ON THE ROAD TO A FASTER, MORE ENDURABLE WORLD
The Hyperloop
Michiel van Oppen Student number: 10756477 Bachelor thesis Economics Faculty of Economics & Business Management Bachelor Degree in General Economics University of Amsterdam Amsterdam, Jan.31st 2018
Statement of Originality This document is written by Student Michiel van Oppen who declares to take full responsibility for the contents of this document. I declare that the text and the work presented in this document are original and that no sources other than those mentioned in the text and its references have been used in creating it. The Faculty of Economics and Business is responsible solely for the supervision of completion of the work, not for the contents.
Preface This is my bachelor’s thesis entitled “On the road to a faster, more endurable world.” I worked hard on it throughout the first six months of the academic year, 2017-2018. In my thesis, part of my degree course on Sustainable Enterprise & Business Management, I have done research on the possibility of replacing the high-speed train, the Thalys, that runs between Amsterdam and Paris, with a sustainable means of transport called the Hyperloop. I have also made a cost and profit analysis of existing means of transport and collected facts, data and statistics based on information kindly provided by the Delft Hyperloop Team. This provides us with insight into the profitability of the Hyperloop compared to existing means of transport. I wish, first of all, to thank Mr. Andrej Woerner most warmly for his coaching and advice. Our weekly sessions have helped me enormously with my research. He has provided me with new ideas and given me greater insight. I also wish to thank Jur Deitmers most warmly, too. Jur is a former classmate of mine and a member of the Delft Hyperloop Team. I have been in touch with him every week and he has helped me get into contact with both the Hyperloop Financial Director and the Technical Team. Thanks to his invaluable aid I have been able to gain all the information necessary to carry out my research. I would also like to thank Amy Daugherty, she has helped me with my translations and always supported me. Finally, I would like to thank Bjorn Witlox, he is in charge of the library of the University of Amsterdam. He has helped me find the data that was necessary to do my research. Michiel van Oppen, Feb.16th 2018 University of Amsterdam, Faculty of Economics & Business Management Bachelor: General economics Student number: 10756477
Preface Introduction Abbreviations Chapter 1 Introduction 1.1 Motivation 6 1.2 Empirical approach and results 7 1.3 Structure of the thesis 7 Chapter 2 Literature review 8 Chapter 3 Background on the Hyperloop 10 Chapter 4 Empirical method (Data and Approach) 4.1 Introduction cost-benefit analysis 11 4.2 Costs 12 4.3 Revenues 16 4.4 Payback period 19 4.5 Summary results 19 Chapter 5 Discussion 22 Chapter 6 Conclusion 23 Chapter 7 Source list 24
Abbreviations HSR: High Speed Rail HL: Hyperloop
Chapter 1 Introduction 1.1 Motivation The Hyperloop is a new means of transport that could have a huge impact on all those people who make use of public transport on a daily basis. By using the Hyperloop as a means of transport, the travelling time for passengers decrease significantly and the negative effects of transport on the environment are mitigated. The Hyperloop thus has the potential to positively influence the lives of the current and future generations.
This paper analyses a potential use of the Hyperloop between Amsterdam and Paris. I compare the current practice of the high-speed train between Amsterdam and Paris, which is carried out by the Thalys, with the possible use of the Hyperloop for this specific route. The Thalys has been providing high-speed services between Amsterdam, Brussels and Paris, since the second of June 1996. This is a route between Amsterdam Central and Paris Nord which can be travelled in 3 hours and 18 minutes (Konings, 1996). In my research, I analyse the possibilities of replacing the current transport system with the Hyperloop. This may provide further insight into the additional value that this project could provide us with and make clear whether this new means of transport can also be used in other places. I have opted for this specific route between Amsterdam and Paris, because it connects two world cities and therefore the possible effects for replacement will be greater. The advantages that the Hyperloop creates are dependent on the distance that has to be covered (van Goeverdern, 2017). The Hyperloop is seen as a competitive and sustainable alternative for long-distance rail transport (high speed rail) and medium-distance air transport, for a distance less than 1500 km (van Goeverden, 2017). In the case of a too short or too long distance, the Hyperloop would not be profitable enough and then it is more sensible to continue using current transport possibilities. The distance between Amsterdam and Paris (431km) is just barely enough for the Hyperloop to be profitable (van Goeverdern, 2017). The Hyperloop is durable; it does not suffer from air resistance or friction with the ground. It makes use of a magnetic field and a vacuum transport tube, thus ensuring highly efficient use of its energy. In addition, this new means of transport could potentially have a huge impact on the world economy. The many possible consequences this could entail, will be explained later on in my thesis. As little research has been conducted into the use of the Hyperloop as a means of transport yet, this thesis aims to fill this gap. My research is informative for governments who search for new opportunities to mitigate negative effects on the environment. The Hyperloop is seen as a possible tool for tackling this problem. This research is also important for organizations who gain insight profitability of this new means of transport.
1.2 Empirical approach and results
The following problem statement can be formulated based on the information given above: "Is it economically viable to replace the high-speed train between Amsterdam and Paris by a new means of transport called the Hyperloop”. To support this main question, first insight needs to be gained into what the Hyperloop exactly is. The technical functioning of the Hyperloop and recent developments in the field of Hyperloop that are relevant to the research are discussed. Secondly, information is provided about the route between Amsterdam and Paris taken by the Thalys. This includes information such as travelling time, distance and ticket prices. The information this provides is necessary in drawing up a cost-benefit analysis. A cost-benefit analysis is prepared, based on all the information accrued which will give more insight into the profitability of this project and the payback period associated herewith. Finally, all the other effects that occur when using the Hyperloop are listed. This emphasizes the consequences that the Hyperloop will have on the environment.
The main results that were found in this thesis is that the Hyperloop performs well as far as the social and environmental aspects are concerned, especially with regard to noise pollution, CO2 emission and energy consumption. I estimate the Hyperloop to be profitable after 24 years when cost overruns are taken into account. If costs are perfectly estimated and budgeted costs will be the same as actual costs, then the Hyperloop might already be profitable after 17 years. However, when interest is also taken into account, the Hyperloop is expected to be profitable only after 98 years, resp. 28 years, depending on whether cost overruns are included. 1.3 Structure of the thesis The thesis structure is as follows. The second chapter reviews the literature. The third chapter provides background information about the Hyperloop. Using the information available, an analysis is made with regard to the profitability of the project in chapter four. The data from the Thalys will be analysed and compared with the effects of the Hyperloop. Chapter five discusses the results and highlights possible limitations. Finally, chapter six concludes and provides recommendations for future research.
Chapter 2 Literature review As the Hyperloop is a new technology for a new means of transport, there has not been done much research yet into the performance and potential profitability of the Hyperloop for a specific route. First, I will review all the findings with regard to the literature that is found about the Hyperloop and then I discuss all the general findings with regard to current means of transport, such as a High-Speed Rail (HSR) or an aircraft. With all these data available it is possible to make a comparison into the performance and potential profitability of the Hyperloop compared to current means of transport.
In today's world, interest in sustainability and in a faster and more efficient way of transport is increasing. As a result, more attention has been paid recently to the Hyperloop (Musk, 2013). In 2017, Mario Cools and Sabine Limbourg conducted similar research into the performance of the Hyperloop as a possible means of transport. The performance and potential profitability of the Hyperloop were compared with current modes of transport such as aircraft and high-speed trains. In this research, a distinction was made between performance, cost and consequences of the Hyperloop, both socially and environmentally. The conclusion was that the Hyperloop performs well as far as social or environmental aspects are concerned, especially in the areas of energy consumption, CO2 emission and noise pollution. The authors identified as the main negative aspect of the Hyperloop the number of people that can be transported are much lower than those of current means of transport, making the use of the Hyperloop less profitable and its payback time higher. This research however is very broad and no research has been done into the possibilities of using the Hyperloop on a specific route that might be profitable due to a longer distance being travelled. Deviations from budgeted costs were also not taken into account. In contrast, this research accounts for possible cost overruns. In the field of external effects of the Hyperloop with regard to the energy consumption, Van Goeverden et al., (2016) concluded in his research that the use of aircraft increased by 45 percent between the years 2001 and 2013, while the use of alternative means of transport remained about the same. The increased use of aircraft as a means of transport has increased the negative effect on the environment, as a result of which the interest in a sustainable, but nevertheless speedy manner of means of transport has increased (Musk, 2013). The trend in the increased in the use of aircraft appears to be continuing (Lee et al., 2009, EC, 2014). These developments in the field of transport highlight the relevance of research into the use of alternative means of transport.
In 2006, C. Mellet et al. did research into the noise emissions produced by high-speed trains. Their research investigated different speeds with their respective impact on noise production. Use was made of a SNCF noise test campaign and a TGV-Duplex train with speeds of up to 350 kilometres per hour. The model used for this gives a representation of the wayside noise increase as a function of the speed involved. This study showed that the sound effects at speeds above 300 kilometres per hour were the greatest (Mellet, 2006). The result of their research is relevant to my research, because in my research the other effects of the Hyperloop are discussed, such as, for instance noise pollution and then compared with the use of a HSR.
A comparable system of the Hyperloop is the Transrapid. In 2004, the Shanghai Transrapid opened a magnetic levitation train that connects the financial district with Pudong International Airport. The technical operation of this is similar to that of the Hyperloop. The difference is that the Hyperloop uses a vacuum transport tube, so it is not affected by air resistance, while the Maglev train is. The results of the Holmer study (2003) were that it makes more efficient use of its energy compared to the bullet train and that the possibilities of this new technique can also be applied elsewhere (Holmer, 2003). This same concept has been applied in Japan. The results of this research can be used to map the possibilities for applying a magnetic train on the route from Amsterdam to Paris. In addition, research was done by Edouard Schneider of the Technical University of Delft on the costs associated with the construction of the Hyperloop project. First, a subdivision was made into five different types of systems that could possibly be used. Here it is possible to use a LIM system, which is devised by the Elon Musk or an LSM system. LIM stands for linear induction motor, whereas LSM stands for linear synchronous motor. The name synchronous motor comes from the fact that the state of the magnets on the rod is equal to the magnetic field caused by the coils on the sides of the tube. By changing the state of these magnets, the rod is repelled by one coil and attracted by the one next to it, therefore moving. This accounts for one of the primary differences between LIM and LSM, that the motor does not experience a 'slip' factor thus increasing the efficiency of the motor. An LIM system contains a continuous sequence of three coils on each side. When a three phase AC is connected to the coils it will create a magnetic field through the rotor. The difference is that a LIM system is much cheaper than an LSM system, but it makes a much less efficient use of its energy, because the batteries of the Pod have to be replaced daily. The construction of an LSM system costs a lot more money, but it is much more efficient in its use of energy. The costs that have been drawn up for this research can be used in my research to draw up a cost-benefit analysis. With regard to the economic consequences of the Hyperloop, research has been conducted by Taylor et al. into the Hyperloop commercial feasibility, where an analyse has been made with regard to the costs. This research was done in collaboration with NASA. The performance of the Hyperloop was compared with other current means of transport. Not only the economic consequences were elaborated upon, but also the social consequences, where a distinction has been made between safety issues, regulatory and policy issues, passenger service and freight service. Also, the system costs have been estimated, they were divided into two parts; capital costs and operational costs. The costs for a specific track between San Francisco and Los Angeles have been estimated. The Hyperloop appears to offer faster services, but people are not able to travel to downtown areas, whereas a HSR can. The costs per mile were calculated and estimated between 25 and 27 million dollars per mile. This was just for the technology, so excluding land acquisition. The economic effects, such as the costs per kilometre can be used in this research, but also the environmental and social effects that were described in this paper can be used in this research and elaborated upon further.
At the moment, no research has been done into the possibilities of using the Hyperloop as a transport system for a specific route between Amsterdam and Paris. However, a lot of research has been done into its technical effect and research has been conducted into the social consequences of the Hyperloop. A lot of research has also been done on the use of a
HSR, but the possibilities of replacement have not been elaborated upon. This makes my research even more interesting. Chapter 3 Background on the Hyperloop The Hyperloop is a concept for a vacuum train, which was presented in 2012 by entrepreneur Elon Musk and which has since been developed by a joint team of its companies Tesla and SpaceX. It is a transport system that makes use of an air pressure tube, somewhat comparable to pneumatic post, through which people and goods are transported. A big difference with pneumatic post is that no overpressure is used; the Hyperloop requires a reasonably strong vacuum. The concept is mainly based on the work of the American physicist Robert Goddard. The route Los Angeles - San Francisco (550 km) is mentioned as a possibility, it could be done in 30 minutes. Operation:
The Hyperloop concept consists of two practically airless tubes, it is thought to 1/1000 atmosphere, which means that the air pressure is extremely low, so the Hyperloop is able to reach speeds of up to 1200 km/h. Capsules are placed in a tube in which people and/or goods can be transported at high speed. The system would be interesting especially for distances below 1500 kilometres, above this distance aircraft would be more efficient, because it is quicker than the Hyperloop (Musk, 2013). The tubes will be built with solar panels on top. Excess energy will be stored in batteries under the Hyperpod, which will provide it with enough energy to also travel in the dark. There are two possible types of the Hyperloop; one that can only be used by passengers, with a proposed tube diameter of 2.23 meter and one that can be used both for the transportation of passengers and also for cargo with a diameter of 3,3 meter. Recent developments:
To boost the technological developments of the Hyperloop, the company of Elon Musk, SpaceX, started the Hyperloop Pod Competition in June 2015. SpaceX built a half-scale 1.6 km long test track, next to their headquarters in California. Student teams, as well as companies, were allowed to participate in this competition with a hyper-running pod at half-scale. In January 2017, three teams, selected on the basis of their design a year earlier, competed against each other, each entering their best design. The Dutch student team from TU Delft that participated in the competition under the name Delft Hyperloop won the competition. A German team, called WARR from Munich, won the classification through reaching the highest speed. There are now also commercial initiatives to set up Hyperloop systems. Several Dutch companies such as; Bam, Fokker and NS recently sent a letter to the Ministry of Infrastructure and Water Management in which they explain their arguments to construct a test trajectory of three to five kilometres in the vicinity of Lelystad. The total cost of this project would be 120 million. They believe that the Netherlands should take the lead in the development and construction of the Hyperloop. Moreover, the knowledge they would acquire during the construction of this project is of great international value.
Chapter 4 Empirical method 4.1 Introduction cost-benefit analysis In this sub-question, a cost-benefit analysis is drawn up showing the possible profitability of the Hyperloop. For the preparation of the analysis, a possible deviation of budgeted costs has been taken into account in the cost-estimate. On the basis of three examples; the Fyra project and two studies about cost overruns, a multiplier was calculated that provides insight into the deviation of actual costs compared to budgeted costs, this is also known as cost overrun. Finally, a cost-benefit analysis is drawn up on the basis of financial data obtained by the Delft Hyperloop team and data from a research by Elon Musk (2013), where a distinction is made between costs and revenues. Costs are divided in two parts; capital costs and operational costs. Journal transport reviews: Bent Flyvberg et al. conducted research in cost overruns in transport infrastructure projects in 2003. They state that despite the large number of infrastructure projects that have been done, little is known about the actual costs, revenues and risk of each project. This has led them to do this research using 258 transport projects, in 20 different countries with a total value of 90 billion dollars (1995 prices). This research shows a statistically significant effect of higher than projected budgeted costs. This study takes into account the differences in geography and time periods. The result was that rail costs are 45 percent higher than budgeted. The costs for geographical obstacles, such as bridges and tunnels, are 34 per cent higher than budgeted and 20 per cent higher for roads (Bent Flyvberg et al., 2003). High-speed train Fyra: The cost overrun that was calculated in this project is used in this research, because the Fyra train runs from Amsterdam to Brussels, which is half of the track, so the result might be a good indicator. The costs for the construction of the high-speed train Fyra was estimated at 7 billion euros. The actual costs of the project amounted to 10.8 billion euros (Gerrits, 2015). These costs consist of the construction of the railway, the infrastructure around the railway such as tunnels and bridges, the trains themselves and the maintenance of previously constructed railway lines. There is already subsidence there, so the costs are increasing every day. Most costs have been made by laying the track. The costs of the construction of the high-speed train Fyra were 1.54 times higher than budgeted (10.8 / 7). Cost overruns in Swedish transport projects:
This paper investigates cost overruns in Swedish infrastructure projects, with a distinction being made between the construction of motorways and railways. The table below shows the average cost overrun of road and rail projects. This data can be used in calculating the cost-benefit analysis. Use has been made of Swedish transport projects, because in Sweden they use the same techniques for building tracks and stations, as in countries like the Netherlands, Belgium and France. Sweden is also part of the EU, which means that they are bound by the same regulations.
Figure 1: Cost overruns in Swedish transport projects, Lundberg, M., Jenpanitsub, A., & Pyddoke, R. (2011).
Data Thalys:
The distance of the journey between Amsterdam & Paris, travelled by the Thalys is 413 kilometres. On schedule, it takes the train 3 hours & 18 minutes to do this. The ticket price depends on when the booking is made, it can vary between € 70.00 and € 400.00 for a return (Thalys, 2018). The Thalys is part of 3 Belgian companies: SNCF, NMBS & DB. Unfortunately, these three companies provide little financial information about the Thalys. This makes it impossible to obtain specific data concerning the profitability of the Amsterdam-Paris route. 4.2 Costs The financial data regarding the costs of the Hyperloop are provided by the Delft Hyperloop team and by research which is done by Elon Musk (2013). The TU in Delft did research into the possibilities of a Hyperloop implementation with the associated costs per kilometre. On the basis of these costs per kilometre, the total costs of the track between Amsterdam and Paris will be calculated, where a distinction is made between capital costs and operational costs. Capital costs: Capital costs are three different sorts of costs, all estimated separately; there are the costs of building the tube, building stations and the Hyperpod itself. Costs for the construction of the track The costs that have to be incurred for the construction of the track consist of the costs for the tube, pillars, guideway, guideway magnetics, guideway power distribution, guideway power, wayside control and communication and power substation and converter costs (Schneider, 2017). In Mr Schneider's research, a distinction was made between five different types of systems; Magneplane, Grumann, Foster-Miller, Betchel and Tansrapid. This study uses the results of the Transrapid. This was chosen because the Maglev train in Shanghai uses the same system and is therefore comparable to the system that is ultimately to be used for the Hyperloop. The difference is that the Maglev train does not make use of a vacuum tube and therefore it suffers from air resistance, where a Hyperloop does not. The total cost per kilometre, expressed in millions of dollars in the year 1999, is 12,382. Adjusted for inflation, the costs per kilometre are: 12.382 * 1.43 = 17.70626 $ in millions (1 $ = 1.43 $) (World Bank).
However, the costs for the construction of the runway depend on the subsurface involved. Where there is a flat landscape and solid ground, the costs for the construction of the tube are many times lower than when there are many geographical obstacles. In the case of the trajectory from Amsterdam to Paris, it is expected that few problems will be encountered from geographical obstacles. It is hereby assumed that possible obstacles have already been dealt with during the construction of the HSR; bridges and tunnels already in use, can also be used for the Hyperloop. In the event of the construction of a tunnel, the costs are estimated at 34 million Euros per kilometre, according to Musk (2013). In the study by Flyvberg et al., it was concluded that the costs for the construction of the railways are 45 per cent higher than budgeted. It is expected that the cost overrun for the Hyperloop project would be about the same percentage. However, we have hardly any experience in the construction of this type of project, so there is a big possibility that the costs have been underestimated. Also, the Hyperloop is located on pillars, so that it can deal more economically with geographical obstacles and the cost overrun will need to be adjusted again. Using this percentage an estimate can be made for the costs for the construction of the runway per kilometre. The costs were estimated between 14 million and 21 million Euros per kilometre. Assuming that the route of the Hyperloop is just as long as the route of the HSR (431km), this would give a total cost between 6389 million and 9265 million Euros. Costs for stations The costs of the construction of a station are estimated at 125 million dollars (Musk, 2013), which is 105 million Euros (Euros or 2018). The analysis assumes that three stations must be built for the route between Amsterdam and Paris. A station in Amsterdam, Brussels and Paris. Brussels is also used as an intermediate station in this analysis, because the Thalys also uses this as an intermediate station on this route. This brings the total costs of the construction of these three stations to 315 million Euros. In a Swedish study on cost overruns in infrastructure projects, it was determined that the average cost overrun for stations was 34.7 percent, this was determined on the basis of nineteen projects (Lundberg, M., Jenpanitsub, A., & Pyddoke, R., 2011). Taking this deviation into account, the total amounts to € 424.355 million. The estimate that can be set with regard to the costs for the construction of stations varies between 315 and 424 million Euros, depending on whether the cost overrun has been taken into account. Cost for the Hyperpod The costs incurred for the Hyperpod are still not clear, since it is not known who will build the Pod and what the economies of scale are if they are produced on a large scale. The costs for the construction of the Pod have been estimated by Musk (2013) at € 1.42 million (Euros of 2018). The distance Amsterdam-Paris can be travelled in about 22 minutes. Because, in my analysis there is also an intermediate station at Brussels it is assumed that the total travelling time will be 30 minutes. This delay is caused by passengers getting on and off and the building up and reducing of speed that has to be made. Assuming a frequency of 10 Pods per hour (Taylor et al., 2016), this means that five Pods will be required to meet this frequency. The total investment costs for the Pod amount to € 7.1 million.
Operational costs Maintenance costs The costs relating to maintenance are assumed to contain a fixed percentage of the capital costs. In 2011, the World Bank conducted research into the share of maintenance costs in capital costs for rail projects. This showed that the percentage varies between five and thirty per cent (The World Bank, 2011). It is stated that the height of this percentage depends on how intensively the track is used. In my research, I assume that a lot of use is made of the Hyperloop, so the percentage is slightly higher. However, the Pod does not make physical contact with the tube, as a result of which the expectation can be adjusted and assumed to be set at 15 per cent of the total capital costs. Most of the maintenance costs are in maintaining and controlling the tube (Chin, J.C., Gray, J.S., Jones, S.M., & Berton, J.J., 2015). The maintenance costs also include all of the cost for the employees connected with the yearly maintenance of the track. Costs for implementation Costs incurred for the implementation of the system include labour costs. It is assumed that the Hyperloop is fully automated and therefore no human labour is needed (Musk, 2013). However, staff will still be needed at the stations and in this research, it is assumed that one person per Pod is involved, in case of emergencies. Ten people will be working for the Pods, because they will work in two shifts. In addition, two people will be working per station for check-in and check-out. These employers will also work in two shifts, so that a total of 12 staff will be needed for the three stations. The average income amounts to € 37,000 (CPB, 2017), which amounts to total labour costs of; € 37,000 * 22 = € 814,000 per year. Table 2: Cost survey of the Hyperloop in millions of adjusted costs (Euros of 2018) Cost
element Investment costs: Total maintenance costs (15%): Total cost Operating cost per year: Total costs per year Track €9264,94 €1389,74 €10654,68 €213,09 Station €424,30 €63,64 €487,94 €0,44 €10,20 Pod €7,1 €1,065 €8,16 €0,37 €0,53 Total €9696,34 €1454,44 €11150,78 €0,81 €223,83 In table 2, a cost survey of the Hyperloop is shown, where the costs are adjusted for the cost overruns. An economic lifespan of fifty years is taken into account, when calculating the annual costs which, according to Rahman and Vanier, is seen as an average depreciation period for infrastructure projects (Rahman, S., & Vanier, D.J., 2004). This is a realistic lifespan that can be used for the Hyperloop, because the Hyperpod does not make any physical contact with the tube, which increases the lifespan. Technology will change in the future, but it is expected that there will not be many adjustments necessary for the tube, but mainly for the Hyperpod. It is easier to replace a current Hyperpod by a new one, instead of building a whole new track.
Table 3: Cost review of the Hyperloop in millions where the costs are estimated exactly (Euros of 2018) Cost element Investment costs: Total maintenance costs (15%): Total cost Operating
cost per year: Total costs per year
Track €6389,61 €958,44 €7348,06 €146,96 Station €315,00 €47,25 €362,25 €0,44 €7,68 Pod €7,1 €1,065 €8,165 €0,37 €0,53 Total €6711,71 €1006,75 €7718,47 €0,81 €155,18 If tables 2 and 3 are compared, an interval can be set up, which shows that the total annual costs vary between €155.18 and €223.83 million. The Thalys is operational 16.5 hours per day, it is expected that the Hyperloop can be operational 20 hours per day, because of the reduced travelling time. Assuming a frequency of 10 Pods per hour (Taylor et al., 2016), this means that 200 Pods per day can travel up and down on this route. The route that has to be covered is 431km long, which means that 86.200 km are covered per day. On an annual basis, this amounts to 31,463,000 km, which results in a cost per kilometre which varies from € 5.98 to € 8.62, so the outcome depends on how accurate the costs are predicted.
4.3 Revenues
Because no research has yet been done into possible ticket prices, a survey has been drawn up to chart the revenues, in which a distinction is made between business use and private use of the Hyperloop. Subsequently, the maximum amount the user was prepared to pay was estimated and then a sales price determined on the basis of 150 respondents, which are reasonably representative for the future user of the Hyperloop. It is necessary that the costs per kilometre are not higher than the revenue per kilometre, for this project to be profitable. The survey that was put on the internet consisted of two questions; “Do you want to use the Hyperloop for business use or private use?” and “What is the maximum amount that you are prepared to pay for a single trip from Amsterdam to Paris?”. The survey was sent to many different people; half of the survey was sent to business people and the other half mainly to students, in order to get a representative outcome. The maximum amount that subjects were prepared to pay varied between €50,00 and €350,00. The average future user for a single journey from Amsterdam to Paris proved to be prepared to pay € 165.00. Due to the low capacity, it is expected that the Hyperloop will mainly be used by people who are prepared to pay the most, who usually are business people. In order to estimate the sales price, a distinction is made between peak hours and less busy times. The Hyperloop is expected to be operational for 20 hours per day, it is assumed that 14 hours will be peak hours and the rest less busy times. The sales price in the peak hours was estimated at €270,00, because this was the average price that a business user was prepared to pay. The price requested in off-peak hours was estimated at €65,00; the average price that private users were prepared to pay was lowered a bit, because they have to travel at less attractive times, which will lower the amount that a user is prepared to pay. The revenue per kilometre can be calculated on the basis of these prices. The Amsterdam-Paris route is operational 20 hours per day. With a frequency of ten Pods per hour, this means that 200 return journals are made per day. The Pod has a maximum capacity of 28 people; this means that 5600 passengers per day can use the Hyperloop (assuming maximum use is made of seating capacity). The distance to be travelled from Amsterdam to Paris is 431 kilometres. The Hyperloop will travel the same distance either in addition to the HSR or will completely replace the current HSR. Then total proceeds realized amount to €1.167.600 per day. The revenue per kilometre is €13.54. The sales price of a ticket is slightly higher than the price demanded by the Thalys. However, this difference can be justified by the shorter travelling time taken and so the willingness to pay is higher. It is expected that the project will break-even, when the costs can be estimated exactly, then if on average a single trip costs €92,05. If account is taken of the possible cost overrun, break-even is expected when on average the selling price is set at € 132.69. Social and environmental effects: The other effects of the Hyperloop are discussed in this part of the thesis. This provides greater insight into the safety, the effect of noise, the amount of energy required and also, how much land is needed to construct the Hyperloop.
Safety
In order to analyse the safety of the Hyperloop, as a means of transport, it is necessary to differentiate between internal and external safety. External safety is concerned with the safety of those living in the near vicinity of the Hyperloop and the risk of accidents and the damage involved in such accidents. Because the Hyperloop uses vacuum tubes it is, therefore, a means of transport which is completely cut off from the outside world. This also means there is no interaction with any other means of transport hereby ensuring complete external safety. This is clearly a great advantage over either a plane or a high-speed train. Internal safety is concerned with the safety of passengers travelling on the Hyperloop. It is difficult to be able to say much on this score in view of the fact that the system is a completely automatic one. This has the advantage that no human errors are possible once the automatic system starts working. Nevertheless, the system requires extensive testing to begin with and there must be possibilities to automatically evacuate passengers should this prove necessary. The Hyperloop claims that in the case of a possible calamity, for example when there is a leak in the tube, so the air pressure will change, the system stops automatically and, if required, oxygen masks made available. (Chin, J.C .Gray, J.S. Jones. S.M, & Berton, J.J., 2015) One possible solution could be to use the Hyperloop for freight only, to begin with. Unfortunately, the chance of terrorist attacks remains, but this will be prevented by a security check at the beginning of the journey. Also, the chance of a terrorist attack is lower for a Hyperloop than a HSR, because there are fewer passengers on board of a Hyperloop, so the potential number of deaths is lower, which makes it less attractive for terrorism. Noise As far as problems caused by noise are concerned and the effect on those living nearby; the noise level – this is to do with the number of decibels produced; and last of all, the duration of the noise – does it continue for a long time or not. This depends, among other things, on the speed of the means of transport and the place where the means of transport has been situated. When one takes the Hyperloop into consideration it is quite clear that there is practically no noise produced whatsoever. This is made possible because of the fact that the Hyperloop travels in the tube which means there is no friction with the ground and therefore there can be no vibration either. Moreover, low air pressure in the tube also ensures that noise cannot travel very far. The only possible cause of noise could be the vacuum pump but it is assumed the noise that this could produce is extremely low (Wilkinson, 2016). Energy used & expulsion of harmful gasses The energy used by the Hyperloop is between two to three times more efficient per passenger per mile than that used by the Thalys (Taylor et al., 2016). The reason being that there is no friction with the ground and there is no problem as far as resistance is concerned. The Hyperloop’s efficient use of energy in comparison to an aircraft’s is dependent on the distance to be covered but is estimated to be two to three times more efficient per person. The Hyperloop system makes complete use of the energy created by means of the solar panels on the roof of the tube. Surplus energy is stored in batteries under the pod to be used in the night and also to make the system possible in cloudy weather. In this way, the system is entirely environmentally friendly, however, when the construction of the infrastructure is taken into consideration, then the expulsion of harmful elements will increase. The energy consumption
of an aircraft is 3230 BTU/p-m1, which uses Jet Fuel as a power source. The energy
consumption of a Maglev train is 1180 BTU/p-m, which is powered by electricity and a HSR which is also powered by electricity consumes 975 BTU/p-m. In this paper by Taylor et al (2016) it is assumed that a Hyperloop is 5-6 times more efficient (per person, per mile) compared to an aircraft, for short distances that is. For longer distances it is assumed that a Hyperloop is 2-3 times more energy efficient than a HSR. The amount of land involved The total length, breadth and value of the amount of land required for the construction of the Hyperloop determines the value of that piece of land. The Hyperloop is expected to be built above the ground and be supported by poles three and a half metres wide and with a distance of thirty metres between each pole. This limit the possibilities of making use of the ground under the tube. However, the use of high speed rail means there is no other choice than to build a rail system on the ground whilst with the Hyperloop there is always the possibility of making use of the ground beneath it. Moreover, the cost of building a bridge is much greater than that of building a road under the Hyperloop. Despite the fact that the Hyperloop is much more efficient in its use of the ground, the fact remains that the Hyperloop is much less manoeuvrable than high speed rail and therefore much more attention has to be paid to ensuring the avoidance of obstacles in its path. Table 4: Operational performance of a Hyperloop compared to a HSR (Taylor et al., 2016) Indicator HL HSR Length of line (km) 600 600 Max. service freq (dep/h)2 10 12 Infrastructure capacity (veh/h)3 10 12 Vehicle capacity (seats/veh) 28 1000 Average operating speed (km/h) 965 264 In vehicle time (minutes) 37,3 136,4 Schedule delay (minutes) 3 2,5 Total station to station travel time (minutes) 40,3 138,9 Given the information provided in table 4, the Hyperloop would perform better in terms of productivity and travelling time compared to HSR. One advantage compared to HSR is that the Hyperloop is not affected by the weather, moreover it is a completely automated system which makes it less likely that the Hyperloop will suffer from delays. The difference between the capacity of both systems is quite high, this makes it more likely that mainly business people will make use of a Hyperloop, because they are prepared to pay more. Although the average occupancy rate of HSR lies between 44 and 55 per cent (financial analyse NMCA), this makes a HSR less efficient per person compared to the Hyperloop. 1 BTU/p-m: British thermal unit per passenger mile: a unit of energy, which is used in the US.
4.4 Payback period Payback time in case of perfect forecasting of costs: Cost function: € 6711,71 + € 20,94 t Revenue function: € 426.17 t t: number of years € 6711,71 + € 20,94 t = € 426.17 t t = 17 years Payback time taking deviation in costs into account: Cost function: € 9696,35 + € 29.90 t Revenue function: € 426.17 t t: number of years Total costs = € 9696.35 + € 29.90 t = € 426.17 t = Yearly revenue t = 24 years The time needed to realise the payback period, taking into account a deviation in budgeted costs varies between 17 and 24 years. When interest rates are also taken into account, the payback period can be calculated based on the following equation: 𝑇𝑜𝑡𝑎𝑙 𝐼𝑛𝑣𝑒𝑠𝑡𝑚𝑒𝑛𝑡 = 7 ./0123 4/5 6/7/895:(<=9)? @A< Where i refers to the interest rate and n to the number of years. An interest rate of 4% is used, as is standard in the literature. The following equation can be set up, using the financial information provided: €9696.35 = €396.27 (1 + 0.04)7 7 @A<
It takes 98 years to earn the investment back, if we also add interest payments to the regression. This is the case when the cost overruns are included.
If the investment costs are perfectly predicted, the following equation can be set up to calculate the payback period: €6711.71 = €405.23 (1 + 0.04)7 7 @A< It then takes 28 years to earn back the investment. 4.5 Summary results
The Hyperloop performs well in the social and environmental area. In addition, the noise pollution is lower than that of a HSR, this is due to the vacuum tube, this ensures that the sound is not carried further, but remains inside the tube. Compared to a HSR train, the Hyperloop also deals more efficiently with its energy, making full use of solar energy, so that there is hardly any emission of harmful gasses, these can only occur during construction. The
a Hyperloop is much lower than an aircraft or HSR. The effect that a Hyperloop has on the safety of the passenger cannot as yet be clearly established, since the system is fully automated and therefore requires a lot of testing, possibly with freight, to prevent computer-controlled problems. Finally, the Hyperloop is more efficient in the use of land, this is because the tube of the Hyperloop is attached to poles, so the soil below can still be used. However, a Hyperloop is less flexible than a HSR, this needs to be taken into account. As for the economic effect, the construction of a Hyperloop for the route from Amsterdam to Paris seems to be profitable within a period of between 17 and 24 years. The outcome depends on the deviation in budgeted costs. The limited capacity of a Hyperpod ensures that the payback time is somewhat higher. However, when interest is also taken into account, the Hyperloop will then be profitable after 98 years, when cost overruns are included. If cost overruns are not included, the Hyperloop will be profitable after 28 years. If cost overruns and interest payments are taken into account, the total payback period of 98 years will be too long in order to make some profit within the economic lifespan of 50 years. The Hyperloop will then not be implemented by large companies or governments, if they focus only on economic profitability. However, the Hyperloop performs much better in the field of the external effects with regard to the environment, which is a good reason for governments to implement the Hyperloop as a daily transport system. Table 5: summary costs (included cost overruns) Cost
element Investment costs: Total maintenance costs (15%): Total cost Operating cost per year: Total costs per year Track €9264,94 €1389,74 €10654,68 €213,09 Station €424,30 €63,64 €487,94 €0,44 €10,20 Pod €7,1 €1,065 €8,16 €0,37 €0,53 Total €9696,34 €1454,44 €11150,78 €0,81 €223,83 Table 6: summary revenues
Revenues Revenue/km Revenue/day Revenue/year
Off-peak hours (sales price=€65,00) €4.19 €109.200 €39.858.000 Peak hours (sales price=€270,00) €17.54 €1.058.400 €386.316.000 Total €13.54 (average) €1.167.600 €426.174.000
Chart 7: graphical survey payback period, with time on the x-axis and net benefit on the y-axis. Chart 7 shows four different interpretations of calculating the payback period. Where time, in years, is situated on the horizontal axis and net benefit in millions of Euros on the vertical axis. The shape of the line depends on whether cost overruns or interest is included. -15000 -10000 -5000 0 5000 10000 15000 0 20 40 60 80 100 120 Net benefit incl. Cost overruns and interest Net benefit excl. Cost overruns incl. Interest Net benefit excl. Cost overruns and interest Net benefit incl. Cost overruns excl. Interest
Chapter 5 Discussion The results of this study can be used to decide whether or not to implement the Hyperloop as a means of transport. Based on the economic effects, the research can be decisive in making the choices and working out which considerations must be made to start this large investment project. The results are valuable for large companies and governments since the calculations also take into account possible deviations from budgeted costs, all based on several studies. Many analyses that are made with regard to the costs and possible profitability of a project do not take into account a possible deviation from budgeted costs. This also appears from numerous studies that have been done, in which the cost overruns have been mapped out on large infrastructure projects. As a result, a project can often give initially a rose-coloured view, then afterwards new financing is needed to complete the project. In addition, a survey has been drawn up to chart the proceeds, in which the maximum amount passengers were willing to pay for a single ticket from Amsterdam to Paris is analysed. These data are seen as valuable, since they provide information for companies and governments about what the user is willing to pay. This data makes it possible to decide whether or not to use the Hyperloop. The construction of the Hyperloop on the Amsterdam-Paris route would be a good incentive to European economy and the development of new knowledge. This research can help with the choices and considerations that have to be made to do this.
As far as the social and environmental effects are concerned, the increasing demand for sustainable means of transport has led to the increasing popularity of the Hyperloop. The effects described in this study can be useful for governments. There is not only the consideration that has to be made with regard to the profitability of the project, but also attention needs to be paid to the positive consequences of the Hyperloop for the environment compared to a HSR. The Hyperloop has greater positive effects compared to current means of transport such as the airplane or HSR as far as the social and environmental aspects are concerned. This could also lead to increasing demand for energy efficient transport systems. The reduced travelling time could also have an impact on the European integration, with regard to the labour market. It is now possible to live in Amsterdam and work in Paris. If the Hyperloop is also applied to other large cities in Europe, this will create more integration within the labour market. Also, the costs for the transportation of goods will be reduced, because of the reduced travelling time. More goods can be transported via the Hyperloop instead of using a truck, this will have a positive effect on the environment and the number of traffic jams can be reduced. The knowledge obtained during the construction of the Hyperloop can be used internationally and can be sold to other companies and governments. This too, will have a positive effect on employment opportunities. However, it is not entirely clear how efficient the Hyperloop will be since the capacity deviates so much from current means of transport. The Hyperloop is still a concept for a future means of transport and the actual costs for the construction may differ from what has been estimated. In this study, though, no account has been taken of possible economies of scale that may occur due to larger number of Hyperloop being purchased. This means that the cost estimate can deviate somewhat from what is budgeted. Furthermore, it is still not clear what the exact capacity of a Hyperpod will be. In this research, it is assumed to be 28 people, but this could be a different number, thus the result would be different from what was budgeted.
and as the connection between larger cities and then use smaller Pods to connect smaller cities with each other. There are also a lot of uncertainties about the frequency per hour of the Hyperpod. In this research, it was estimated at 10 Pods per hour (Taylor et al.,2016), but there are also ideas of connecting different Hyperpods with each other, which will increase the number of Hyperpods that can travel up and down on this specific route, thus increasing the revenues. The positive external effects have also not yet been fully worked out, therefore they are not included in the cost-benefit analysis, but they are mentioned and taken into consideration. In time, there may also be new ideas with regard to technology, which will improve the social and environmental effects. It is also possible that these new developments will occur after building the track, which makes the Hyperloop less efficient compared to the newly developed one. There are also uncertainties about the data provided by Edouard Schneider, he conducted research into five possible Hyperloop systems, where I used the Maglev system, because this was most comparable to the Hyperloop. It may also be possible, that they eventually use a combination of different systems which will create a different cost per kilometre which could make my results less valuable. Chapter 6 Conclusion As far as the social and environmental aspects are concerned, the conclusion is reached that the Hyperloop performs 2-3 times better in the field of energy consumption compared to current means of transport such as a HSR or an aircraft. The Hyperloop also performs much better in the field of noise pollution compared to a HSR or an aircraft. This will give a good reason for governments to implement the Hyperloop. When taking into account the economic aspects, the profitability of the Hyperloop depends on whether costs overruns or interest payments are included. The construction of a Hyperloop for the route from Amsterdam to Paris, seems to be profitable within a period between 17 and 24 years. The outcome depends only on the deviation in budgeted costs. When both interest payments and cost overruns are taken into account, the Hyperloop will then be profitable after 98 years. If only interest is included, the Hyperloop will be profitable after 28 years. The Hyperloop is and remains a concept which makes it difficult to estimate what the costs will be. That is why it is necessary to do more research on the most efficient system and also to increase the capacity of the Hyperpods. It will then be possible to provide a better picture of the actual costs per kilometre and the profitability of the route. If more passengers can be transported more effectively per day, profitability can be increased and ticket prices reduced and so compete more with current means of transport and make it more of a daily means of transport for the entire community.
Chapter 7 Source list
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