The Next Frontier: Commercial Space Stations and the Future of Global LEO Economy

As the International Space Station (ISS) approaches the conclusion of its operational lifespan, challenges related to cost considerations and geopolitical tensions on Earth are increasingly impeding its sustainability. The ISS represents a collaborative mission involving five prominent space agencies: the United States, Russia, the European Union, Canada, and Japan. Remarkably, the ISS has exceeded its intended operational duration, serving as a platform that has accommodated 258 astronauts and cosmonauts from 20 nations. Additionally, it has facilitated the execution of numerous groundbreaking experiments.

Throughout its operational lifetime, the International Space Station (ISS) has incurred a total cost exceeding $159 billion, with an annual operational expenditure of approximately $3.1 billion. Of this, $1.3 billion is allocated to the station’s operations and research activities, while nearly $1.8 billion is dedicated to crew and cargo transportation.

Following the retirement of the ISS, the agency anticipates annual savings of $1.5 billion, with projections indicating an increase to $1.8 billion post-2030. These realized cost reductions will empower NASA to allocate additional funds toward enhancing its deep space exploration initiatives and other space programs.

The emergence of commercial space stations heralds a new era in leveraging the Low Earth Orbit (LEO) economy, offering fresh avenues for revenue generation and enhanced value creation through space exploration. These commercial space stations will facilitate various key applications, including microgravity research, in-space manufacturing, in-orbit demonstration and verification, research, product development, testing and qualification, and mission support services.

These applications cater to essential verticals such as biotechnology, pharmaceuticals, agriculture, electronics, education, food production, manufacturing, materials science, tourism, entertainment, and advertising. Some key use cases of the ISS are:

• PandG improved drug modification and utility by utilizing the ISS, which led to advancements in NELL-1 delivery.
• Additionally, PandG employed microgravity to advance its understanding of product chemistry and enhance the shelf life of commercial foams, gels, and sprays.
• Merck and Co. leveraged the microgravity capabilities of the ISS to produce high-quality, high-resolution crystalline suspensions, thereby enhancing drug formulation, storage, and purification processes.
• Hyspeed Computing LLC (Dr. James Goodman) leveraged the ISS Remote sensing data to develop three on-demand remote sensing, cloud-based data processing products.

As commercial space stations become operational, they will unlock opportunities for innovative ventures and collaborations across diverse industries, contributing to the growth and evolution of the space economy.

Given the substantial costs involved in establishing and operating commercial space stations, coupled with the global demand for space station services, NASA is poised to become a significant, if not the primary, customer essential for sustaining the viability of these space stations.

NASA’s pivotal initiative in supporting the development of commercial space stations is the Commercial Low Earth Orbit Destinations (CLD)/Commercial Low-Earth Orbit Development program. The agency is anticipated to allocate up to $1 billion annually for CLD services.

In 2021, key participants selected for this program include:

• NanoRacks, in collaboration with its majority shareholder Voyager Space and Lockheed Martin, has been awarded $160 million to advance its Starlab Space Station project.
• Blue Origin, partnered with Sierra Space (a carve-out from Sierra Nevada Corporation), Boeing, and Redwire, has secured $130 million to develop its Orbital Reef project.
• In association with Dynetics, Northrop Grumman has received a grant of $125.6 million for the development of its unnamed station.

As of early 2024, the commercial space station market has undergone significant shifts among its participants. Factors such as the extended development timeline, the substantial initial capital investment required for a functional space station, and the limited size of the customer base for commercial space station services have prompted changes in market dynamics.

Notably, Lockheed Martin has withdrawn from the Starlab project, and Airbus Defense and Space has stepped in as the replacement partner. Additionally, Northrop Grumman has reoriented its efforts to develop a space station and has joined Starlab. Although it received $36.6 million as part of the $125.6 million agreement from NASA, Northrop Grumman has opted for collaboration and has dropped its efforts to develop its own space station.

In a recent development in January of this year, NASA awarded nearly $100 million in additional funding to Blue Origin and Voyager Space. This funding is intended to support the development of concepts for a new orbiting laboratory as part of the Commercial Low Earth Orbit Destinations (CLD) program.

These strategic adjustments underscore the complexities and challenges inherent in the commercial space station market as industry participants navigate evolving conditions to position themselves for sustained success in this dynamic sector.

The commercial space stations are expected to focus on providing services for human habitation and will be equipped with scientific research labs for microgravity applications and research. Some of the key Commercial Space Stations being developed:

• Axiom Station:

Axiom Space is in the process of developing a modular space station known as Axiom Station, utilizing modules from the ISS. The founding team at Axiom Space possesses substantial expertise from their extensive experience working with the ISS, establishing themselves as pivotal players in delivering human spaceflight services. Leveraging its heritage, developed capabilities, and comprehensive agreements with various stakeholders for their space services, Axiom Space emerges as a highly favorable market participant poised for success in the post-ISS retirement by 2030.

• Starlab:

Nanoracks (part of Voyager Space) is developing a large inflatable habitat to be used as their space station. In August 2023, Voyager Space announced a joint venture with Airbus Defence and Space, where Airbus will provide technical design support and expertise for Starlab. In October, Northrop Grumman joined the Voyager Space commercial space station project to develop fully autonomous docking systems for Northrop’s Cygnus cargo spacecraft. Given the number of market participants involved, their competencies, technology approach, and recent capital raised by Voyager Space puts Starlab in a favorable position to likely be developed and maybe slightly later than their stipulated timeline.

• Orbital Reef:

Blue Origin spearheads the development of Orbital Reef in collaboration with key market participants, including Sierra Space, Boeing, Redwire Space, Amazon, and others. NASA recently granted an additional $42 million to support the project’s ongoing development. While Sierra Space has made continuous progress with successful tests of their inflatable module, noteworthy advancements from Blue Origin’s side have not been prominently observed. In October 2023, reports indicated that Blue Origin is changing its corporate partnership to construct a commercial space station. These changes involved staff reassignments and leadership adjustments as the company adapted to more pressing priorities. The observed restructuring suggests a potential lack of a cohesive strategy and roadmap for the comprehensive development and execution of the space station by Blue Origin.

• HAVEN-1:

HAVEN-1, the space station developed by VAST SPACE LLC, is set to launch in 2025, with SpaceX’s Falcon 9 rocket secured for its transportation. In a strategic move in February 2023, VAST SPACE LLC acquired Launcher, enhancing its capabilities in orbiter development. The entire development initiative is self-funded by the founder and chief executive, Jed McCaleb. Despite the strategic recruitment of crucial members into their organization, there appears to be a lack of discernible focus in executing their development plan. This aspect may impact the overall perception of HAVEN-1’s success in the industry.