal protection system for their fully reusable second stage. Their goal is an order of magnitude increased cadence by minimizing post-flight inspections and maintenance operations.
“Space for Earth” vs “Space for Space”
The framework Prime Movers Lab uses to think about the space economy focuses on who the end-beneficiaries are for a given capability. (All credit for this super helpful framework to my partner and the lead of our space investing practice, Anton.) Examples of “Space for Earth” include things like DirecTV, GPS navigation, and weather satellites. Examples of “Space for Space” include on-orbit refueling, in-situ resource utilization, and the establishment of a human far-off-world permanent presence.
The reduced cost of launch coupled with the improvements in compact satellite design (eg electronics size and power reductions benefitting from Moore’s law) are giving rise to low-earth orbit (LEO) satellite mega-constellations, the largest market segment in the near-term “Space for Earth” economy at $22.5B and growing (per Quilty Analytics report on Emerging Technologies for DIU). Satellite telecommunications are moving away from legacy revenue models of video or voice and towards data (consumer broadband internet, mobile aircraft internet, Internet of Things (IoT) applications, on-orbit computing, etc). Investors at Morgan Stanley have commented on the value of SpaceX + Starlink earlier this week — dubbing the launch + satellite product offering a “double flywheel of technology development”. Of note, RocketLab and Phantom Space are also pursuing spacecraft manufacturing as well. (A comment on the growing earth observation market — it’s 1/10th the size of the opportunity in telecommunications.)
Space tourism is another near-term growth segment in the “Space for Earth” market. Beyond just the companies offering humans a ride, the tourism infrastructure is expanding. The first mover in the commercial habitat space is Axiom, which will be able to leverage the substantial capabilities of the International Space Station while they build out their own. NASA’s Commercial LEO Destinations aims to increase the number of commercial space station providers, with proposals from Blue Origin/Boeing/Sierra/Redwire and Lockheed/Nanoracks. There are several nascent segments gaining recent momentum, such as in-space manufacturing with several startups pursuing approaches from manufacturing ZBLAN fiber optic cables (e.g. Varda Space Industries) to bio-manufacturing of retinas on the International Space Station (Lambda Vision). NASA’s LEO Opportunities: In-Space Production Applications outlines other application areas.
Where in the space economy ecosystem does one draw the line to think about “Space for Space”? While in the near term, offerings like on-orbit servicing for satellite life extension (Northrop Grumman, Space Logistics), propellant refueling depots (OrbitFab), and space situational awareness benefits the “Space for Earth” constellation operators, long-term these are the building blocks of a robust “Space for Space” infrastructure. (If you missed it last week, my partner Christie had an amazing post on Orbital Debris. We also hosted a lively webinar on the topic, summarized here.) In-space manufacturing is another segment with both short and longer-term applications. In June 2020, Redwire acquired Made-in-Space, a provider of additive manufacturing capabilities on orbit. Kleos Space is also leveraging a capability they are developing for deploying large-scale antennas into a capability for in-space manufacturing of large carbon fiber structures. We have also seen promising technologies for beaming energy over long distances, and are excited about the growth in that segment.
We believe the next decade will contain the launch technology tipping point to grow the “Space for Space” economy beyond the realm of governments and science missions. This inflection point will open up the investment opportunities to fund the technologies that move our species forward while preserving our precious home.
Prime Movers Lab invests in breakthrough scientific startups founded by Prime Movers, the inventors who transform billions of lives. We invest in companies reinventing energy, transportation, infrastructure, manufacturing, human augmentation, and agriculture.
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