Calculating the Economics of Reusable Launch Vehicles
The mathematics driving the resurgence of reusable rockets is more nuanced than it may seem. As it turns out, the economic considerations behind making reusability a core element of your business can be as complex as the rocket science itself.
In February, SpaceX pulled off one of the most impressive feats in modern rocket science with its first test flight of Falcon Heavy. The hulking behemoth — 230 feet tall and powered by 27 engines — ejected a dummy payload into orbit before its first stage cores twirled back to Earth for a synchronized, ballet-like landing. The launch captured the attention of the world: Is this what the future of spaceflight looks like?
With 23 successful first stage recoveries under its belt, SpaceX has proven that reusability is not just a way to save a couple bucks. The advantages it brings over traditional expendable vehicles has completely flipped the industry on its head, forcing every rocket company to take a beat and reconsider the way they approach launch as a business.
But the mathematics driving the resurgence of reusable rockets is more nuanced than it may seem. As it turns out, the economic considerations behind making reusability a core element of your business can be as complex as the rocket science itself.
One Step at a Time
From the perspective of Firefly Aerospace CEO Tom Markusic, it just doesn’t make sense for a new launch startup to focus exclusively on reusability. Building an expendable vehicle for the first time is hard enough, he says; adding in the technical challenges associated with making parts of it reusable is a risk that could cripple your business before it even gets off the ground. Markusic believes experimenting with reusable models should be left to more “mature” companies. “You can try to go straight to a reusable solution but the technological barriers you’re going to face are so much more significant than doing a conventional expendable vehicle,” he says. “I believe it would be somewhat reckless to try to fund a company right from the outset with a reusable vehicle.”
Despite SpaceX’s success with Falcon 9, a number of NewSpace launch companies seem to agree. Rocket Lab and Vector Space Systems, for example, have both designed expendable vehicles to serve the smaller mass end of the satellite market. “Even [SpaceX founder] Elon Musk, who is a really bold and decisive type of guy … started with the Falcon 1, not Falcon 9,” Markusic points out. “They built their way up and that’s the right way to do it.”
Falcon 1, an expendable dedicated smallsat launch vehicle, ultimately wasn’t profitable enough to “earn its share of the production floor,” SpaceX President Gwynne Shotwell admitted on stage at the SATELLITE 2018 Conference & Exhibition. But the lessons the company learned from those first few launches were a springboard for what would eventually become one of the most commercially successful rockets yet: Falcon 9. SpaceX then combined three Falcon 9 first stage boosters with a supersized payload fairing to create Falcon Heavy, now the world’s most powerful operational rocket. Reusability, it seems, is best approached in increments. According to Markusic, Firefly Aerospace intends to follow a similar path.
At the moment, its engineers are primarily focused on finalizing on the expendable 95-foot-long Alpha, which will be the company’s first vehicle to market. Behind the scenes, though, they’re already thinking about its reusable successor, Firefly Beta. According to Markusic, Beta has two potential configurations: “The most obvious … is to put three Alpha cores together and have something that looks like a Falcon Heavy or a Delta 4 — a small triple-core rocket where you just use the Lego pieces you already have,” he says. This design would increase Firefly Aerospace’s lift from 1 metric ton to Low Earth Orbit (LEO) with Alpha to 4 metric tons, giving the company a quick path to the medium mass market.
The alternative is to build an entirely new first stage with a larger diameter and redesigned engines. “That’s a little more daunting because big engine development costs a lot more — probably about three times as much to do the triple-core design,” Markusic says. It would also add at least a year to the Beta’s developmental timeline.
Markusic’s ideal reusable rocket wouldn’t look anything like Falcon 9, though. Rather than adhering to the vertical take-off and landing paradigm we’ve already seen from SpaceX and Blue Origin, Markusic is intrigued by the idea of a vehicle based on “aircraft heritage … that exploits the atmosphere we live in,” he says. This hypersonic rocket plane, augmented with air-breathing propulsion, would return to Earth on a controlled glide, and “gradually bleed off energy” instead of burning extra fuel to slam on the brakes.
This design is still a long way off for Firefly Aerospace, whose Alpha isn’t set to fly until Q3 2019. But Markusic believes this step-by-step approach to reusability could set the company up to dominate the small and medium launch market, enabling it to offer flights well below $10,000 per kg.
Striking a Balance on the Mass Spectrum
The argument for reusability only grows stronger as you approach the higher-end payload mass of the market, says Forecast International analyst Bill Ostrove. “The more expensive it is to build a rocket, the easier it's going to be to recoup your expenses by spending a little bit extra on rocket construction to make it reusable,” he says. SpaceX’s Falcon Heavy illustrates this point well: Heavy has three times the lift of Falcon 9, and yet is just 33 percent more expensive to build thanks to its flight-proven boosters. If SpaceX can hit a proper launch cadence with Heavy (if being the key word here, given the uncertainty of that side of market), it can squeeze some significant value out of those assets.
At the same time, reusability doesn’t necessarily have the same financial draw for companies building smaller launch vehicles with lower capex. “Their argument is that they're trying to get the cost of production down as much as possible,” Ostrove says. “One of the ways of doing that is simplifying the rockets and making them easier to build, but also building as many of them as they possibly can to take advantage of economies of scale.” Rocket Lab, for example, hopes to spread out its fixed costs by launching anywhere from 50 to 120 times per year.
Smallsat launchers can get away with this simply because of the massive demand for launch from the thriving smallsat sector. “If you had 30 Falcon 9s every year, you wouldn’t have payloads for them,” Markusic says. On the other hand, for as many smallsat launchers that exist there are people willing to pay for a ride. “So, I think the biggest way we’re going to drive costs down [is] to get into a real rhythm where these rockets are rolling down the assembly line,” Markusic says.
Not If, But When
Still, Blue Origin CEO Bob Smith believes it’s just a matter of time before reusability becomes commonplace across all launch paradigms. “With the launch rate, availability and overall cost structure being much better … [the launch industry] is going to be dominated by reusability. It just has to be — there’s no other way,” Smith asserts.
One of the reasons circles back to the issue of reliability, arguably the launch industry’s greatest downfall. A common misconception is that launching on a previously flown asset is inherently more risky. In reality, increased reliability and reusability go hand in hand, Smith says. It is significantly more expensive up front to design and build a reusable rocket like New Glenn versus an expendable equivalent — which means any launch failure is that much more costly. It follows then that the economics of New Glenn — which must fly at least 25 times to hit Blue Origin’s targets — are dependent on the vehicle being very safe.
Of course, customers will also appreciate the added reliability, especially those whose entire business case rests on a certain spacecraft making it to orbit in one piece. There’s a potential cost benefit too, although that has not fully materialized yet. Other than some discounts for the first brave souls to ride on a flight-proven Falcon 9, SpaceX, for one, has maintained its pricing structure as it recoups its massive Research and Development (R&D) investments. But eventually, Smith expects competition from reusable vehicles to drive lower prices throughout the whole industry.
“Eventually these companies are going to be forced to respond,” he says. “I think for many years the cost advantage was with expendable launch vehicles. But it seems like with the breakthroughs that SpaceX and Blue Origin [are] having, that equation is starting to shift.” VS