The search for a commercial lunar economyby Jeff Foust
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| Intuitive Machines reported revenues for the year to date of $173.3 million, far more than all of 2023, but most of that comes from NASA contracts. |
That upward trajectory does have some caveats. Despite the sharply increased revenue, the company is still running at a loss, with an adjusted EBITDA (earnings before interest, taxes, depreciation, and amortization) loss of nearly $30.5 million through the first nine months of the year, compared to a $49.9 million adjusted EBITDA loss in the first nine months of last year. To bolster its cash reserves, the company sold $80.5 million in stock in the quarter, giving the company “ample liquidity to execute on our growth trajectory,” said company CFO Peter McGrath on the call.
Another is a source of the revenue. According to the company’s 10-Q filing with the Securities and Exchange Commission, $115 million of its revenue to date this year came from a contract called OMES III to provide engineering services at NASA’s Goddard Space Flight Center. While a lucrative contract and a main reason for the sharp increase in revenue (work on the contract started late last year for Intuitive Machines), it is only tangentially linked, at best, to lunar lander or other infrastructure work.
The 10-Q filing also shows that most of the other revenue comes from NASA in the form of its Commercial Lunar Payload Services (CLPS) task orders for its lunar lander missions, as well as associated work such as a Lunar Terrain Vehicle (LTV) Services award in April to work on the design of an Artemis lunar rover. Intuitive Machines is bringing in plenty of revenue, but nearly all of it is from the government. Is this what the lunar economy looks like?
Commercial lunar chimera
Yes, at least for the foreseeable future, according to one report. A study released in October by the Center for Strategic and International Studies (CSIS) was skeptical that anyone other than governments will be customers for lunar landers or other services being offered by industry.
“Though there is certainly a lot of buzz about cislunar growth, the authors of this report found evidence of only a modest increase in cislunar activities over the next decade compared to the past 10 years,” the report concluded. “Additionally, the authors found little sign of a business case for cislunar activities that is not closely tied to government funding and support.”
Those back-to-back sentences took aim at two of the biggest claims made about the surge in commercial activities at the Moon. One is how many missions are actually going, with some claims that 100 or more lunar missions worldwide in the next decade. “How to count the missions was something that took a lot of time and thought,” said Clayton Swope, deputy director of the Aerospace Security Project at CSIS and lead author of the report, at an October 25 webinar to discuss the report.
| “Truly commercial uses of the Moon remain a chimera, with no obvious sign this could change in the next several years,” the CSIS report concluded. |
He noted, as in the report, that the definition of “mission” ranged from a discrete lander or orbiter down to individual instruments that are payloads on those spacecraft. “Many future cislunar missions look like matryoshka, or Russian nesting, dolls; they are complex systems of systems, with some providing lunar ridesharing,” the report stated. The upcoming IM-2 lander by Intuitive Machines, for example, includes NASA and commercial payloads on the lander as well as rideshare spacecraft, like NASA’s Lunar Trailblazer orbiter, that will hitch a ride on the launch.
“Counting a UNESCO memory disk, which is effectively a very small thumb drive,” a payload on the upcoming Hakuto-R M2 lander mission by Japan’s ispace, “as the same as Artemis 3? It feels like that is telling a slightly distorted story of what’s happening on the Moon,” Swope said.
The report ended up identifying about 40 “significant” missions that are currently scheduled for launch in the next decade, ranging from Artemis and potential Chinese crewed missions to the moon to CLPS landers. That list thins out near the end of the decade given the lack of visibility into future missions then, but also includes some missions that appear unlikely to fly at least in the near term, like Israel’s Beresheet 2 lander, which does not have the funding needed to launch in 2025 as listed in the report.
A clear takeaway from that list of significant missions is that most are either government-led missions or missions with the government as a big enough customer that, without it, the mission would be unlikely to fly. That would include CLPS missions where NASA is the largest, or even sole, customer for commercial landers.
“There is no indication of a lunar gold rush because there are no strong revenue-generating businesses centered around cislunar activities anchored by commercial customers,” the CSIS report concluded. “Truly commercial uses of the Moon remain a chimera, with no obvious sign this could change in the next several years.”
There are, of course, companies that think otherwise, seeing a business case for lunar activities like resource extraction. Those resources range from water ice believed to exist at the lunar poles to helium-3, the isotope long linked to fusion power generation but with nearer-term applications in areas like quantum computing.
| “There’s no question that if you have the capacity to deliver large amounts of lunar rocks back to Earth, they will have commercial value,” MacDonald said. |
Interlune, a startup led by former Blue Origin president Rob Meyerson, is pursuing helium-3 extraction from the Moon. But its roadmap doesn’t foresee returning even small quantities of helium-3—up to about 20 kilograms a year—until at least the early 2030s, after initial missions to prospect for the isotope and test the ability to extract it.
At the CSIS webinar, Alex MacDonald, NASA’s chief economist, drew parallels to long-running interest in asteroid mining. “Konstantin Tsiolkovsky talked about there being asteroid mining in the 1880s, and it’s not clear whether we’re closer in time to him or closer in time to asteroid mining,” he said.
He said that there was “no doubt” that there will be significant commercial activities on the Moon, eventually. In the near term, he suggested that could be something as simple as delivering cremated remains, or cremains, to the Moon (one that, he added, does pose some policy issues) or returning lunar rocks to the Earth for commercial sale, tapping into a market of collectors where demand exceeds a very limited supply. “There’s no question that if you have the capacity to deliver large amounts of lunar rocks back to Earth, they will have commercial value,” he concluded.
That was, in fact, the business plan of a long-forgotten startup, Applied Space Resources, which a quarter-century ago announced its intent to pursue missions to bring back lunar samples for sale commercially. It was, though, ahead of its time, fading away in the early 2000s after struggling with the technical and financial challenges of commercial lunar sample return.
For the time being, though, “the predominant driver is government programs in science and exploration and international cooperation,” he concluded. “That is, for me, the 95% answer to the lunar economy,” worth about $8–10 billion annually. “That is nontrivial, and it is sufficient at this time to drive a lot of the innovation that we are seeing in the economic ecosystem.”
Lunar slowdown
The CSIS report is not the only one to examine the lunar economy. In 2021, PricewaterhouseCoopers (PwC), the consulting company, published a report on its own assessment of the lunar economy. That study projected the lunar economy to have a cumulative value of about $170 billion over a 20-year period to 2040. Transportation would be the largest market, accounting for $100 billion over that time period, with resource utilization generating $63 billion; data services accounted for the rest.
That will increasingly be driven by commercial activity, one of the authors of the report stated. “By 2040, it will not be purely institutions. It will also, to a certain extent, be commercially driven, meaning that we will have by then enough maturity in terms of technology and a sustainable presence on the Moon to have commercial actors paying for these missions,” said Yann Perrot, senior manager of the space practice at PwC France, during a panel at Space Tech Expo Europe last week.
He acknowledged, though, that the forecasts in that now three-year-old report may have been overoptimistic. “The main change is the slower pace at which the commercial sector is picking up,” he said, citing a slowdown in investment in the sector. Government programs, like Artemis missions, have also suffered delays.
“It’s still too early to say if the changes will be more structural in terms of the shape of the lunar economy,” he said, rather than shifting growth curves to the right that simply delay the markets. “It’s a matter of timelines. Whether it’s three, five, ten years delayed, I cannot really say now.”
He added he could not estimate how much that forecast of $170 billion in cumulative revenue by 2040 had changed without doing more analysis.
Another panelist was skeptical that commercial lunar activities would play a major role in the next two decades. “I don’t see currently in the near future an economy with private investors and private companies,” said Ralf Zimmermann, head of space exploration and Moon programs at Airbus Defence and Space and project manager for the European Service Module for NASA’s Orion spacecraft. “The market is largely driven by institutions.”
“In the way of private investments to make to make the first step to go to the Moon, settle on the Moon, have a lab on the Moon or around the Moon, I have my doubts that we will be ready for this in the next 15 to 20 years,” he said later in the panel. “It might come after, but I don’t see it being launched that quickly.”
| “In the way of private investments to make to make the first step to go to the Moon, settle on the Moon, have a lab on the Moon or around the Moon, I have my doubts that we will be ready for this in the next 15 to 20 years,” Zimmerman said. |
At the CSIS event, panelists also took a long-term view towards the development of a commercial lunar economy. Victoria Samson, chief director of space security and sustainability at the Secure World Foundation, noted it took decades for low Earth orbit to become “economically standalone” from government customers. “It’s going to be a while, decades, maybe,” for that to happen at the Moon, she estimated.
“But maybe only decades,” MacDonald added.
Those timelines pose challenges for companies with private investors who want returns in several years, not several decades. That means companies like Intuitive Machines will, for now, look to government customers who have requirements linked to science and national prestige to motivate spending billions on lunar missions and enabling infrastructure. Intuitive Machines won a NASA contract in September worth as much as $4.8 billion over ten years to provide lunar communications services, funding a five-satellite network that could potentially be used by other customers as well as NASA.
Those companies, though, still need to make money on that government business. In its 10-Q filing this month, Intuitive Machines noted that its IM-1 lander mission in February, along with its upcoming IM-2 and IM-3 missions—all part of CLPS—are considered “loss contracts” by the company as the cost of executing those missions exceeds the revenue expected from NASA and commercial customers, with $22.8 million in combined losses recorded on them this year alone. Even when working for the government, it can be hard to make money on the Moon.
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