Economic value analysis of on-orbit servicing for geosynchronous communication satellites

• Published in: Acta astronautica 2021-03, Vol.180, p.176-188
• Main Authors: Liu, Yuqiang, Zhao, Yang, Tan, Chunlin, Liu, Huawei, Liu, Yongjian
• Format: Article
• Language: English
• Subjects: Aerospace environments; Commercial space industry; Communication satellites; Construction costs; Cost analysis; Depreciation; Discounted cash flow; Economic analysis; Economic feasibility; Feasibility studies; Geosynchronous communication satellites; On-orbit servicing (OOS); Orbital servicing; Pricing strategy; Satellite servicing; Satellites; Space economy; Sustainable development; Taxation; Value analysis
• ISSN: 0094-5765; 1879-2030
• DOI: 10.1016/j.actaastro.2020.11.040

In recent years, On-orbit servicing (OOS) is in the ascendant, attracting attentions of a growing number of institutions and commercial space companies. The sustainable development of OOS is heavily relied on its economic benefits. However, the economic feasibility of OOS is not sufficiently analyzed in the existing studies. Based on this, a general economic value analysis framework for OOS is proposed in this paper. Firstly, the maximum price that clients would be willing to pay is obtained by real option method through comparing values of OOS by an alternative scheme. Secondly, the minimum price that the servicer could afford is predicted by Discounted Cash Flow (DCF) method, which is based on a service provider value model. Six necessary factors are considered in this model at the same time, including servicing architecture and its initial construction cost, mission related depreciation, income tax, operating expense, monetary value, as well as technical risks and the corresponding insurance premium. Then, the above two prices are compared to analyze the economic feasibility of OOS. Finally, mission cost, pricing strategies and OOS value drivers are modeled and discussed within the estimated acceptable price range. The results show that the OOS is commercially viable when the initial costs of geosynchronous communication satellites and the servicing architecture are more than $242 M and less than $140 M respectively. The applicability and usefulness of the proposed method are demonstrated by an actual business case analysis of the Mission Extension Vehicle-1 (MEV-1). •An economic value analysis framework for on-orbit servicing (OOS) is proposed.•A modified cost model for service provider is established.•It discusses acceptable service charging, value-based pricing strategy and key driving factors of OOS.•The satellite servicing for GEO satellites is a promising industry.•Appropriate value sharing between clients and service providers is essential for sustainable development of OOS.