2. Market Analysis & External Factors 2.1. Overview This section reports the results of a preliminary market analysis for energy delivered by Solar Power Satellite (SPS), concentrating primarily on electric energy for end-use. The analysis was performed by members of the study team from both Futron and SAIC and also by SAIC’s Utility Services and Engineering Division. Additional insights were collected from personal contacts with staff members of EPRI and various utility companies, and from participation by electric power industry representatives and investing in the Economic Technical Interchange Meeting, convened as part of Phase I of this study. The purpose of the market analysis is two-fold: (1) to determine to first order the size of the market and the characteristics of worldwide demand patterns for electricity and other forms of energy, and; (2) to identify candidate target markets (Le., market segments) for SSP-supplied energy. The market analysis: is global in scope: because solar power satellite systems have the potential to reach worldwide markets, and because wireless power delivery may prove economically attractive in areas now lacking an installed power grid includes all energy forms: because beamed solar energy may be readily converted to chemical or thermal form for storage or immediate use focuses on electricitv: because worldwide demand by end-users for electricity is growing faster than for any other form of energy. 2.1.1. Economic Viability of Space Solar Power The economic viability of a space solar power system is a function of the cost of the system, the revenues it can generate, and other costs and benefits (such as pollution that is avoided) not captured in the cost or revenue stream. The monetized value of these streams taken together, discounted appropriately to reflect the time value of money (that is, the principle that a dollar received today is worth more than received tomorrow), is the net present value of a space solar power system. The discount rate used to reflect the time value of money can also be used as to approximate the return on investment (ROI) of such a system. The discount rate is varied until the net present value of the system (all the costs and all the benefits) equals zero; the discount rate at which this is achieved is the internal rate of return (IRR). IRR is often used to estimate ROI for economic and long-term financial analyses. 2.1.2. Costs The technical attributes of a space solar power system determine the costs of the system. System costs are addressed at length in the discussion of technical concepts in other sections of this report. The revenues and external costs associated with a system are discussed in this Section. The IRRs achieved by different systems are discussed in the section on Results.
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