/sci/ - Science & Math

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Despite Citi’s optimistic outlook, the firm emphasized that much remains speculative in the industry, “such as space-based solar power, moon/asteroid mining, space logistics/cargo, space tourism, intercity rocket travel, and microgravity R&D and construction.”

“A similar analogy would be attempting to forecast the value of the internet today versus nearly 20 years ago when the term ‘smartphone’ was relatively unknown and before broadband replaced dial-up internet connections,” the analysts said.

In Citi’s view, a $1 trillion space economy would happen through a decline in launch costs, which it says “have already fallen precipitously since the 1980s,” about 40 times lower.

The cost of a rocket launch is typically broken out on a dollar-per-kilogram basis. From 1970 to 2010, Citi noted, the average launch cost plateaued around $16,000 per kilogram for heavy payloads and $30,000 per kilogram for light payloads.

The bank credited the private sector for the sharp decline in costs. “Lower launch costs were pioneered by SpaceX with the launch of Falcon 9 in 2010,” Citi said. The rocket dropped the average cost per kilogram down to around $2,500, 30 times lower than NASA’s Space Shuttle’s costs and 11 times lower than the previous historical average.

“Fundamentally, with the new generation of space being driven by the commercial sector, the launch industry is seeing a secular shift from being largely cost-plus pricing-based to being value-based in order to open up new markets and maximize profitability,” Citi said. “Previously, the launch market had a limited number of government-supported companies that were concerned more with military capability and creating revenue and jobs than with increasing operational efficiency.”