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IGS Low cost access to space April 2016

IGS Low cost access to space April 2016

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IGS Low cost access to space April 2016

  1. 1. IGS LOW COST ACCESS TO SPACE April 2016
  2. 2. 2 Executive Summary 3 Market Overview 6 Background 6 Satellites 7 Science in space 14 Human spaceflight 17 Market Drivers 18 Small satellite market 19 Smallsat launch providers 22 Growth Potential 24 Opportunities for the UK 24 Conclusions 26 Recommendations 27 Co-ordination across the value chain 27 Establishing an operational spaceport 29 Appendix 31 Risks to smallsat market opportunity 31 Regulatory blockers 31 TABLE OF CONTENTS COPYRIGHT Copyright © Satellite Applications Catapult Ltd 2016 THE COPYRIGHT IN THIS DOCUMENT IS THE PROPERTY OF SATELLITE APPLICATIONS CATAPULT Ltd. All rights reserved. No part of this documentation may be reproduced by any means in any material form (including photocopying or storing it in any electronic form) without the consent of the Copyright Owner, except in accordance with the Copyright, Designs and Patents Act, 1988, or under the terms of a license and/or confidentiality agreement issued by the Copyright Owner, Satellite Applications Catapult. Applications for the copyright owners’ permission to reproduce any part of this documentation should be addressed to, The Chief Executive Officer, Satellite Applications Catapult, Electron Building, Fermi Avenue, Harwell, Didcot, Oxfordshire, OX11 0QR, UK. Report Author: Conor O’Sullivan, Satellite Applications Catapult
  3. 3. 3 The UK’s satellite technologies, applications and intelligent space systems are exported across the world. This report focuses on the UK’s leading expertise in the small satellite market1 , a growing segment of the space sector, for which low cost access to space is of significant importance. Small satellites are currently under-served when it comes to dedicated and timely launch opportunities, and addressing this issue is of particular relevance for the UK. Defined as the infrastructure and services required to enable the next generation of hardware to reach space at an affordable cost, low cost access to space includes satellite payload (the brain that will ensure the satellite does what it is meant to do) and spacecraft bus (the spacecraft platform) manufacturing, test, integration and launch facilities. The UK currently has world-leading capability in all parts of the satellite industry value chain, except launch. This makes it vulnerable to launch price and schedule changes from international partners and suppliers2 and poses an increasing risk to achieving the UK space sector’s ambitious growth targets. Small satellite-based missions and services are particularly at risk. Launch is expensive, it can typically account for a third to one half of the total cost of a small satellite mission. Uncertainty regarding schedule and price can seriously impact a business case and can be the deciding factor in concluding or losing an order.3 Reducing this uncertainty is particularly important for the UK’s small satellite manufacturing industry, which aims to provide competitive, integrated mission packages for satellite operators, together with the timely testing of new technologies. Debating the current lack of indigenous launch capability in 2015, the UK Space Propulsion Working Group4 found that: “A UK launch capability focused on small payloads will ensure small satellite operators are given the ability to launch without reliance upon the ad- hoc availability of spare capacity on large launch vehicles.”5 1 Defined here as those satellites with mass less than 500kg 2 Surrey Satellite Technology Ltd (2013) “Towards a UK launch infrastructure”. Unpublished study, part of the Space Collaborative Innovation Team Initiative (Space CITI) programme within the UK Space Agency’s National Space Technology Programme (NSTP) 3 Interview, April 2015, Surrey Satellite Technology Ltd 4 UK Space Propulsion Working Group (UKSPWG), an industry/academic body that is considering the technology and supply chain required for small satellite launch, in particular propulsion. 5 UK Space Propulsion Working Group (2015) “Increasing revenue growth is the UK space sector through development of a small satellite launch capability” Multiple Industry Contributors EXECUTIVE SUMMARY
  4. 4. 4 Low cost access to space creates a real opportunity for a complete solution from the UK, spanning the entire satellite value chain - strengthening the small satellite industry, supporting the growth of manufacturers, propulsion providers enabling next generation of re- usable launchers including new propulsion capability such as SABRE from Reaction Engines, and advancing the downstream applications sector (Fig. 1). Additionally, indigenous capability upstream, including low cost launch, enables increasing value creation downstream in space-enabled applications and services. Applications and services are expected to account for over 90% of UK space industry revenues by 2030.6 Vertical integration is therefore key. FIG. 1. SATELLITE INDUSTRY VALUE CHAIN. SOURCE: SATELLITE APPLICATIONS CATAPULT (2015) The importance of securing upstream resources - satellites and ground supporting infrastructure - is evident in increasing commercial enterprise activities in this sector. Google, along with others such as Fidelity, invested almost $1 billion in launch vehicle provider SpaceX in 2015.7 Google also bought Skybox Imaging (renamed Terra Bella), a commercial high-resolution satellite analytics provider, for $500 million in 2014.8 6 Space Innovation and Growth Strategy 2014-2030, Space Growth Action Plan 7 http://blogs.wsj.com/digits/2015/01/21/spacexs-valuation-rockets-to-12-billion-with-google-investment/ 8 http://www.forbes.com/sites/ellenhuet/2014/06/10/google-buys-skybox-imaging-not-just-for-its- satellites/#4e8ce8bd425d
  5. 5. 5 The number of small satellite constellations, which demand a cost- effective launch solution, is growing and low cost access to space allows new satellite companies to enter the market and to test new business models. With competitive launch prices from small satellite launch vehicles, a leading domestic satellite manufacturing industry and access to polar orbits (to which most small satellite, low earth orbit missions go), the UK is in prime position to capture a sizeable share of this burgeoning global market. To summarise, the key findings of this report are: Low cost access to space is fundamental to a growing small satellite industry: vertically integrated capability will complete the satellite industry value chain and create a unique advantage point. Low cost access to space is a key requirement for any major player in this sector, leading to increased economic benefits through satellite manufacturing, applications and services. An operational spaceport to support orbital access is a top priority: a spaceport will position the UK to take advantage of emerging demand for small satellite launch, commercial human spaceflight and microgravity research. Assuring timely and dedicated access to space will create an opportunity not just for the UK, but for Europe as a whole. As robust and resilient space assets and space based capabilities become increasingly significant for national security and defence, a UK launch site is likely to become a future strategic requirement.
  6. 6. 6 Background This report focuses on low cost access to space, identified as a priority market within the Space Innovation and Growth Strategy (IGS), and has been produced by the Satellite Applications Catapult, in partnership with the UK Space Agency. It is derived from a combination of meetings, workshops and interviews with key government and industry stakeholders and existing research. Central to the IGS is the goal of capturing 10% of the global space enabled market by 2030, taking the UK’s share of the revenue to £40bn and creating 100,000 new jobs. With this in mind, the subsequent Space Growth Action Plan identified forty growth markets relying on space technology or services (Fig. 2) and fifteen of these were judged to be priority markets for detailed review and subsequent action by government, industry and other stakeholders. FIG. 2. IGS PRIORITY MARKETS MARKET OVERVIEW
  7. 7. 7 The Space IGS 2013 report highlights current access to space as a barrier to growth for UK companies, as well as a commercial opportunity, and advocates short to medium term action if the UK is to host commercial spaceflight and small satellite launch. A national space launch infrastructure and domestic launch capability underpins IGS growth targets and is central to capitalising on both existing UK strengths in small satellite manufacturing and future demand for space tourism and microgravity research. Market projections indicate that low cost access to space from the UK would support and stimulate growth in these sectors. A seamless supply chain, with low costs and faster development cycles for satellite manufacturers, operators and launch providers, would also offer opportunities for commercial companies focusing on the downstream exploitation of satellite data. Satellites The UK is home to world-leading small satellite manufacturers, including Surrey Satellite Technology Ltd. (SSTL), and Clyde Space, as well as larger satellite producers including Airbus Defence and Space and Thales Alenia Space. The UK is thus well positioned to build on an established competitive advantage in the satellite manufacturing market and UK domestic satellite manufacturing stands to benefit from global growth in the sector. This upstream sector accounted for approximately 11%, or £1.2bn, of the total £11.3bn space industry turnover in 2012/13, according to the report, Size and Health of the UK’s Space Industry. The IGS expects this segment’s revenue to almost triple to £3bn by 2030. Recent multi-million dollar investments in ventures including Planet Labs, Spire, SpaceX and OneWeb9 , demonstrate continued commercial interest in the nano, micro and mini satellite sectors (Fig. 3). The adoption of constellations by new businesses, involved in activities including remote sensing and satellite communications, gives rise to optimistic growth forecasts, described later in this report. 9 SpaceX announced in early 2015 a constellation of approximately 4,000 small telecommunications satellites to be launched into Low Earth Orbit (LEO) (date unspecified) and in June 2015 OneWeb announced a contract with Airbus Defence and Space to build up to 900 satellites (including spares) for a similar concept of a LEO constellation of broadband satellites, with launches starting in 2019.
  8. 8. 8 FIG. 3. SMALL SATELLITE SEGMENTATION SOURCE: SATELLITE APPLICATIONS CATAPULT (2015) Satellite Market Trends 1) Spacecraft mass Satellites are getting smaller. Miniaturisation of technology and standardisation are driving performance and efficiency increases in a trend similar to that experienced by technology as a whole. The smallest satellites are employed in both the civil and commercial sectors (Table 1) and their relative size can be seen in Fig. 4. TABLE 1: SATELLITES LAUNCHED IN 2014, BY MASS CATEGORY SOURCE: SERADATA, SPACETRAK BRIEFING, 2014 LAUNCHES
  9. 9. 9 FIG. 4. SATELLITE SIZE AND IMAGING CAPABILITIES OF EARTH OBSERVATION (EO) DATA PROVIDERS, SOURCE: NATURE INTERNATIONAL WEEKLY JOURNAL OF SCIENCE (2014) 2) Satellite Orbits The vast majority of small satellites are launched into the low Earth orbit (LEO), although its inclination depends on what it is monitoring. SpaceWorks, a market intelligence provider, suggests that by 2018 over 70% of nano or micro-satellites will be used for Earth Observation (EO) missions.10 Among their many applications are monitoring the air, seas and land; providing the basis for accurate weather reports; and supplying national and international relief agencies with timely data when disasters strike. EO, atmospheric and weather satellites tend to be launched into a sun-synchronous or polar orbit, defined as having an inclination of approximately 90 degrees to the equator. Up to now, the Civil Aviation Authority has claimed that the UK’s northerly latitude means that it is only suitable for launching satellites into polar orbit.11 It is generally accepted that the UK is not suitable for launches into low/medium inclination orbits, however, industry sources consulted for this report suggest that launching into inclined orbits around the UK’s latitude (50-60 degrees) is also possible. This provides much greater scope for launch as these are the orbits commonly used by small communication satellites operating in LEO. This is an increasing market from which the UK could benefit, if it can encourage launch vehicle providers to operate at competitive rates. 10 SpaceWorks Enterprises, Inc., (2016), “2016 Nano/Microsatellite Market Forecast” 11 Civil Aviation Authority (2014), UK Government review of commercial spaceplane certification and operations, p.28
  10. 10. 10 3) The launch market According to Frost & Sullivan, global launch market revenues were approximately $7bn in 2013, and are expected to grow to around $8.4bn by 2025. The breakdown by country can be seen in Fig 5. FIG. 5. LAUNCH REVENUE BY COUNTRY, 2013 SOURCE: FROST & SULLIVAN12 While commercial satellite launch revenues are currently dominated by the US and Russia, with approximately 35% of launches taking place in the US, a large proportion of these orders are derived from European demand.13 In 2014, Europeans placed the second largest share of commercial launch orders (45%).14 As can be seen in Fig. 6, there is a currently a gap in the market for an orbital launch site15 in conterminous European territory (Kourou, not located on the European Continent geographically, is duly noted as a European owned launch site). However, there are other potential competitors for European launch sites: Andøya in Norway and Kiruna in Sweden. On account of geographical proximity and lower logistical costs,16 a UK launch facility would thus have a good chance of gaining European orders. 12 Frost & Sullivan (2014), Global Launch Systems and Satellites: Demand for Space Capabilities Will Increase as Competition Drives Prices Down 13 Civil Aviation Authority (2014), UK Government review of commercial spaceplane certification and operations, p.29 14 Satellite Industry Association (2015), “State of the Satellite Industry Report”, available from www.sia.org/wp- content/uploads/2015/05/Mktg15-SSIR-2015-FINAL-Compressed.pdf (accessed 1st June 2015) 15 The terms launch site and spaceport are used interchangeably. 16 Civil Aviation Authority (2014), “UK Government review of commercial spaceplane certification and operations”, p.29
  11. 11. 11 FIG. 6. MAJOR GLOBAL SPACE LAUNCH FACILITIES. SOURCE: VARIOUS (2014) 4) Export potential and inward investment The UK space sector, as a whole, is export-intensive. Exports are estimated to make up around two thirds (66%) of turnover for companies in the UK space economy (excluding BSkyB).17 They constitute a large proportion of revenues for satellite manufacturing. There is thus significant opportunity for export of UK built satellite manufacturing components and finished goods. Approximately 90% of SSTL’s earnings result from export orders18 and other export-intensive examples include: the provision of power systems for Luxembourg- based space company, Lux Space, by Glasgow-based Clyde Space in a deal valued at £1.2m; a second deal, worth nearly £1m, involving US-based Spire Inc.19 and an international partnership deal funded by the UK Space Agency to build three CubeSats for American global broadcast company, Outernet Inc. for £1m.20 An end-to-end supply chain would encourage more small satellite companies, like Spire,21 to set up in the UK and take advantage of a complete solution. 17 Source: Case for Space 2015 18 SSTL website (2013), UK’s Space Innovation and Growth Strategy 2014-2030 is good for business, Available from: www.sstl.co.uk/Press/UK-s-Space-Innovation-and-Growth-Strategy-2014-203 (accessed 28th February 2015) 19 BBC website (2014) retrieved from www.bbc.co.uk/news/uk-scotland-29743958 20 Clyde Space website (2015), “Clyde Space wins £1m Outernet contract”, Available from: www.clyde-space.com/ news/417_clyde-space-wins-1m-outernet-contract (accessed 15th March 2015) 21 In June 2015 Spire announced the creation of 50 new jobs at its office in Glasgow. Spire’s satellite manufacturing partner in Glasgow is Clyde Space. http://www.bbc.co.uk/news/uk-scotland-scotland-business-33066479
  12. 12. 12 New geographical markets present further opportunities. The Size and Health of the UK Space Sector survey has reported increased export intensity in sales to foreign customers which are growing in most regions at sustained rates. The composition of customer location is also changing with Asian turnover doubling since 2010/11, sales in Europe (outside the UK) growing by 50% and sales to the Americas by 11% (Fig. 7).22 FIG. 7. REAL GROWTH RATE OF TURNOVER BY CUSTOMER LOCATION. SOURCE: UK SPACE AGENCY & LONDON ECONOMICS (2014) 22 UK Space Agency (2014), The Size and Health of the UK Space Industry, Available from: www.gov.uk/government/ uploads/system/uploads/attachment_data/file/363903/SandH2014final2.pdf (accessed 28th February 2015)
  13. 13. 13 Current Launch Scenario Currently, the only way small satellites can get into space is through rideshare opportunities. Launched as “piggyback” payloads (Fig. 8), they use the excess launch capacity on a rocket travelling into orbit or to the ISS. FIG. 8. PIGGYBACK PAYLOAD TO SPACE COPYRIGHT: FORBES There are multiple drawbacks to this approach: AA The requirement of the primary payload might change, putting the small satellite’s mission in jeopardy and creating long delays. Delays in launch can amount to a year or more. AA The primary payload may be going to a crowded orbit, or an inclination or altitude that’s not desirable for the small satellite, so the satellite operator often has to make do with a second best or worse solution. The ability to nominate an exact orbit is essential when building a constellation over several launches and is key to closing a business case for small satellite operators. AA The certainty of a fixed launch price is a vital requirement for winning on-orbit delivery work contract. However, this is difficult for small satellites to achieve, particularly in the negotiation or early stages of a launch. AA Transporting satellites and team members to international launch locations, negotiating customs and other export regulations, incurs additional costs.
  14. 14. 14 AA The decision about if and when to launch lies with the launch provider. Additional payloads from another nation may be jeopardized by politically motivated decisions or instability. Thus, launch is a key dependency for satellite manufacturers, to the extent that a business partner can delay a product or service or dictate when it begins. Such reliance on partnerships represents a risk to a business model and it’s likely to be unsustainable, according to a SpaceWorks report: “As traditional (established) launch vehicles focus on serving the growing spacecraft masses with geosynchronous Earth orbit (GEO) destinations, the challenges of rideshare opportunities will increase and may be unable to keep up with the growing demand in the emerging small payload sector.”23 A number of launch companies are developing solutions to these problems and we outline some of these in the section on small satellite launch providers; they are enabling small satellites to meet their specific mission requirements, at an affordable cost.24 Science in space Microgravity platforms are used by the science community largely for research, particularly in: AA Biosciences: for product development and research, especially in disease modelling, tissue engineering, biopharmaceuticals, vaccine development, cell biology and drug testing and delivery. Changes in the human body and crystal structures are also of interest. AA Physical and materials science: opportunities include energy, nanotechnology, advanced manufacturing, aerospace and IT. Areas of specific focus include nanomaterials, analytical devices, energy source generation, propulsion and combustion. Most highly prized and offering the longest exposure to microgravity is a slot secured on the International Space Station (ISS) but it’s also expensive and subject to competition. Other microgravity platforms include parabolic flights, drop towers and sounding rockets. 23 SpaceWorks (2014), Trends in Average Spacecraft Launch Mass, see www.spaceworksforecast.com/docs/ SpaceWorks_Spacecraft_Mass_Trends_2014.pdf (accessed 28th February 2015) 24 SpaceWorks (2014), Trends in Average Earth-Orbiting Spacecraft Launch Mass: Exploring market potential for a dedicated nano/microsatellite launch vehicle, Available from: www.spaceworksforecast.com/docs/SpaceWorks_ Spacecraft_Mass_Trends_2014.pdf (accessed 28th February 2015)
  15. 15. 15 Exposure to microgravity through sub-orbital, re-usable vehicles (SRVs), or spaceplanes, can increase the frequency of experiments and act as a precursor to the ISS, at an affordable cost. They also have advantages over sounding rockets and parabolic flights in duration of microgravity and lead time for experiments to start. A comparison of the different platforms is seen in Table 2. TABLE 2: MICROGRAVITY PLATFORM COMPARISON25 *BASED ON XCOR LYNX SRV If a new a platform (an SRV, for example) with complementary properties to existing options becomes available, scientists will find a use for it. However, this only becomes viable if sufficient funding is in place, for hardware, flight and ground based preparation. The cost also needs to compete favourably with existing platforms. Low cost access to space via SRVs like Virgin Galactic’s SpaceShipTwo and XCOR’s Lynx could result in increased interest from commercial players, especially in the Biotech and Aerospace sectors. Expanding the platforms on which experiments are performed26 will also help. NASA, for instance, has selected Virgin Galactic’s SpaceShipTwo for payload experiments in their Flight Opportunities Programme. NASA has, to date, announced 12 different experiments for SpaceShipTwo’s first research flight, including in-space 3D printing, on-orbit propellant depots, asteroid formation and biological gene expression.27 While microgravity experiments from the scientific community could be subject to research councils and universities’ budget constraints, demand from commercial players is unlikely to diminish and shows every sign of increasing. A total of 818 microgravity-related patents were filed between 1980-2005 but the past decade has seen many 25 Suborbital Research Association, see www.suborbital-research.org/wp-content/uploads/2013/11/SRA-and-Lynx- Mission-Eng.pdf (accessed 23rd June 2015)) 26 NASA website (2014), NASA, Virgin Galactic Announce Payloads for SpaceShipTwo Flight, see www.nasa.gov/ ames/nasa-virgin-galactic-announce-payloads-for-spaceshiptwo-flight/#.VPItV_msWSp (accessed 28th February 2015) 27 Ibid.
  16. 16. 16 more, with a further 580 applications28 . This suggests a growing trend in microgravity research by industry, with applications in biotech, materials, instrumentation and aerospace sectors being the most popular (Fig 9). FIG. 9. TOP 20 PATENT CATEGORIES. SOURCE: UHRAN, M. (2012), MICROGRAVITY RELATED PATENT HISTORY29 Microgravity research in the Aerospace, Defence, Pharmaceuticals and Biotechnology sectors is also likely to increase interest through the UK academic community’s participation in the European programme for Life and Physical Sciences (ELIPS), which is funded by the European Space Agency (ESA). 28 Uhran, M. (2012), Microgravity Related Patent History, Available from: www.isscasis.org/portals/0/docs/2012%20 patent%20history.pdf (accessed 28th February 2015) 29 Ibid.
  17. 17. 17 Human Spaceflight Aside from supporting the small satellite market and science research, low cost access to space could encourage an increasing interest in space travel from the general public. Launch revenues can be generated from opening up the space market, allowing non- professional enthusiasts to experience a journey that has, up to now, been possible only for trained astronauts. This is the aim of commercial spaceplane companies, like Virgin Galactic and XCOR Aerospace, who are conducting tests to make this a reality in the coming years.30 Publicly available data for current spaceflight experience bookings on Virgin Galactic and XCOR is seen in Table 3. TABLE 3: SPACEFLIGHT EXPERIENCE BOOKINGS SOURCE: VARIOUS PUBLICLY AVAILABLE WEBSITES (APPROXIMATIONS) More high net worth individuals live in London than any other city in the world,31 and this is an important source of demand for spaceplane and spaceport operators. A 2014 report on the business case for a spaceport in the UK estimates that, in the first ten years of operation, the number of spaceflight tourists using such a facility could number around 5,000. This would generate a revenue of £500m for spaceplane operators with corresponding benefits for the spaceport operator.32 It is likely that manned spaceflight from the UK will also increase awareness of the UK’s space programme and stimulate, to some extent, STEM engagement, as has occurred in the US.33 30 Publicly available data and company websites 31 Knight Frank (2014), The Wealth Report, Available from: www.thewealthreport.net/resources/thewealthreport2014. pdf (accessed 28th February 2015) 32 Satellite Applications Catapult (2014), Spaceport UK: Forging Ahead With Commercial Confidence, Available from: www.sa.catapult.org.uk/market-reports (accessed 28th February 2015) 33 Interview, Dale Ketcham, August 2014
  18. 18. 18 Heavy lift focus Rather than small satellite secondary payloads, the biggest margins for existing, launch providers, are in heavy satellites. According to Mark Albrecht, President of launch service provider ILS: “There was a potential advantage in the past [in gaining market share] that is no longer there. In this congested market, you need to find where your sweet spot is. Ours is launching satellites weighing between 4,500 and 6,500 kilograms to geostationary transfer orbit,”34 Most competition among existing key players is still currently in the heavier side of the satellite market, as can be seen in Figure 10. FIG. 10. SELECTED HEAVY LIFT LAUNCH PROVIDERS SOURCE: VARIOUS The expected growth in the small satellite market, which we address later in this section, is unlikely to be satisfied by existing “piggyback” launch options on such rockets. Instead, the gap in the market to provide competitive services for small satellites stands to be addressed by new launch vehicle entrants, from spaceplane operators to vertical vehicles, with SpaceWorks reporting: “Though no clear winner has emerged, compelling evidence suggests the industry has a need for small launch vehicles.”35 34 Space News website (2004), Available from: www.spacenews.com/ils-abandoning-lower-end-launch-market/ (accessed 28th February 2015) 35 SpaceWorks Enterprises, Inc (2015), “2015 Nano/Microsatellite Market Forecast” MARKET DRIVERS
  19. 19. 19 Small satellite market Small satellite constellations enable new types of mission to be delivered cost effectively and are a growing trend. Over time, small, low-cost, highly efficient satellites will enable new customer markets and applications. The IGS estimates that downstream revenues from user equipment, space-enabled applications and services will grow from £8bn to £37bn by 2030. This will in turn stimulate demand for new and improved space infrastructure, including satellites and supporting ground infrastructure. “This analysis highlights a ‘virtuous circle’ of increased demand from customer sectors pulling through improved technology and greater infrastructure capacity. The evidence suggests that much of this activity can be space sector led, with improved reliability, lower cost and better availability of space services and applications needed to drive take up by other sectors.” (Space IGS 2014-2030, Space Growth Action Plan) A number of world-leading companies engaged in this sector are based in the UK, including SSTL and Clyde Space. Their next generations of spacecraft will have even shorter schedules from order to orbit, reduced fixed-price cost and enhanced systems’ capabilities and quality. Other small satellite players include US based Planet Labs, who, at the time of writing, has had 133 satellites successfully launched into space. The company is aiming to provide continuous global coverage of the Earth from its constellation of CubeSats and deliver actionable insights to customers across a range of different industries. Another American company, Spire, maintains an office in Glasgow where it’s partnering with Clyde Space on a CubeSat constellation. Spire plans to operate a constellation of satellites to monitor the oceans and provide five times more weather data profiles than was previously possible. Perhaps the most high-profile manufacturer in the sector is SpaceX which plans to build, launch, and operate over 4,000 small communications satellites and thus provide internet access to unconnected or underserved parts of the world. At the time of writing, the timeframe of when this constellation will be operational, was unknown. OneWeb Ltd., a start-up founded by Greg Wyler and backed by Airbus, Intelsat, Virgin Group and Qualcomm, amongst others, shares a similar vision and plans to launch 648 satellites (900 including spares), each weighing around 150kg into 18 orbital planes, with 36 satellites in each plane, at an altitude of around 1200 km. The first satellites are expected to be launched in 2019.
  20. 20. 20 Small satellite market forecasts Although launch demand exists for a range of satellite masses, analysis by Airbus Defence & Space suggests that, those satellites with a mass of less than 200 kg are underserved by existing space access solutions (Fig. 11). FIG. 11. PERCENTAGE OF SMALL LAUNCH MARKET VALUE 2010-2014 SOURCE: AIRBUS DEFENCE AND SPACE (2015) Other industry experts appear to agree as is apparent from a comment made by Arianespace’s CEO: “We may need micro-launcher for growing 50-300kg SmallSat market. No formal proposal yet, but need to consider it.#IAC2015’36 To maximise the chance of being commercially viable, the UK’s small launcher capability must target the market segment of highest revenue per launch (considering total launch payload mass and orbit attained). It’s difficult to precisely determine this optimum segment as satellite market forecasts are not wholly reliable; they focus on volume and do not include launch price points. Additionally, recent market developments indicate that the small launcher performance at which revenue is maximised will evolve and should therefore be left open for the market to decide. Satellites below 100kg are an increasingly important segment of activity within the small satellite (smallsat) sector but not the sole area of market focus for a small launcher. The most conservative figures are from Euroconsult, which estimates that a total of 510 smallsats (nanosats, microsats and minisats) will be launched in the next five years, approximating 100 smallsats per year. The market value of these smallsats is estimated at $7.4bn, to develop and launch the satellites. Euroconsult reports that market growth will 36 Peter B. de Selding, Space News, Twitter, 13 October 2015.
  21. 21. 21 remain strong (+17%) as the small decrease over time in prices and in launch masses (for satellites greater than 50 kg) is offset by larger numbers being launched.37 Northern Sky Research (NSR) forecasts the launch of over 2,500 sub-100kg satellites during the next decade, approximating 250 per year. Its latest report, Nano and Microsatellite Markets, 2nd Edition, forecasts that activity in the segment will generate cumulative revenues exceeding €4.2bn for manufacturing and €1.1bn for launch services by 2024. NSR believes that, in the coming years, more than half of all launches will be fuelled by constellation deployment and replenishment.38 The most optimistic forecast is by SpaceWorks, which has covered the use and launch of nano and microsatellites (1-50 kg) for a number of years. The 2016 forecast is for the launch of as many as 3,000 nano/microsatellites between 2016-2022, approximately 400 per year.39 According to this report: “In terms of quantity, the eruption of commercial companies and start-up activities will continue to drive the nano/microsatellite market” The commercial potential of small satellites is evident in the success of US-based Planet Labs and Spire who have, to date, raised $183mn and $66.5mn, respectively,40 in private capital. Prior to its acquisition by Google in June 2014 for $500mn, SkyBox Imaging (recently renamed, Terra Bella), a commercial high-resolution satellite imagery provider, had already raised over $90m in three rounds of private funding.41 Other companies planning to use nano/microsatellites to provide a wide range of commercial services include Dauria Aerospace, Deep Space Industries, GeoOptics, Tyvak, Outernet, Planetary Resources and SpaceQuest. While not all of the currently announced constellations will be fully realised, the many in development and lower deployment costs will enable several to become operational. Whether the increased number of satellites will equate to significantly more dedicated launches is difficult to forecast. The number of satellites launched (volume) and launch market value (revenues) are not necessarily correlated. 37 Euroconsult (2015), “Prospects for the Small Satellite Market,” see www.euroconsult-ec.com/shop/space- industry/64-prospects-for-the-small-satellite-market.html accessed 25th September 2015 38 Northern Sky Research (2015), “Nano and Microsatellite Markets, 2nd Edition,” see www.nsr.com/news-resources/ nsr-in-the-press/nsr-press-releases/nano-and-microsatellite-boom-to-lead-space-industry-diversification/ accessed 21st June 2015 39 SpaceWorks Enterprises, Inc., (2015), “2015 Nano/Microsatellite Market Forecast” 40 CrunchBase website, see www.crunchbase.com/organization/planet-labs and www.crunchbase.com/organization/ nanosatisfi accessed 1st June 2015 41 Ibid.
  22. 22. 22 Smallsat launch providers There are at least 20 launch vehicles in development around the world that are designed for small satellite payloads (weighing up to 1,000 kg), according to a recent Orbital ATK survey42 . A number of new providers are attempting to address the opportunity offered by the current gap in the market for dedicated small satellite launch. These systems allow smaller payloads to launch when they want, to their orbit of choice. Some, but not all, can be seen in Fig. 12. FIG. 12. PLANNED, DEDICATED SMALL SATELLITE LAUNCHERS (N.B. FIGURES ARE ESTIMATES) SOURCE: LAUNCH COMPANY WEBSITES, ADDITIONAL SOURCES (2015)43 42 See www.parabolicarc.com/2015/09/23/multiple-small-satellite-launch-vehicles-development/?utm_ content=bufferb31ee&utm_medium=social&utm_source=twitter.com&utm_campaign=buffer accessed 25th September 2015 43 See also www.parabolicarc.com/2015/09/23/multiple-small-satellite-launch-vehicles-development/?utm_ content=bufferb31ee&utm_medium=social&utm_source=twitter.com&utm_campaign=buffer and www.eucass2015.eu/ wp-content/uploads/Philippe_ADELL_JPL.pdf accessed 25th September 2015
  23. 23. 23 At first glance, using a basic cost/kg measure, none of these launch vehicles are as economical as the piggyback rideshare option on a heavy lift rocket. Whether or not small satellite manufacturers or operators will consider paying a premium for dedicated launch will be largely dependent on the pricing schedules emerging small satellite launch providers can offer. Spaceport launch rates will be a key factor in determining those pricing schedules. However, the indications are that a modest premium may be justified if it comes with greater control over the choice of orbit and time of launch. “To know you are to go on a certain date…that is quite powerful,” says Rob Staples, Business Manager of Launch at SSTL. “The small satellite market currently struggles with the timeliness of a mission.” The previous examples show that dedicated launch providers differ between those that launch in the air (from a carrier aircraft) and those focussed on vertical launch from the ground. Offering UK launch capabilities to accommodate both is the preferred option, in order to stimulate more than one type of provider. According to the Civil Aviation Authority’s report on spaceplane operations from the UK, several studies have indicated that the only suitable location in the UK for a vertical launch site would be the north coast of Scotland. Therefore, separate spaceport sites for spaceplane operations and vertical launch could be established, assuming strong commercial business cases are developed by these site operators. Given the trends towards lower satellite mass and constellations, there’s a possibility of dedicated secondary payload missions being offered by existing heavy launch providers. For example, Jonathan Hofeller, Director of Business Development at SpaceX, says the company is considering “dedicated rideshare” launches, with its Falcon 9 rocket carrying a collection of smallsats that would ordinarily fly as secondary payloads on other launches. “We’re trying to push a new normal, in some sense,” he says, “where we can foster missions that are dedicated to secondary payloads.”44 It’s likely that SpaceX would work with a third party to aggregate the individual satellites for launch on those missions. Whether increased numbers of satellites will also equate to significantly more new dedicated launch vehicles, is difficult to forecast. If the UK is not prepared to address the opportunity in the growth of the launch market over the next decade, further consolidation by the US and Russia is the likely result, with competition emerging from India and China. If this is the case, then relying on other nations for launch capabilities, brings with it uncertainty around schedules, pricing and, ultimately, access to space. 44 Spacenews.com (2015), “Smallsat Developers Enjoy Growth In Launch Options”, see www.spacenews.com/ smallsat-developers-enjoy-growth-in-launch-options/ accessed 21st June 2015
  24. 24. 24 Opportunities for the UK The two most compelling reasons for investment in low cost access to space are gains through: First mover advantage. Industry welcomes the UK government’s current pace and momentum towards establishing a launch capability to take advantage of the growing market opportunity. Adhering to a stringent timeline is crucial to maximise the overall growth potential of UK based space launch services and to gain advantage over possible competition from other planned spaceports, such as in Sweden or the UAE. Predicted growth in satellite constellations. The number of EO satellite constellations creating images of the Earth with higher temporal resolution is increasing, and the preference is for sun- synchronous and polar orbits, achievable from the UK. In addition, small communication satellite constellations, such as OneWeb, are planned to operate in near-polar orbits. However, forecasting launch market revenues is difficult given the range of variables in play, including: AA the number of small satellites that could be launched in any single launch event; AA whether or not announced commercial satellite constellations are realised. As an illustrative estimate of potential UK revenue, if we assume five launches per annum and an approximate cost of £5m per launch, baseline figures could be in the order of £25m per annum.45 Adding annual revenues of £50m from human spaceflight46 increases this to £75m per annum. Applying the space sector’s gross value-added (GVA)47 multiplier of 2.248 (which implies that each £1 generates £1.20 worth of GVA in the supply chain and supporting sectors) gives a rough estimate of direct economic impact of £165 million. However, this assessment does not include the long term benefits that UK launch capability would bring - new opportunities and the chance to develop skills (further work is required to investigate the direct and indirect economic impact of low cost access to space from the UK). Further non-calculable benefits include: greater flexibility for satellite operators, enabling the downstream applications market and providing a European, dedicated small satellite launch location. 45 Estimates by Satellite Applications Catapult 46 Satellite Applications Catapult (2014), Spaceport UK: Forging Ahead With Commercial Confidence, p.14 Available from: www.sa.catapult.org.uk/market-reports (accessed 28th February 2015) 47 Estimating indirect contribution of the sector, beyond the boundaries of the industry itself 48 UK Space Agency (2014), The Size and Health of the UK Space Industry, Available from: www.gov.uk/government/ uploads/system/uploads/attachment_data/file/363903/SandH2014final2.pdf (accessed 28th February 2015). A multiplier of 2.2. implies that each £1 of space economy GVA generates £1.20 worth of GVA in the supply chain and supporting sectors GROWTH POTENTIAL
  25. 25. 25 Geopolitical reasons are a further consideration. Current launch options are concentrated and vulnerable to geo-politics. Russian launch providers experienced a drop in orders as a result of doubts over reliability and the conflict in Ukraine. Given sanctions imposed on Russia by western governments, there is a continuing risk of retaliatory sanctions which could impact on the supply of Russian launch vehicles to non-Russian friendly payloads. Political factors can also affect launch vehicles irrespective of location. For instance, one of the most popular rockets, the Atlas V, is reliant on Russian-built RD-180 engines. In 2015, in response to Russian threats to ban exports of these engines, US Congress prohibited the future use of Russian engines for national security launches.49 Although the ban has since been effectively overturned, it underscores the danger of reliance on another nation’s technology and launch capabilities. 49 http://spacenews.com/spending-bill-lifts-rd-180-ban-puts-ula-back-in-competitive-game/#sthash.AAokOti8.dpuf
  26. 26. 26 AA Pursuing a low cost access to space agenda will enable a vertically integrated small satellite industry that is more competitive in the global marketplace; a complete mission package. AA Whilst revenues from launch services are not expected to be as significant as other parts of the value chain, the strategic importance of a low cost, domestic launch capability cannot be underestimated. It will support both the established and developing UK satellite manufacturing industry and help facilitate human spaceflight and science research. If no indigenous small launcher is developed, short term requirements could be met through international collaboration. A number of international launch options are currently being built or planned, but regulatory agreement will be key to successful collaboration. AA Launch from the UK offers an alternative solution to the continued consolidation of small launch market power by non-European nations. It presents an opportunity for the European space sector as a whole. AA There is growing demand for small satellite constellations: in earth observation and satellite communications. With its leading capability in small satellite manufacturing, the UK is ready to take advantage of this and can win a larger percentage of orders than its overall share in the global space industry might suggest. AA A spaceport is the key infrastructure for low cost access to space capability. Considering both horizontal and vertical launch sites is vital to attracting the broadest range of launch options. CONCLUSIONS
  27. 27. 27 As has been demonstrated, there is considerable opportunity for the UK in the area of low cost access to space. To ensure this opportunity is realised, a number of actions are recommended for industry, Government, Catapult and academia. 1. Co-ordination across the value chain A one-stop shop solution for small satellite customers requires the development of vertically integrated capability. To achieve this, the primary action for industry is to offer competitive solutions and services. There are three main ways it can do this: AA Define the UK’s unique selling points (USPs) for small satellite launch, by working with Government to clarify and quantify value and commercial benefits to customers. AA Assist in securing a pipeline of customers through dialogue with emerging small satellite launch providers, brokers and satellite operators to promote launch demand from the UK. Committed customers are essential to support business case development for launch vehicle providers and spaceport operators. AA Continue to develop a case for indigenous launcher development. The UK Space Propulsion Working Group, for example, should actively monitor the fast growing market for small satellite launch services and potential sources of investment. Industry should also support Government in its action items to ensure a successful outcome. Additionally, a regular ‘Access to Space’ event would harness the expertise of UK commercial, research and institutional bodies and act as a vehicle to review progress on the low cost access to space agenda. The primary action for Government is to create a regulatory environment that promotes growth. This can be achieved through: AA Clearly setting out the regulatory requirements for every stage of launch and assessing the associated delay factors and costs to industry. Regulatory processes will be necessary at several stages of each launch - from procurement, licensing and safety controls to post-launch confirmation of orbit achieved and upper stage disposal. There are concerns similar to the International Traffic in Arms Regulations (ITAR), in respect of blocking or delaying factors and potentially high costs. AA Creation of a favourable regulatory environment to launch and operate small satellites from the UK with the aid of a study benchmarking UK licensing competitiveness against other major space-faring nations. RECOMMENDATIONS
  28. 28. 28 Three courses of action are recommended for the Satellite Applications Catapult: AA Business case development for vertically integrated capability across the UK satellite industry value chain. The Catapult should also help the UK Space Agency and industry qualify the USPs for small satellite launch from the UK. AA Development of an In-Orbit Demonstration (IOD) programme to: help de-risk new small satellite technologies; showcase UK capability in space applications and act as a potential anchor customer for smallsat launch providers. AA Support the development and demonstration of downstream applications through public and private sector collaboration to deliver on growth targets. Academia should: AA In partnership with the UK Space Agency, commission a survey to establish demand for microgravity research if lower cost platforms (e.g. spaceplanes) with greater microgravity exposure were available. AA Focus on commercialising world-class academic research in upstream and downstream markets and exploit opportunities through international partnerships. AA Develop the skills base to support world-class expertise across the satellite industry value chain.
  29. 29. 29 2. Establishing an operational spaceport A UK spaceport would be a pillar of growth for the UK and European space industry, enabling lower cost access to space and creating economic benefit far beyond its perimeter. To achieve this, the following actions from industry, Government, Catapult and academia are recommended: Industry should: AA Advise and work with Government for progress on ITAR and other regulatory discussions, including liability indemnification. AA Investigate the benefits of co-locating manufacturing facilities with a spaceport site (build, assembly, and test). Government should: AA Develop a cost efficient solution to ITAR, through dialogue with the US Government and launch industry, to establish spaceplane and orbital operations in the UK. An agreement should ensure that additional cost burdens are not placed on launch operators’ suppliers, as this could render a UK launch service uncompetitive in the global market. AA Attract initial anchor tenants to a UK spaceport via flight demonstrations on small satellite launch vehicles. A government anchor customer has been critical for all space launch systems to date, including commercial ones, and is even more important for the emerging small satellite launch market. NASA, for example, recently announced $17m worth of agreements, with Virgin Galactic, Rocket Lab and Firefly, to launch experimental satellites through its Venture Class Launch Services programme.50 AA Accommodate launcher diversity by building on existing industry studies51 and commissioning a full report into the feasibility of a vertical launch site in the UK, thereby increasing the range of launch options. 50 https://www.nasa.gov/press-release/nasa-awards-venture-class-launch-services-contracts-for-cubesat-satellites 51 Surrey Satellite Technology Ltd (2013) “Towards a UK launch infrastructure”. Unpublished study, part of the Space Collaborative Innovation Team Initiative (Space CITI) programme within the UK Space Agency’s National Space Technology Programme (NSTP)
  30. 30. 30 AA Define the business environment for the UK’s small launch service with the establishment of a tariff for spaceport infrastructure. This would clarify issues of ownership, actions allowed and payments between the site and spaceport builders, operators, launch and payload providers, as well as regulators. Given that there are uncertainties, candidate business model matrices could be set out to clarify: a. The infrastructure that will be available at the spaceport/launch site. b. How the cost of infrastructure to support launch will initially be paid for. c. Whether the cost will be fully amortised through charges or discounted to take into account net economic impact. Satellite Applications Catapult should: AA Further promote the benefits and business case for a UK spaceport. AA Work with licensed UK spaceport/s to ensure a complete business package including regulation, licensing, integration, launch and satellite data exploitation. Academia should: AA Investigate the benefits and costs of co-locating research facilities with a spaceport site. AA Work with small satellite launch providers and Government to ensure UK science payloads have reliable and low cost access to space.
  31. 31. 31 Risks to smallsat market opportunity AA New launch providers not as price competitive – If SpaceX can offer a cost of approximately $5,000/kg to LEO (with the ambition to get that cost down further to $1,000/kg), new entrants may not be able to benefit from the economies of scale that larger launch vehicle providers can take advantage of. New market entrants, to recover the cost of vehicle development, may be forced to charge higher prices than rideshare/piggyback opportunities in the short to medium term of the life of their dedicated small satellite launch vehicle. If these dedicated launch options are not price competitive (particularly due to launch rates), satellite manufacturers/operators/ brokers may continue to choose the piggyback option on a pure cost comparison basis. AA Regulatory concerns – Whilst “buying-in” launch capability to the UK can be attractive because non-recurring costs are already met in the development of the vehicle by non-UK players, this poses a risk to operation from the UK if regulatory agreements are changed or adjusted based on factors outside of the control of the launch vehicle manufacturer or operator. AA Spaceplane launch focus – by only seeking to enable spaceplane operations in the near to medium term, and not vertical small satellite launch vehicles, launch options are then limited. AA Launch decision disintermediated – Domestic satellite manufacturers like SSTL and Clyde Space do not necessarily buy the launch capacity/decide where the satellite is launched from. This is usually the decision of the satellite operator, or a decision disseminated to a launch broker – in which case there may be multiple non-UK options available for the operator to choose from. However, if there is a competitive service being offered from the UK, then most operators would likely consider it. Regulatory Blockers AA Liability indemnification - The Outer Space Act 1986 was established to ensure that the UK maintains compliance with international obligations under the UN Outer Space Treaty 1967. The licensing regime under the UN Outer Space Act (OSA) enables the UK Government to pass its liability to its licensees. Following a consultation process and the Deregulation Act 2015 made law (March 2015), the UK Government has accepted to set a maximum amount of a licensee’s in-orbit liability on a per mission basis; which is progress since the original unlimited liability requirement.52 Whilst the reform is a step in the right direction, the insurance premiums required for satellite operators to self-insure and 52 UK Parliament (2015), Deregulation Act 2015, Available from: www.legislation.gov.uk/ukpga/2015/20/section/12/ enacted (accessed 7th April 2015) APPENDIX
  32. 32. 32 indemnify the Government against in-orbit risk still represent a significant cost and are burdensome for entrepreneurs looking to create new small satellite businesses in the sector. This additional cost reduces UK satellite operators’ global competitiveness in the space industry. In the same consultation, the UK Government decided to defer a decision on waiving the capped liability and insurance requirement for the in-orbit operation of CubeSats and other nanosatellites.53 AA License fees - Each spacecraft is required to obtain a separate license from the UK Space Agency, the application fee for which is currently £6,500. UK Space Agency has stated that it is willing to consider licensing constellations of identical satellites under the same license, but there is no standard process in place, creating uncertainty. The issue is compounded for constellations comprising a number of satellites that are becoming increasingly common. AA Two years of audited financial statements is a very difficult requirement to meet for new business start-ups. This effectively prevents new companies from obtaining a license and starting new satellite businesses in the UK, moreover the licensing process needs to start 6 months prior to the launch and it takes as long to build the satellite. UK Space Agency has stated that exceptions can be made with guarantees, but this lacks a consistent and predictable process for businesses. AA Lack of transparency and clear procedure - a license requires approval from UK Space Agency, BIS (Department for Business, Innovation & Skills) and Ofcom. The existing procedures in the UK are unclear and lack transparency as to the technical, financial, and legal assessments required for the Management of Satellite Filings. The lack of certainty regarding the weighting of the licensee responses to all the questions that need to be answered is discouraging and blocking for applicants, but is also a problem for large established businesses, making it difficult for companies to attract funding and growth capital. All stakeholders should work together to address these risks and challenges to implementing the low cost access to space agenda from the UK. 53 UK Space Agency (2013), Reform of the Outer Space Act 1986: Summary of responses and Government response to consultation, Available from: www.gov.uk/government/uploads/system/uploads/attachment_data/file/295769/gov- response-osa-consultation.pdf (accessed 15th March 2015)
  33. 33. Published by the Space Growth Partnership “Working together to develop and deliver the UK’s Space Innovation & Growth Strategy” www.spacegrowthpartnership.org Report edited by Adriana Hamacher adriana@hipgeeks.com Design by Helen Boosey www.helenboosey.co.uk

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