MARINA: Privately Owned Space Station Concept

NASA and private companies are actively exploring a commercially owned and operated successor to the International Space Station (ISS) upon its retirement. However, cost remains a stumbling block, and state of the art costing methods are still tuned for contractors and government agencies. For private investors interested in commercial human spaceflight, there is a need for new modelling techniques which integrate demand modelling with new cost models to support investment decision making. This is especially critical because important model inputs, such as projections of future launch costs, impact both the demand and supply sides of a commercial space opportunity.

The integrated investment decision model I developed to study such questions was used in our 2017 NASA-sponsored study for a private space station: the MAnaged, Reconfigurable, In-space Nodal Assembly (MARINA). MARINA’s main activity is space tourism via its anchor tenant, a luxury Earth-facing space hotel. Secondary activities are the rental of serviced berths and interior rack space to companies wishing to provide services to other MARINA tenants and users.

The starting point for modelling was to select appropriate anchors and uncertainty ranges for model parameters. These drive an ensemble of interlinked models of demand for space tourism; berth / rack leases; construction costs; operating costs, and launch costs. We simulated exogenous and endogenous events, including agent decisions and interactions among model components. The models drive a 20-year cash flow forecast, condensed to a Net Present Value (NPV) using a conservative 20% discount rate. A Monte Carlo of the NPV’s samples the uncertain variables and yields a statistical distribution of Expected NPV (ENPV). Our baseline control case without real options estimated the ENPV range to between -$3 billion to +$3.6 billion, with probability 90%. The real options were then enabled, simulating the decisions of agents to activate pre-emplaced options in response to actual events. The best result with real options was an improved ENPV range from +$0.2 billion to +$3.9 billion with probability 80%, demonstrating commercial viability.

This work demonstrates the application of real options to the simultaneous modelling of demand and lifecycle cost drivers for complex space systems while retaining the realism of uncertain input variables and flexible, path-dependent strategies by rational agents. The approach facilitates the concurrent design of business strategies and space system designs by helping the architect to discover, calculate and communicate net present value, ultimately overcoming existing roadblocks and contributing to a “GO” investment decision by a private investor.

MARINA received the First Place in Graduate Division Award at the 2017 NASA RASC-AL Forum. For more information please refer to the paper presented at the International Astronautical Congress (2019), titled "Investment Decision Model for a Commercially Owned Space Station in Low Earth Orbit".

Figure: MARINA was designed to be modular and expandable, providing "Real Options" to the developers to start small and then expand as needed to meet increases, if any, in the highly uncertain market demand.