Private space industrialization is here

The universal glee that surrounded the launch of the crewed Dragon spacecraft made it easy to overlook that the Falcon rocket’s red glare marked the advent of a new era — that of private space industrialization. For the first time in human history, we are not merely exploring a new landmass. We, as a biological species, are advancing to a new element — the cosmos.

The whole history of humanity is the story of our struggle with space and time. Mastering new horizons, moving ever farther; driven by the desire for a better life or for profit, out of fear or out of sheer curiosity, people found ever faster, easier, cheaper and safer ways to conquer the space between here and there. When, at the beginning of the 19th century, Thomas Jefferson bought Louisiana from Napoleon, actually having doubled the territory of the United States at that time, he believed it would take thousands of years for settlers to populate these spaces in the center of the continent.

But after just a few decades, the discovery of gold in California mobilized huge masses of industrious people, created incentives for capital and demanded new technologies. As countless wagons of newcomers moved through the land, threads of railways were stretched coast to coast, cities and settlements arose, and what Jefferson envisioned more than 200 years ago was actualized — and in the span of just one human life.

Growing up in a small Mongolian village near where Genghis Khan began the 13th-century journey that resulted in the largest contiguous land empire in history, I acquired an early interest in the history of explorers. Spending many long Siberian winter twilights reading books about great geographical discoveries, I bemoaned fate for placing me in a dull era in which all new lands had been discovered and all frontiers had been mapped.

Little did I know that only a few decades later, I would be living through the most exciting time for human exploration the world had ever seen.

The next space race

In recent years, the entire space industry has been waiting and looking for what will serve as the gold rush of space. One could talk endlessly about the importance of space for humanity and how technologies developed by and for space activity help to solve problems on Earth: satellite imagery, weather, television, communications. But without a real “space fever” — without the short-term insanity that will pour enormous financial resources, entrepreneurial energy and engineering talent into the space industry, it will not be possible to spark a new “space race.”

Presently, the entire space economy — including rockets, communications, imagery, satellites and crewed flights — does not exceed $100 billion, which is less than 0.1% of the global economy. For comparison: during the dot-com bubble in the late 1990s, the total capitalization of companies in this sector amounted to more than 5% of global GDP. The influence of the California Gold Rush in the 1850s was so significant that it changed the entire U.S. economy, essentially creating a new economic center on the West Coast.

The current size of the space economy is not enough to cause truly tectonic shifts in the global economy. What candidates do we have for this place in the 21st century? We are all witnesses to the deployment of space internet megaconstellations, such as Starlink from SpaceX, Kuiper from Amazon and a few other smaller players. But is this market enough to create a real gold rush? The size of the global telecommunications market is an impressive $1.5 trillion (or almost 1.5% of the global economy).

If a number of factors coincide — a sharp increase in the consumption of multimedia content by unmanned car passengers, rapid growth in the Internet of Things segment — satellite telecommunications services can grow in the medium term to 1 trillion or more. Then, there is reason to believe that this segment may be the driver of the growth when it comes to the space economy. This, of course, is not 5% (as was the case during the dot-com era), but it is already an impressive 1% of the world economy.

But despite all the importance of telecommunications, satellite imagery and navigation, these are the traditional space applications that have been used for many decades since the beginning of the space era. What they have in common is that these are high value-added applications, often with no substitutes on the ground. Earth surveillance and global communications are difficult to do from anywhere but space.

Therefore, the high cost of space assets, caused primarily by the high cost of launch and historically amounting to tens of thousands of dollars per kilogram, was the main obstacle to space applications of the past. For the true industrialization of space and for the emergence of new space services and products (many of which will replace ones that are currently produced on Earth), a revolution is needed in the cost of launching and transporting cargo in space.

Space transports

The mastering of new territories is impossible to imagine without transport. The invention and proliferation of new means of moving people and goods — such as railways, aviation, containers — has created the modern economy that we know. Space exploration is not an exception. But the physical nature of this territory creates enormous challenges. Here on Earth, we are at the bottom of a huge gravity well.

To deliver the cargo into orbit and defeat gravity, you need to accelerate things to the prodigious velocity of 8 km/s — 10-20 times faster than a bullet. Less than 5% of a rocket’s starting mass reaches orbit. The answer, then, lies in reusability and in mass production. The tyranny of rocket science’s Tsiolkovsky equation also contributes to the large rocket sizes that are necessary. It drives the strategies for companies like SpaceX and Blue Origin, who are developing large, even gigantic, reusable rockets such as Starship or New Glenn. We’ll soon see that the cost of launching into space will be even less than a few hundred U.S. dollars per kg.

But rockets are effective only for launching huge masses into low-Earth orbits. If you need to distribute cargo into different orbits or deliver it to the very top of the gravity well — high orbits, such as GEO, HEO, Lagrange points or moon orbit — you need to add even more delta velocity. It is another 3-6 km/sec or more. If you use conventional rockets for this, the proportion of the mass removed is reduced from 5% to less than 1%. In many cases, if the delivered mass is much less than the capabilities of huge low-cost rockets, you need to use much more expensive (per kg of transported cargo) small and medium launchers.

This requires multimodal transportation, with huge cheap rockets delivering cargo to low-Earth orbits and then last-mile space tugs distributing cargo between target orbits, to higher orbits, to the moon and to other planets in our solar system. This is why Momentus, the company I founded in 2017 developing space tugs for “hub-and-spoke” multimodal transportation to space, is flying its first commercial mission in December 2020 on a Falcon 9 ride-share flight.

Initially, space tugs can use propellant delivered from Earth. But an increase in the scale of transportation in space, as well as demand to move cargo far from low-Earth orbit, creates the need to use a propellant that we can get not from the Earth’s surface but from the moon, from Mars or from asteroids — including near-Earth ones. Fortunately, we have a gift given to us by the solar system’s process of evolution — water. Among probable rocket fuel candidates, water is the most widely spread in the solar system.

Water has been found on the moon; in craters in the vicinity of the poles, there are huge reserves of ice. On Mars, under the ground, there is a huge ocean of frozen water. We have a vast asteroid belt between the orbits of Mars and Jupiter. At the dawn of the formation of the solar system, the gravitational might of Jupiter prevented one planet from forming, scattering fragments in the form of billions of asteroids, most of which contain water. The same gravity power of Jupiter periodically “throws out” asteroids into the inner part of the solar system, forming a group of near-Earth asteroids. Tens of thousands of near-Earth asteroids are known, of which almost a thousand are more than 1 km in diameter.

From the point of view of celestial mechanics, it is much easier to deliver water from asteroids or from the moon than from Earth. Since Earth has a powerful gravitational field, the payload-to-initial-mass ratio delivered to the very top of the gravitational well (geostationary orbit, Lagrange points or the lunar orbit) is less than 1%; whereas from the surface of the moon you can deliver 70% of the original mass, and from an asteroid 99%.

This is one of the reasons why at Momentus we’re using water as a propellant for our space tugs. We developed a novel plasma microwave propulsion system that can use solar power as an energy source and water as a propellant (simply as a reaction mass) to propel our vehicle in space. The choice of water also makes our space vehicles extremely cost-effective and simple.

The proliferation of large, reusable, low-cost rockets and in-space last-mile delivery opens up opportunities that were not possible within the old transportation price range. We assume that the price to deliver cargo to almost any point in cislunar space, from low-Earth orbit to low-lunar orbit will be well below $1,000/kg within 5-10 years. What is most exciting is that it opens up an opportunity to introduce an entirely new class of space applications, beyond traditional communication, observation and navigation; applications that will start the true industrialization of space and catalyze the process of Earth industry migration into space.

Now, let’s become space futurists, and try to predict future candidates for a space gold rush in the next 5-10 years. What will be the next frontier’s applications, enabled by low-cost space transportation? There are several candidates for trillion-dollar businesses in space.

Energy generation

Energy generation is the first and largest candidate for the gold rush, as the energy share of the global economy is about 8.2%. Power generation in space has several fantastic advantages. First, it is a continuity of power generation. In space, our sun is a large thermonuclear reactor that runs 24/7. There’s no need to store electricity at night and in bad weather. As a result, the same surface collects 10 times more energy per 24 hours than on Earth.

This is not intuitively obvious, but the absence of twilights or nighttime, and the lack of clouds, atmosphere or accumulating dust create unique conditions for the production of electricity. Due to microgravity, space power plants with much lighter structures can eventually be much less costly than terrestrial plants. The energy can be beamed to the ground via microwaves or lasers. There are, however, at least two major challenges to building space power stations that still need to be resolved. The first is the cost of launching into space, and then the cost of transportation within space.

The combination of huge rockets and reusable space tugs will reduce the cost of transporting goods from Earth to optimal orbits up to several hundred dollars per kilogram, which will make the share of transportation less than one cent per kilowatt-hour. The second problem is the amount of propellant you’ll need to stabilize vast panels that will be pushed away by solar radiation pressure. For every 1 gigawatt of power generation capacity, you’ll need 500-1,000 tons of propellant per year. So to have the same generation capacity as the U.S. (1,200 GW), you’ll need up to 1 million tons of propellant per year (eight launches of Falcon 9 per hour or one launch of Starship per hour).

Power generation will be the largest consumer of the propellant in cislunar space, but the delivery of propellant from Earth will be too economically inefficient. The answer lies on the moon, where 40 permanently darkened craters near the north pole contain an estimated 600 million metric tonnes of ice. That alone will be enough for many hundreds of years of space power operations.

Data processing

Centers for data computation and processing are one of the largest and fastest-growing consumers of energy on Earth. Efficiency improvements implemented over the last decade have only increased the demand for large cloud-based server farms. The United States’ data centers alone consume about 70 billion kilowatt-hours of electricity annually. Aside from the power required to operate the systems that process and store data, there is an enormous cost in energy and environmental impact to cool those systems, which translates directly to dollars spent both by governments and private industry.

Regardless of how efficiently they are operated, the expansion of data centers alongside demands for increased power consumption is not sustainable, economically or environmentally. Instead of beaming energy to the ground via microwaves or lasers, energy can be used for data processing in space. It is much easier to stream terabytes and petabytes from space than gigawatts. Power-hungry applications like AI can be easily moved to space because most of them are tolerant of latency.

Space mining

Eventually, asteroids and the moon will be the main mining provinces for humanity as a space species. Rare and precious metals, construction materials, and even regolith will be used in the building of the new space economy, space industrialization and space habitats. But the first resource that will be mined from the moon or asteroids will be water — it will be the “oil” of the future space economy.

In addition to the fact that water can be found on asteroids and other celestial bodies, it is quite easy to extract. You simply need heat to melt ice or extract water from hydrates. Water can be easily stored without cryogenic systems (like liquid oxygen or hydrogen), and it doesn’t need high-pressure tanks (like noble gases — propellant for ion engines).

At the same time, water is a unique propellant for different propulsion technologies. It can be used as water in electrothermal rocket engines (like Momentus’ microwave electrothermal engines) or can be separated into hydrogen and oxygen for chemical rocket engines.

Manufacturing

The disruption of in-space transportation costs can make space a new industrial belt for humanity. Microgravity can support creating new materials for terrestrial applications like optical fiber, without the tiny flaws that inevitably emerge during production in a strong gravity field. These flaws increase signal loss and cause large attenuation of the transmitted light. Also, microgravity can be used in the future space economy to build megastructures for power generation, space hotels for tourists and eventually human habitats. In space, you can easily have a vacuum that would be impossible to achieve on Earth. This vacuum will be extremely valuable for the production of ultrapure materials like crystals, wafers and entirely new materials. The reign of in-space manufacturing will have begun when the main source of raw materials is not Earth, but asteroids or the moon, and the main consumers are in-space industry.

The future market opportunities enabled by the disruption in space transportation are enormous. Even without space tourism, space habitats will be almost a two trillion dollar market in 10-15 years. Undoubtedly, it will lead to a space gold rush that will drive human civilization’s development for generations to come.

The final frontier

I studied in high school during the last years of the Soviet Union. The Soviet economy was collapsing, we had no sanitation in the house, and quite often we had no electricity. During those dark evenings, I studied physics and mathematics books by the light of a kerosene lamp. We had a good community library, and I could order books and magazines from larger libraries in the big cities, like Novosibirsk or Moscow. It was my window into the world. It was awesome.

I was reading about the flights of the Voyager spacecraft, and about the exploration of the solar system, and I was thinking about my future. That was the time when I realized that I both love and excel in science and math, and I decided then to become a space engineer. In an interview with a local newspaper back in 1993, I told the reporter, “I want to study advanced propulsion technologies. I dream about the future, where I can be part of space exploration and may even fly to Mars … .”

And now that future is coming.

Private space industrialization is here

The universal glee that surrounded the launch of the crewed Dragon spacecraft made it easy to overlook that the Falcon rocket’s red glare marked the advent of a new era — that of private space industrialization. For the first time in human history, we are not merely exploring a new landmass. We, as a biological species, are advancing to a new element — the cosmos.

The whole history of humanity is the story of our struggle with space and time. Mastering new horizons, moving ever farther; driven by the desire for a better life or for profit, out of fear or out of sheer curiosity, people found ever faster, easier, cheaper and safer ways to conquer the space between here and there. When, at the beginning of the 19th century, Thomas Jefferson bought Louisiana from Napoleon, actually having doubled the territory of the United States at that time, he believed it would take thousands of years for settlers to populate these spaces in the center of the continent.

But after just a few decades, the discovery of gold in California mobilized huge masses of industrious people, created incentives for capital and demanded new technologies. As countless wagons of newcomers moved through the land, threads of railways were stretched coast to coast, cities and settlements arose, and what Jefferson envisioned more than 200 years ago was actualized — and in the span of just one human life.

Growing up in a small Mongolian village near where Genghis Khan began the 13th-century journey that resulted in the largest contiguous land empire in history, I acquired an early interest in the history of explorers. Spending many long Siberian winter twilights reading books about great geographical discoveries, I bemoaned fate for placing me in a dull era in which all new lands had been discovered and all frontiers had been mapped.

Little did I know that only a few decades later, I would be living through the most exciting time for human exploration the world had ever seen.

The next space race

In recent years, the entire space industry has been waiting and looking for what will serve as the gold rush of space. One could talk endlessly about the importance of space for humanity and how technologies developed by and for space activity help to solve problems on Earth: satellite imagery, weather, television, communications. But without a real “space fever” — without the short-term insanity that will pour enormous financial resources, entrepreneurial energy and engineering talent into the space industry, it will not be possible to spark a new “space race.”

Presently, the entire space economy — including rockets, communications, imagery, satellites and crewed flights — does not exceed $100 billion, which is less than 0.1% of the global economy. For comparison: during the dot-com bubble in the late 1990s, the total capitalization of companies in this sector amounted to more than 5% of global GDP. The influence of the California Gold Rush in the 1850s was so significant that it changed the entire U.S. economy, essentially creating a new economic center on the West Coast.

The current size of the space economy is not enough to cause truly tectonic shifts in the global economy. What candidates do we have for this place in the 21st century? We are all witnesses to the deployment of space internet megaconstellations, such as Starlink from SpaceX, Kuiper from Amazon and a few other smaller players. But is this market enough to create a real gold rush? The size of the global telecommunications market is an impressive $1.5 trillion (or almost 1.5% of the global economy).

If a number of factors coincide — a sharp increase in the consumption of multimedia content by unmanned car passengers, rapid growth in the Internet of Things segment — satellite telecommunications services can grow in the medium term to 1 trillion or more. Then, there is reason to believe that this segment may be the driver of the growth when it comes to the space economy. This, of course, is not 5% (as was the case during the dot-com era), but it is already an impressive 1% of the world economy.

But despite all the importance of telecommunications, satellite imagery and navigation, these are the traditional space applications that have been used for many decades since the beginning of the space era. What they have in common is that these are high value-added applications, often with no substitutes on the ground. Earth surveillance and global communications are difficult to do from anywhere but space.

Therefore, the high cost of space assets, caused primarily by the high cost of launch and historically amounting to tens of thousands of dollars per kilogram, was the main obstacle to space applications of the past. For the true industrialization of space and for the emergence of new space services and products (many of which will replace ones that are currently produced on Earth), a revolution is needed in the cost of launching and transporting cargo in space.

Space transports

The mastering of new territories is impossible to imagine without transport. The invention and proliferation of new means of moving people and goods — such as railways, aviation, containers — has created the modern economy that we know. Space exploration is not an exception. But the physical nature of this territory creates enormous challenges. Here on Earth, we are at the bottom of a huge gravity well.

To deliver the cargo into orbit and defeat gravity, you need to accelerate things to the prodigious velocity of 8 km/s — 10-20 times faster than a bullet. Less than 5% of a rocket’s starting mass reaches orbit. The answer, then, lies in reusability and in mass production. The tyranny of rocket science’s Tsiolkovsky equation also contributes to the large rocket sizes that are necessary. It drives the strategies for companies like SpaceX and Blue Origin, who are developing large, even gigantic, reusable rockets such as Starship or New Glenn. We’ll soon see that the cost of launching into space will be even less than a few hundred U.S. dollars per kg.

But rockets are effective only for launching huge masses into low-Earth orbits. If you need to distribute cargo into different orbits or deliver it to the very top of the gravity well — high orbits, such as GEO, HEO, Lagrange points or moon orbit — you need to add even more delta velocity. It is another 3-6 km/sec or more. If you use conventional rockets for this, the proportion of the mass removed is reduced from 5% to less than 1%. In many cases, if the delivered mass is much less than the capabilities of huge low-cost rockets, you need to use much more expensive (per kg of transported cargo) small and medium launchers.

This requires multimodal transportation, with huge cheap rockets delivering cargo to low-Earth orbits and then last-mile space tugs distributing cargo between target orbits, to higher orbits, to the moon and to other planets in our solar system. This is why Momentus, the company I founded in 2017 developing space tugs for “hub-and-spoke” multimodal transportation to space, is flying its first commercial mission in December 2020 on a Falcon 9 ride-share flight.

Initially, space tugs can use propellant delivered from Earth. But an increase in the scale of transportation in space, as well as demand to move cargo far from low-Earth orbit, creates the need to use a propellant that we can get not from the Earth’s surface but from the moon, from Mars or from asteroids — including near-Earth ones. Fortunately, we have a gift given to us by the solar system’s process of evolution — water. Among probable rocket fuel candidates, water is the most widely spread in the solar system.

Water has been found on the moon; in craters in the vicinity of the poles, there are huge reserves of ice. On Mars, under the ground, there is a huge ocean of frozen water. We have a vast asteroid belt between the orbits of Mars and Jupiter. At the dawn of the formation of the solar system, the gravitational might of Jupiter prevented one planet from forming, scattering fragments in the form of billions of asteroids, most of which contain water. The same gravity power of Jupiter periodically “throws out” asteroids into the inner part of the solar system, forming a group of near-Earth asteroids. Tens of thousands of near-Earth asteroids are known, of which almost a thousand are more than 1 km in diameter.

From the point of view of celestial mechanics, it is much easier to deliver water from asteroids or from the moon than from Earth. Since Earth has a powerful gravitational field, the payload-to-initial-mass ratio delivered to the very top of the gravitational well (geostationary orbit, Lagrange points or the lunar orbit) is less than 1%; whereas from the surface of the moon you can deliver 70% of the original mass, and from an asteroid 99%.

This is one of the reasons why at Momentus we’re using water as a propellant for our space tugs. We developed a novel plasma microwave propulsion system that can use solar power as an energy source and water as a propellant (simply as a reaction mass) to propel our vehicle in space. The choice of water also makes our space vehicles extremely cost-effective and simple.

The proliferation of large, reusable, low-cost rockets and in-space last-mile delivery opens up opportunities that were not possible within the old transportation price range. We assume that the price to deliver cargo to almost any point in cislunar space, from low-Earth orbit to low-lunar orbit will be well below $1,000/kg within 5-10 years. What is most exciting is that it opens up an opportunity to introduce an entirely new class of space applications, beyond traditional communication, observation and navigation; applications that will start the true industrialization of space and catalyze the process of Earth industry migration into space.

Now, let’s become space futurists, and try to predict future candidates for a space gold rush in the next 5-10 years. What will be the next frontier’s applications, enabled by low-cost space transportation? There are several candidates for trillion-dollar businesses in space.

Energy generation

Energy generation is the first and largest candidate for the gold rush, as the energy share of the global economy is about 8.2%. Power generation in space has several fantastic advantages. First, it is a continuity of power generation. In space, our sun is a large thermonuclear reactor that runs 24/7. There’s no need to store electricity at night and in bad weather. As a result, the same surface collects 10 times more energy per 24 hours than on Earth.

This is not intuitively obvious, but the absence of twilights or nighttime, and the lack of clouds, atmosphere or accumulating dust create unique conditions for the production of electricity. Due to microgravity, space power plants with much lighter structures can eventually be much less costly than terrestrial plants. The energy can be beamed to the ground via microwaves or lasers. There are, however, at least two major challenges to building space power stations that still need to be resolved. The first is the cost of launching into space, and then the cost of transportation within space.

The combination of huge rockets and reusable space tugs will reduce the cost of transporting goods from Earth to optimal orbits up to several hundred dollars per kilogram, which will make the share of transportation less than one cent per kilowatt-hour. The second problem is the amount of propellant you’ll need to stabilize vast panels that will be pushed away by solar radiation pressure. For every 1 gigawatt of power generation capacity, you’ll need 500-1,000 tons of propellant per year. So to have the same generation capacity as the U.S. (1,200 GW), you’ll need up to 1 million tons of propellant per year (eight launches of Falcon 9 per hour or one launch of Starship per hour).

Power generation will be the largest consumer of the propellant in cislunar space, but the delivery of propellant from Earth will be too economically inefficient. The answer lies on the moon, where 40 permanently darkened craters near the north pole contain an estimated 600 million metric tonnes of ice. That alone will be enough for many hundreds of years of space power operations.

Data processing

Centers for data computation and processing are one of the largest and fastest-growing consumers of energy on Earth. Efficiency improvements implemented over the last decade have only increased the demand for large cloud-based server farms. The United States’ data centers alone consume about 70 billion kilowatt-hours of electricity annually. Aside from the power required to operate the systems that process and store data, there is an enormous cost in energy and environmental impact to cool those systems, which translates directly to dollars spent both by governments and private industry.

Regardless of how efficiently they are operated, the expansion of data centers alongside demands for increased power consumption is not sustainable, economically or environmentally. Instead of beaming energy to the ground via microwaves or lasers, energy can be used for data processing in space. It is much easier to stream terabytes and petabytes from space than gigawatts. Power-hungry applications like AI can be easily moved to space because most of them are tolerant of latency.

Space mining

Eventually, asteroids and the moon will be the main mining provinces for humanity as a space species. Rare and precious metals, construction materials, and even regolith will be used in the building of the new space economy, space industrialization and space habitats. But the first resource that will be mined from the moon or asteroids will be water — it will be the “oil” of the future space economy.

In addition to the fact that water can be found on asteroids and other celestial bodies, it is quite easy to extract. You simply need heat to melt ice or extract water from hydrates. Water can be easily stored without cryogenic systems (like liquid oxygen or hydrogen), and it doesn’t need high-pressure tanks (like noble gases — propellant for ion engines).

At the same time, water is a unique propellant for different propulsion technologies. It can be used as water in electrothermal rocket engines (like Momentus’ microwave electrothermal engines) or can be separated into hydrogen and oxygen for chemical rocket engines.

Manufacturing

The disruption of in-space transportation costs can make space a new industrial belt for humanity. Microgravity can support creating new materials for terrestrial applications like optical fiber, without the tiny flaws that inevitably emerge during production in a strong gravity field. These flaws increase signal loss and cause large attenuation of the transmitted light. Also, microgravity can be used in the future space economy to build megastructures for power generation, space hotels for tourists and eventually human habitats. In space, you can easily have a vacuum that would be impossible to achieve on Earth. This vacuum will be extremely valuable for the production of ultrapure materials like crystals, wafers and entirely new materials. The reign of in-space manufacturing will have begun when the main source of raw materials is not Earth, but asteroids or the moon, and the main consumers are in-space industry.

The future market opportunities enabled by the disruption in space transportation are enormous. Even without space tourism, space habitats will be almost a two trillion dollar market in 10-15 years. Undoubtedly, it will lead to a space gold rush that will drive human civilization’s development for generations to come.

The final frontier

I studied in high school during the last years of the Soviet Union. The Soviet economy was collapsing, we had no sanitation in the house, and quite often we had no electricity. During those dark evenings, I studied physics and mathematics books by the light of a kerosene lamp. We had a good community library, and I could order books and magazines from larger libraries in the big cities, like Novosibirsk or Moscow. It was my window into the world. It was awesome.

I was reading about the flights of the Voyager spacecraft, and about the exploration of the solar system, and I was thinking about my future. That was the time when I realized that I both love and excel in science and math, and I decided then to become a space engineer. In an interview with a local newspaper back in 1993, I told the reporter, “I want to study advanced propulsion technologies. I dream about the future, where I can be part of space exploration and may even fly to Mars … .”

And now that future is coming.

Could developing renewable energy micro-grids make Energicity Africa’s utility of the future?

When Nicole Poindexter left the energy efficiency focused startup, Opower a few months after the company’s public offering, she wasn’t sure what would come next.

At the time, in 2014, the renewable energy movement in the US still faced considerable opposition. But what Poindexter did see was an opportunity to bring the benefits of renewable energy to Africa.

“What does it take to have 100 percent renewables on the grid in the US at the time was not a solvable problem,” Poindexter said. “I looked to Africa and I’d heard that there weren’t many grid assets [so] maybe I could try this idea out there. As I was doing market research, I learned what life was like without electricity and I was like.. that’s not acceptable and I can do something about it.”

Poindexter linked up with Joe Philip, a former executive at SunEdison who was a development engineer at the company and together they formed Energicity to develop renewable energy microgrids for off-grid communities in Africa.

“He’d always thought that the right way to deploy solar was an off-grid solution,” said Poindexter of her co-founder.

At Energicity, Philip and Poindexter are finding and identifying communities, developing the projects for installation and operating the microgrids. So far, the company’s projects have resulted from winning development bids initiated by governments, but with a recently closed $3.25 million in seed financing, the company can expand beyond government projects, Poindexter said.

“The concessions in Benin and Sierra Leone are concessions that we won,” she said. “But we can also grow organically by driving a truck up and asking communities ‘Do you want light?’ and invariably they say yes.” 

To effectively operate the micro-grids that the company is building required an end-to-end refashioning of all aspects of the system. While the company uses off-the-shelf solar panels, Poindexter said that Energicity had built its own smart meters and a software stack to support monitoring and management.

So far, the company has installed 800 kilowatts of power and expects to hit 1.5 megawatts by the end of the year, according to Poindexter.

Those micro-grids serving rural communities operate through subsidiaries in Ghana, Sierra Leone and Nigeria, and currently serve thirty-six communities and 23,000 people, the company said. The company is targeting developments that could reach 1 million people in the next five years, a fraction of what the continent needs to truly electrify the lives of the population. 

Through two subsidiaries, Black Star Energy, in Ghana, and Power Leone, in Sierra Leone, Energicity has a 20-year concession in Sierra Leone to serve 100,000 people and has the largest private minigrid footprint in Ghana, the company said.

Most of the financing that Energicity has relied on to develop its projects and grow its business has come from government grants, but just as Poindexter expects to do more direct sales, there are other financial models that could get the initial developments off the ground.

Carbon offsets, for instance, could provide an attractive mechanism for developing projects and could be a meaningful gateway to low-cost sources of project finance. “We are using project financing and project debt and a lot of the projects are funded by aid agencies like the UK and the UN,” Poindexter said. 

The company charges its customers a service fee and a fixed price per kilowatt hour for the energy that amounts to less than $2 per month for a customers that are using its service for home electrification and cell phone charging, Poindexter said.

While several other solar installers like M-kopa and easy solar are pitching electrification to African consumers, Poindexter argues that her company’s micro-grid model is less expensive than those competitors.

“Ecosystem Integrity Fund is proud to invest in a transformational company like Energicity Corp,” said James Everett, managing partner, Ecosystem Integrity Fund, which backed the company’s. most recent round. “The opportunity to expand clean energy access across West Africa helps to drive economic growth, sustainability, health, and human development.  With Energicity’s early leadership and innovation, we are looking forward to partnering and helping to grow this great company.”

Despite pandemic setbacks, the clean energy future is underway

The economic lockdown resulting from the coronavirus pandemic has had an immediate negative impact on renewable energy projects and electric vehicles sales, but the sustainable trends are still in place and may even be strengthened over the longer term.

For the first time in four decades, global installation of solar, wind and other renewable energy will be less than the previous year, according to the International Energy Agency, which is projecting a 13% reduction in installations in 2020 compared to 2019. Woods Mackenzie projects an 18% reduction for global solar installations in 2020. Morgan Stanley is projecting declines in U.S. solar PV installations from 48% in second quarter to 17% in the fourth quarter of 2020.

This is due to a combination of construction delays, supply chain disruptions and a capital crunch.

Installation of rooftop solar has been hit particularly hard. Access to homes and businesses was generally halted in March 2020 for several months. Installers have indicated that as much as half the workforce had to be furloughed. The supply chain was also disrupted as PV manufacturing in China was temporarily suspended. Installations and the supply chain will resume, and most contracts are still in place, but the robust projected growth in rooftop PV for 2020 will not be met, and it may take more than a year to catch up. Also, some businesses that planned installations may have higher priorities for cash and investment now as they reopen. Many of the small businesses planning solar installations may not return at all.

On the other hand, utility scale electricity generation from renewable energy continues to grow and take market share. In the first part of this year, renewable energy has produced more electricity than coal for the first time since the late 19th century, when hydropower started the power industry. Wind and solar are the cheapest alternatives for new electric generation in the U.S. The pandemic and collapse in oil prices will not change that. The closure of coal plants has been accelerating this year, and wind and solar will continue to be competitive with gas.

Furthermore, most solar and wind farms were already financed and construction underway in rural areas not affected by the lockdown. About 30 GW of new solar capacity have already been contracted, and as long as interest rates remain low, financing should not be a problem. In fact, many solar and wind projects in the U.S and China are rushing to completion this year to qualify for government incentives.

But supply chains for utility scale renewables were still disrupted. Solar panel manufacturing in China was halted during the first quarter and has now reopened, but facing reduced orders. At one point, 18 wind turbine manufacturing facilities in Spain and Italy were stopped while social distancing and sanitation measures were put in place. Mining operations in Africa and other countries were also temporarily halted and now face reduced demand.

The replacement of oil and gas electricity generation with renewables in developing countries is not going to seem as attractive as a few years ago. Emerging economies need to expand electricity as cheaply as possible, which means coal, gas and even diesel plants. New fossil fuel plants in developing nations could lock in carbon emissions for years.

Electric vehicle sales globally have also been severely impacted. The transition to electric vehicles takes place as people purchase new vehicles. The price of oil has collapsed, used-car prices are dropping and unemployment has soared to levels not seen since the Great Depression. Cheap gas, cheap cars and high unemployment will dramatically lower the expectations for multipassenger EV sales in 2020. Wood Mackenzie has projected a 43% global decline in EV sales in 2020 from 2019. Furthermore, many new electric models from the automakers are not expected until 2021.

However, the long-term transition to EVs will continue and may even accelerate. It still costs less to drive a mile on electricity compared to gasoline, and when the upfront cost of electric vehicles becomes competitive with internal combustion vehicles in a few years, the market should quickly move to EVs. Now that the battery range is adequate for the average driver, the last barrier seems to be the availability of fast charging stations between cities.

Before the collapse in oil demand this year, the oil majors were expecting peak oil demand to occur sometime during the 2040s. Now peak oil demand is expected earlier, perhaps in the mid-2020s. Some even think that 2019 might turn out to be the highest level of oil consumption historically. At any rate, it seems that it will be at least a few years until the 2019 levels are reached again, if ever.

However, the recent collapse in oil prices means the oil and gas industry will be able to supply fuel at very competitive prices for decades. This will at least make it more difficult for electric vehicles to take market share in the short term, and very difficult for alternative liquid fuels to be competitive. For biofuels and synthetic fuels, it seems to be a repeat of earlier decades when cheap oil crushed those industries. Replacing gas and diesel-powered cars is certainly going to be unattractive in the impoverished economies of developing nations.

But there are also bright spots for clean transportation alternatives emerging. Electric bicycles, for example, are a hot item. As people look for alternatives to mass transit and want something to move outdoors in the fresh air, electric-assisted bikes are a great solution and are no longer looked down upon as a vehicle for older (or lazy) cyclists.

Telecommuting struggled for years to take hold, but the pandemic seems to have finally changed that. The recent national lockdown has spurred many large businesses to set up their employees to work from home. They have found that it works fairly well, and many will not return to packed downtown offices.

Several experts have cited the potential for cleaner energy alternatives because the public is seeing cleaner air and the environmental benefits of a 30% reduction in daily oil consumption. Some consumer surveys have indicated a greater interest in electric vehicles.

There is certainly the hope that we will take the opportunity to revive the economy with cleaner technologies than before the lockdown. However, the reality is that workers and businesses need to start up again with the infrastructure they have, and investment in cleaner technology requires capital. Since many business operations are struggling to find cash and loans to just remain open, new clean technology may be delayed.

Yet the major infrastructure changes for a sustainable future are well underway. Solar and wind are rapidly replacing fossil fuels for electricity. Automakers and governments are committed to electrification of the transportation sector. The pandemic may be a near-term obstacle, but the transition to a sustainable economy is just delayed and may even be accelerated in the coming years.

The Sun Exchange raises $3M for crypto driven solar power in Africa

South Africa based renewable energy startup Sun Exchange has raised $3 million to close its Series A funding round totaling $4 million.

The company operates a peer-to-peer, crypto enabled business that allows individuals anywhere in the world to invest in solar infrastructure in Africa.

How’s that all work?

“You as an individual are selling electricity to a school in South Africa, via a solar panel you bought through the Sun Exchange,” explained Abe Cambridge — the startup’s founder and CEO.

“Our platform meters the electricity production of your solar panel. Arranges for the purchasing of that electricity with your chosen energy consumer, collects that money and then returns it to your Sun Exchange wallet.”

It costs roughly $5 a panel to get in and transactions occur in South African Rand or Bitcoin.

“The reason why we chose Bitcoin is we needed one universal payment system that enables micro transactions down to a millionth of a U.S. cent,” Cambridge told TechCrunch on a call.

He co-founded the Cape Town headquartered startup in 2015 to advance renewable energy infrastructure in Africa. “I realized the opportunity for solar was enormous, not just for South Africa, but for the whole of the African continent,” said Cambridge.

“What was required was a new mechanism to get Africa solar powered.”

Sub-Saharan Africa has a population of roughly 1 billion people across a massive landmass and only about half of that population has access to electricity, according to the International Energy Agency.

Recently, Sun Exchange’s main market South Africa — which boasts some of the best infrastructure in the region — has suffered from blackouts and power outages.

Image Credits: Sun Exchange

Sun Exchange has 17,000 members in 162 countries who have invested in solar power projects for schools, businesses and organizations throughout South Africa, according to company data.

The $3 million — which closed Sun Exchange’s $4 million Series A — came from the Africa Renewable Power Fund of London’s ARCH Emerging Markets Partners.

With the capital the startup plans to enter new markets. “We’re going to expand into other Sub-Saharan African countries. We’ve got some clear opportunities on our roadmap,” Cambridge said, referencing Nigeria as one of the markets Sun Exchange has researched.

There are several well-funded solar energy startups operating in Africa’s top economic and tech hubs, such as Kenya and Nigeria. In East Africa, M-Kopa sells solar hardware kits to households on credit then allows installment payments via mobile phone using M-Pesa mobile money. The venture is is backed by $161 million from investors including Steve Case and Richard Branson.

In Nigeria, Rensource shifted from a residential hardware model to building solar-powered micro utilities for large markets and other commercial structures.

Sun Exchange operates as an asset free model and operates differently than companies that install or manufacture solar panels.

“We’re completely supplier agnostic. We are approached by solar installers who operate on the African continent. And then we partner with the best ones,” said Cambridge — who presented the startup’s model at TechCrunch Startup Battlefield in Berlin in 2017.

“We’re the marketplace that connects together the user of the solar panel to the owner of the solar panel to the installer of the solar panel.”

Abe Cambridge, Image Credits: TechCrunch

Sun Exchange generates revenues by earning margins on sales of solar panels and fees on purchases and kilowatt hours generated, according to Cambridge.

In addition to expanding in Africa, the startup looks to expand in the medium to long-term to Latin America and Southeast Asia.

“Those are also places that would really benefit from from solar energy, from the speed in which it could be deployed and the environmental improvements that going solar leads to,” said Cambridge.

The Sun Exchange raises $3M for crypto driven solar power in Africa

South Africa based renewable energy startup Sun Exchange has raised $3 million to close its Series A funding round totaling $4 million.

The company operates a peer-to-peer, crypto enabled business that allows individuals anywhere in the world to invest in solar infrastructure in Africa.

How’s that all work?

“You as an individual are selling electricity to a school in South Africa, via a solar panel you bought through the Sun Exchange,” explained Abe Cambridge — the startup’s founder and CEO.

“Our platform meters the electricity production of your solar panel. Arranges for the purchasing of that electricity with your chosen energy consumer, collects that money and then returns it to your Sun Exchange wallet.”

It costs roughly $5 a panel to get in and transactions occur in South African Rand or Bitcoin.

“The reason why we chose Bitcoin is we needed one universal payment system that enables micro transactions down to a millionth of a U.S. cent,” Cambridge told TechCrunch on a call.

He co-founded the Cape Town headquartered startup in 2015 to advance renewable energy infrastructure in Africa. “I realized the opportunity for solar was enormous, not just for South Africa, but for the whole of the African continent,” said Cambridge.

“What was required was a new mechanism to get Africa solar powered.”

Sub-Saharan Africa has a population of roughly 1 billion people across a massive landmass and only about half of that population has access to electricity, according to the International Energy Agency.

Recently, Sun Exchange’s main market South Africa — which boasts some of the best infrastructure in the region — has suffered from blackouts and power outages.

Image Credits: Sun Exchange

Sun Exchange has 17,000 members in 162 countries who have invested in solar power projects for schools, businesses and organizations throughout South Africa, according to company data.

The $3 million — which closed Sun Exchange’s $4 million Series A — came from the Africa Renewable Power Fund of London’s ARCH Emerging Markets Partners.

With the capital the startup plans to enter new markets. “We’re going to expand into other Sub-Saharan African countries. We’ve got some clear opportunities on our roadmap,” Cambridge said, referencing Nigeria as one of the markets Sun Exchange has researched.

There are several well-funded solar energy startups operating in Africa’s top economic and tech hubs, such as Kenya and Nigeria. In East Africa, M-Kopa sells solar hardware kits to households on credit then allows installment payments via mobile phone using M-Pesa mobile money. The venture is is backed by $161 million from investors including Steve Case and Richard Branson.

In Nigeria, Rensource shifted from a residential hardware model to building solar-powered micro utilities for large markets and other commercial structures.

Sun Exchange operates as an asset free model and operates differently than companies that install or manufacture solar panels.

“We’re completely supplier agnostic. We are approached by solar installers who operate on the African continent. And then we partner with the best ones,” said Cambridge — who presented the startup’s model at TechCrunch Startup Battlefield in Berlin in 2017.

“We’re the marketplace that connects together the user of the solar panel to the owner of the solar panel to the installer of the solar panel.”

Abe Cambridge, Image Credits: TechCrunch

Sun Exchange generates revenues by earning margins on sales of solar panels and fees on purchases and kilowatt hours generated, according to Cambridge.

In addition to expanding in Africa, the startup looks to expand in the medium to long-term to Latin America and Southeast Asia.

“Those are also places that would really benefit from from solar energy, from the speed in which it could be deployed and the environmental improvements that going solar leads to,” said Cambridge.

Africa Roundup: DHL invests in MallforAfrica, Zipline launches in US, Novastar raises $200M

Events in May offered support to the thesis that Africa can incubate tech with global application.

Two startups that developed their business models on the continent — MallforAfrica and Zipline — were tapped by international interests.

DHL acquired a minority stake in Link Commerce, a turn-key e-commerce company that grew out of MallforAfrica.com — a Nigerian digital-retail startup.

Link Commerce offers a white-label solution for doing online-sales in emerging markets.

Retailers can plug into the company’s platform to create a web-based storefront that manages payments and logistics.

Nigerian Chris Folayan founded MallforAfrica in 2011 to bridge a gap in supply and demand for the continent’s consumer markets. While living in the U.S., Folayan noted a common practice among Africans — that of giving lists of goods to family members abroad to buy and bring home.

With MallforAfrica, Folayan aimed to allow people on the continent to purchase goods from global retailers directly online.

The e-commerce site went on to onboard more than 250 global retailers, and now employs 30 people at order processing facilities in Oregon and the U.K.

Folayan has elevated Link Commerce now as the lead company above MallforAfrica.com. He and DHL plan to extend the platform to emerging markets around the world and offer it to companies who want to wrap online stores, payments and logistics solution around their core business.

“Right now the focus is on Africa…but we’re taking this global,” Folayan said.

Another startup developed in Africa, Zipline, was tapped by U.S. healthcare provider Novant for drone delivery of critical medical supplies in the fight against COVID-19.

The two announced a partnership whereby Zipline’s drones will make 32-mile flights on two routes between Novant Health’s North Carolina emergency drone fulfillment center and the nonprofit’s medical center in Huntersville — where front-line healthcare workers are treating coronavirus patients.

Zipline and Novant are touting the arrangement as the first authorized long-range drone logistics delivery flight program in the U.S. The activity has gained approval by the U.S. Federal Aviation Administration and North Carolina’s Department of Transportation.

The story behind the Novant, Zipline UAV collaboration has a twist: The capabilities for the U.S. operation were developed primarily in Africa. Zipline has a test facility in the San Francisco area, but spent several years configuring its drone delivery model in Rwanda and Ghana.

Image Credits: Novant Health

Co-founded in 2014 by Americans Keller Rinaudo, Keenan Wyrobek and Will Hetzler, Zipline designs its own UAVs, launch systems and logistics software for distribution of critical medical supplies.

The company turned to East Africa in 2016, entering a partnership with the government of Rwanda to test and deploy its drone service in that country. Zipline went live with UAV distribution of life-saving medical supplies in Rwanda in late 2016, claiming the first national drone-delivery program at scale in the world.

The company expanded to Ghana in 2016, where in addition to delivering blood and vaccines by drone, it now distributes COVID-19-related medication and lab samples.

In addition to partner Novant Health, Zipline has caught the attention of big logistics providers, such as UPS — which supported (and studied) the startup’s African operations back to 2016.

The presidents of Rwanda and Ghana  — Paul Kagame and Nana Akufo-Addo, respectively — were instrumental in supporting Zipline’s partnerships in their countries. Other nations on the continent, such as Kenya, South Africa and Zambia, continue to advance commercial drone testing and novel approaches to regulating the sector.

African startups have another $100 million in VC to pitch for after Novastar Ventures’ latest raise.

The Nairobi and Lagos-based investment group announced it has closed $108 million in new commitments to launch its Africa Fund II, which brings Novastar’s total capital to $200 million.

With the additional resources, the firm plans to make 12 to 14 investments across the continent, according to Managing Director Steve Beck .

On-demand mobility powered by electric and solar is coming to Africa.

Vaya Africa, a ride-hail mobility venture founded by Zimbabwean mogul Strive Masiyiwa, launched an electric taxi service and charging network in Zimbabwe this week with plans to expand across the continent.

The South Africa-headquartered company is using Nissan Leaf EVs and has developed its own solar-powered charging stations. Vaya is finalizing partnerships to take its electric taxi services on the road to countries that could include Kenya, Nigeria, South Africa and Zambia, Vaya Mobility CEO Dorothy Zimuto told TechCrunch.

The initiative comes as Africa’s on-demand mobility market has been in full swing for several years, with startups, investors and the larger ride-hail players aiming to bring movement of people and goods to digital platforms.

Uber and Bolt have been operating in Africa’s major economies since 2015, where there are also a number of local app-based taxi startups. Over the last year, there’s been some movement on the continent toward developing EVs for ride-hail and delivery use, primarily around motorcycles.

Beyond environmental benefits, Vaya highlights economic gains for passengers and drivers of shifting to electric in Africa’s taxi markets, where fuel costs compared to personal income is generally high for drivers.

Using solar panels to power the charging station network also helps Vaya’s new EV program overcome some of challenges in Africa’s electricity grid.

Vaya is exploring EV options for other on-demand transit applications — from mini-buses to Tuk Tuk taxis.

In more downbeat news in May, Africa-focused tech talent accelerator Andela had layoffs and salary reductions as a result of the economic impact of the COVID-19 crisis, CEO Jeremy Johnson confirmed to TechCrunch.

The compensation and staff reductions of 135 bring Andela’s headcount down to 1,199 employees. None of Andela’s engineers were included in the layoffs.

Backed by $181 million in VC from investors that include the Chan Zuckerberg Initiative, the startup’s client-base is comprised of more than 200 global companies that pay for the African developers Andela selects to work on projects.

There’s been a drop in the demand for Andela’s services, according to Johnson.

More Africa-related stories @TechCrunch  

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