0191-9067/81/010061-10$02.00/0 Copyright ® 1981 SUNSAT Energy Council SPS: AN ECONOMIC OUTLOOK KLAUS P. HEISS ECON, Inc. 900 State Road Princeton, New Jersey, USA The solar power satellite is a concept which can provide continuing inexhaustible electric power to earth. The rudiments of its technology are viable, though not yet exploited for optimization. The scale of its operation requires amalgamation of numerous technology and technique combinations which also appear feasible if also not fully exploited for application optimization and reliability of operation. The significance of the environmental impacts of SPS are not yet judiciously evaluated, yet they do not appear to be insurmountable. To bring SPS to fruition, funds and resources must be allocated to the research and development required. To substantiate these allocations, economic analysis can be performed with the intent of giving quantitative justification in support of a national or international interest or gain from such allocations. The rigorous application of economic principles to such an economic analysis is essential to justify the investment required. Yet, what are the economic principles and with what rigor must they be applied to produce a viable justification for such a long-term investment? Answers to these questions require exploration. ECONOMIC CRITERIA AND CONCERNS To a "hard nosed” economist an immediate question is how can the investment of funds in a project that will come to fruition 50 years from now withstand the application of a rigorous social interest rate of 10% or even 5%? That is, even with extremely large, certain, and proven benefits 50 years hence their discounting to the present will invariably lead to rather modest if any justified expenditures of funds. Such limited benefit cost analyses imply a commitment to deploy 25 to 50 years from now; they assume certainty or at least knowledge of costs (i.e., prices) 25 to 50 years or more into the future where no such certainty can exist and they have to make assumptions about competitiveness, economics, and benefits again with this time horizon in mind. Clearly, an economic analysis that proposes or attempts or claims to do such things can easily be proven faulty. However, these are not the serious economic evaluations that should be considered. Rather, expenditures have to be seen in the context of different, broader economic considerations which, when applied rigorously, are as convincing and decisive as the simple discounting of future benefits and costs to present values. These principles and levels of economic analysis, to my mind, include the following:
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