IGS LOW COST ACCESSTO SPACEApril 2016

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Executive Summary 3Market Overview 6 Background 6 Satellites 7 Science in space 14 Humanspaceflight 17Market Drivers 18 Small satellite market 19 Smallsatlaunchproviders 22Growth Potential 24 OpportunitiesfortheUK 24Conclusions 26Recommendations 27 Co-ordinationacrossthevaluechain 27 Establishinganoperationalspaceport 29Appendix 31 Risks to smallsat market opportunity 31 Regulatory blockers 31

TABLE OF CONTENTS

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Allrightsreserved.Nopartofthisdocumentationmaybereproducedbyanymeansinanymaterialform(includingphotocopyingorstoringitinanyelectronicform)withouttheconsentoftheCopyrightOwner,exceptinaccordancewiththeCopyright,DesignsandPatentsAct,1988,orunderthetermsofalicenseand/orconfidentialityagreementissuedbytheCopyrightOwner,SatelliteApplicationsCatapult.Applicationsforthecopyrightowners’permissiontoreproduceanypartofthisdocumentationshouldbeaddressedto,TheChiefExecutiveOfficer,SatelliteApplicationsCatapult,ElectronBuilding,FermiAvenue,Harwell,Didcot,Oxfordshire,OX110QR,UK.

Report Author: ConorO’Sullivan,SatelliteApplicationsCatapult

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TheUK’ssatellitetechnologies,applicationsandintelligentspacesystemsareexportedacrosstheworld.ThisreportfocusesontheUK’sleadingexpertiseinthesmallsatellitemarket1,agrowingsegmentofthespacesector,forwhichlowcostaccesstospaceisofsignificantimportance.Smallsatellitesarecurrentlyunder-servedwhenitcomestodedicatedandtimelylaunchopportunities,andaddressingthisissueisofparticularrelevancefortheUK.Definedastheinfrastructureandservicesrequiredtoenablethenextgenerationofhardwaretoreachspaceatanaffordablecost,lowcostaccesstospaceincludessatellitepayload(thebrainthatwillensurethesatellitedoeswhatitismeanttodo)andspacecraftbus(thespacecraftplatform)manufacturing,test,integrationandlaunchfacilities.TheUKcurrentlyhasworld-leadingcapabilityinallpartsofthesatelliteindustryvaluechain,exceptlaunch.Thismakesitvulnerabletolaunchpriceandschedulechangesfrominternationalpartnersandsuppliers2 andposesanincreasingrisktoachievingtheUKspacesector’sambitiousgrowthtargets.Smallsatellite-basedmissionsandservicesareparticularlyatrisk.Launchisexpensive,itcantypicallyaccountforathirdtoonehalfofthetotalcostofasmallsatellitemission.Uncertaintyregardingscheduleandpricecanseriouslyimpactabusinesscaseandcanbethedecidingfactorinconcludingorlosinganorder.3 Reducing thisuncertaintyisparticularlyimportantfortheUK’ssmallsatellitemanufacturingindustry,whichaimstoprovidecompetitive,integratedmissionpackagesforsatelliteoperators,togetherwiththetimelytestingofnewtechnologies.Debatingthecurrentlackofindigenouslaunchcapabilityin2015,theUKSpacePropulsionWorkingGroup4foundthat:“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

1Definedhereasthosesatelliteswithmasslessthan500kg2SurreySatelliteTechnologyLtd(2013)“Towards a UK launch infrastructure”.Unpublishedstudy,partoftheSpaceCollaborativeInnovationTeamInitiative(SpaceCITI)programmewithintheUKSpaceAgency’sNationalSpaceTechnologyProgramme(NSTP)3Interview,April2015,SurreySatelliteTechnologyLtd4UKSpacePropulsionWorkingGroup(UKSPWG),anindustry/academicbodythatisconsideringthetechnologyandsupplychainrequiredforsmallsatellitelaunch,inparticularpropulsion.5UKSpacePropulsionWorkingGroup(2015)“Increasing revenue growth is the UK space sector through development of a small satellite launch capability”MultipleIndustryContributors

EXECUTIVE SUMMARY

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LowcostaccesstospacecreatesarealopportunityforacompletesolutionfromtheUK,spanningtheentiresatellitevaluechain-strengtheningthesmallsatelliteindustry,supportingthegrowthofmanufacturers,propulsionprovidersenablingnextgenerationofre-usablelaunchersincludingnewpropulsioncapabilitysuchasSABREfromReactionEngines,andadvancingthedownstreamapplicationssector(Fig.1).Additionally,indigenouscapabilityupstream,includinglowcostlaunch,enablesincreasingvaluecreationdownstreaminspace-enabledapplicationsandservices.Applicationsandservicesareexpectedtoaccountforover90%ofUKspaceindustryrevenuesby2030.6 Vertical integrationisthereforekey.

FIG.1.SATELLITEINDUSTRYVALUECHAIN.SOURCE: SATELLITE APPLICATIONS CATAPULT (2015)

Theimportanceofsecuringupstreamresources-satellitesandgroundsupportinginfrastructure-isevidentinincreasingcommercialenterpriseactivitiesinthissector.Google,alongwithotherssuchasFidelity,investedalmost$1billioninlaunchvehicleproviderSpaceXin2015.7GooglealsoboughtSkyboxImaging(renamedTerraBella),acommercialhigh-resolutionsatelliteanalyticsprovider,for$500millionin2014.8

6SpaceInnovationandGrowthStrategy2014-2030,SpaceGrowthActionPlan7http://blogs.wsj.com/digits/2015/01/21/spacexs-valuation-rockets-to-12-billion-with-google-investment/8http://www.forbes.com/sites/ellenhuet/2014/06/10/google-buys-skybox-imaging-not-just-for-its-satellites/#4e8ce8bd425d

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Thenumberofsmallsatelliteconstellations,whichdemandacost-effectivelaunchsolution,isgrowingandlowcostaccesstospaceallowsnewsatellitecompaniestoenterthemarketandtotestnewbusinessmodels.Withcompetitivelaunchpricesfromsmallsatellitelaunchvehicles,aleadingdomesticsatellitemanufacturingindustryandaccesstopolarorbits(towhichmostsmallsatellite,lowearthorbitmissionsgo),theUKisinprimepositiontocaptureasizeableshareofthisburgeoningglobalmarket.Tosummarise,thekeyfindingsofthisreportare:Low cost access to space is fundamental to a growing small satellite industry:verticallyintegratedcapabilitywillcompletethesatelliteindustryvaluechainandcreateauniqueadvantagepoint.Lowcostaccesstospaceisakeyrequirementforanymajorplayerinthissector,leadingtoincreasedeconomicbenefitsthroughsatellitemanufacturing,applicationsandservices.An operational spaceport to support orbital access is a top priority: aspaceportwillpositiontheUKtotakeadvantageofemergingdemandforsmallsatellitelaunch,commercialhumanspaceflightandmicrogravityresearch.AssuringtimelyanddedicatedaccesstospacewillcreateanopportunitynotjustfortheUK,butforEuropeasawhole.Asrobustandresilientspaceassetsandspacebasedcapabilitiesbecomeincreasinglysignificantfornationalsecurityanddefence,aUKlaunchsiteislikelytobecomeafuturestrategicrequirement.

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BackgroundThisreportfocusesonlowcostaccesstospace,identifiedasaprioritymarketwithintheSpaceInnovationandGrowthStrategy(IGS),andhasbeenproducedbytheSatelliteApplicationsCatapult,inpartnershipwiththeUKSpaceAgency.Itisderivedfromacombinationofmeetings,workshopsandinterviewswithkeygovernmentandindustrystakeholdersandexistingresearch.CentraltotheIGSisthegoalofcapturing10%oftheglobalspaceenabledmarketby2030,takingtheUK’sshareoftherevenueto£40bnandcreating100,000newjobs.Withthisinmind,thesubsequentSpaceGrowthActionPlanidentifiedfortygrowthmarketsrelyingonspacetechnologyorservices(Fig.2)andfifteenofthesewerejudgedtobeprioritymarketsfordetailedreviewandsubsequentactionbygovernment,industryandotherstakeholders.

FIG.2.IGSPRIORITYMARKETS

MARKET OVERVIEW

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TheSpaceIGS2013reporthighlightscurrentaccesstospaceasabarriertogrowthforUKcompanies,aswellasacommercialopportunity,andadvocatesshorttomediumtermactioniftheUKistohostcommercialspaceflightandsmallsatellitelaunch.AnationalspacelaunchinfrastructureanddomesticlaunchcapabilityunderpinsIGSgrowthtargetsandiscentraltocapitalisingonbothexistingUKstrengthsinsmallsatellitemanufacturingandfuturedemandforspacetourismandmicrogravityresearch.MarketprojectionsindicatethatlowcostaccesstospacefromtheUKwouldsupportandstimulategrowthinthesesectors.Aseamlesssupplychain,withlowcostsandfasterdevelopmentcyclesforsatellitemanufacturers,operatorsandlaunchproviders,wouldalsoofferopportunitiesforcommercialcompaniesfocusingonthedownstreamexploitationofsatellitedata.

SatellitesTheUKishometoworld-leadingsmallsatellitemanufacturers,includingSurreySatelliteTechnologyLtd.(SSTL),andClydeSpace,aswellaslargersatelliteproducersincludingAirbusDefenceandSpaceandThalesAleniaSpace.TheUKisthuswellpositionedtobuildonanestablishedcompetitiveadvantageinthesatellitemanufacturingmarketandUKdomesticsatellitemanufacturingstandstobenefitfromglobalgrowthinthesector.Thisupstreamsectoraccountedforapproximately11%,or£1.2bn,ofthetotal£11.3bnspaceindustryturnoverin2012/13,accordingtothereport,Size and Health of the UK’s Space Industry.TheIGSexpectsthissegment’srevenuetoalmosttripleto£3bnby2030.Recentmulti-milliondollarinvestmentsinventuresincludingPlanetLabs,Spire,SpaceXandOneWeb9,demonstratecontinuedcommercialinterestinthenano,microandminisatellitesectors(Fig.3).Theadoptionofconstellationsbynewbusinesses,involvedinactivitiesincludingremotesensingandsatellitecommunications,givesrisetooptimisticgrowthforecasts,describedlaterinthisreport.

9SpaceXannouncedinearly2015aconstellationofapproximately4,000smalltelecommunicationssatellitestobelaunchedintoLowEarthOrbit(LEO)(dateunspecified)andinJune2015OneWebannouncedacontractwithAirbusDefenceandSpacetobuildupto900satellites(includingspares)forasimilarconceptofaLEOconstellationofbroadbandsatellites,withlaunchesstartingin2019.

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FIG.3.SMALLSATELLITESEGMENTATIONSOURCE: SATELLITE APPLICATIONS CATAPULT (2015)

Satellite Market Trends1) Spacecraft massSatellitesaregettingsmaller.Miniaturisationoftechnologyandstandardisationaredrivingperformanceandefficiencyincreasesinatrendsimilartothatexperiencedbytechnologyasawhole.Thesmallestsatellitesareemployedinboththecivilandcommercialsectors(Table1)andtheirrelativesizecanbeseeninFig.4.

TABLE 1: SATELLITES LAUNCHED IN 2014, BY MASS CATEGORY

SOURCE: SERADATA, SPACETRAK BRIEFING, 2014 LAUNCHES

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FIG.4.SATELLITESIZEANDIMAGINGCAPABILITIESOFEARTHOBSERVATION(EO)DATAPROVIDERS,SOURCE: NATURE INTERNATIONAL WEEKLY JOURNAL OF SCIENCE (2014)

2) Satellite Orbits ThevastmajorityofsmallsatellitesarelaunchedintothelowEarthorbit(LEO),althoughitsinclinationdependsonwhatitismonitoring.SpaceWorks,amarketintelligenceprovider,suggeststhatby2018over70%ofnanoormicro-satelliteswillbeusedforEarthObservation(EO)missions.10Amongtheirmanyapplicationsaremonitoringtheair,seasandland;providingthebasisforaccurateweatherreports;andsupplyingnationalandinternationalreliefagencieswithtimelydatawhendisastersstrike.EO,atmosphericandweathersatellitestendtobelaunchedintoasun-synchronousorpolarorbit,definedashavinganinclinationofapproximately90degreestotheequator.Uptonow,theCivilAviationAuthorityhasclaimedthattheUK’snortherlylatitudemeansthatitisonlysuitableforlaunchingsatellitesintopolarorbit.11 It is generally acceptedthattheUKisnotsuitableforlaunchesintolow/mediuminclinationorbits,however,industrysourcesconsultedforthisreportsuggestthatlaunchingintoinclinedorbitsaroundtheUK’slatitude(50-60degrees)isalsopossible.ThisprovidesmuchgreaterscopeforlaunchasthesearetheorbitscommonlyusedbysmallcommunicationsatellitesoperatinginLEO.ThisisanincreasingmarketfromwhichtheUKcouldbenefit,ifitcanencouragelaunchvehicleproviderstooperateatcompetitiverates.

10SpaceWorksEnterprises,Inc.,(2016),“2016 Nano/Microsatellite Market Forecast”11CivilAviationAuthority(2014),UK Government review of commercial spaceplane certification and operations,p.28

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3) The launch marketAccordingtoFrost&Sullivan,globallaunchmarketrevenueswereapproximately$7bnin2013,andareexpectedtogrowtoaround$8.4bnby2025.ThebreakdownbycountrycanbeseeninFig5.

FIG.5.LAUNCHREVENUEBYCOUNTRY,2013SOURCE: FROST & SULLIVAN12

WhilecommercialsatellitelaunchrevenuesarecurrentlydominatedbytheUSandRussia,withapproximately35%oflaunchestakingplaceintheUS,alargeproportionoftheseordersarederivedfromEuropeandemand.13In2014,Europeansplacedthesecondlargestshareofcommerciallaunchorders(45%).14 AscanbeseeninFig.6,thereisacurrentlyagapinthemarketforanorbitallaunchsite15inconterminousEuropeanterritory(Kourou,notlocatedontheEuropeanContinentgeographically,isdulynotedasaEuropeanownedlaunchsite).However,thereareotherpotentialcompetitorsforEuropeanlaunchsites:AndøyainNorwayandKirunainSweden.Onaccountofgeographicalproximityandlowerlogisticalcosts,16 a UKlaunchfacilitywouldthushaveagoodchanceofgainingEuropeanorders.

12Frost&Sullivan(2014), Global Launch Systems and Satellites: Demand for Space Capabilities Will Increase as Competition Drives Prices Down 13CivilAviationAuthority(2014),UK Government review of commercial spaceplane certification and operations,p.2914SatelliteIndustryAssociation(2015),“State of the Satellite Industry Report”,availablefromwww.sia.org/wp-content/uploads/2015/05/Mktg15-SSIR-2015-FINAL-Compressed.pdf(accessed1stJune2015)15Thetermslaunchsiteandspaceportareusedinterchangeably.16CivilAviationAuthority(2014),“UK Government review of commercial spaceplane certification and operations”,p.29

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FIG.6.MAJORGLOBALSPACELAUNCHFACILITIES.SOURCE: VARIOUS (2014)

4) Export potential and inward investmentTheUKspacesector,asawhole,isexport-intensive.Exportsareestimatedtomakeuparoundtwothirds(66%)ofturnoverforcompaniesintheUKspaceeconomy(excludingBSkyB).17Theyconstitutealargeproportionofrevenuesforsatellitemanufacturing.ThereisthussignificantopportunityforexportofUKbuiltsatellitemanufacturingcomponentsandfinishedgoods.Approximately90%ofSSTL’searningsresultfromexportorders18andotherexport-intensiveexamplesinclude:theprovisionofpowersystemsforLuxembourg-basedspacecompany,LuxSpace,byGlasgow-basedClydeSpaceinadealvaluedat£1.2m;aseconddeal,worthnearly£1m,involvingUS-basedSpireInc.19andaninternationalpartnershipdealfundedbytheUKSpaceAgencytobuildthreeCubeSatsforAmericanglobalbroadcastcompany,OuternetInc.for£1m.20 Anend-to-endsupplychainwouldencouragemoresmallsatellitecompanies,likeSpire,21tosetupintheUKandtakeadvantageofacompletesolution.

17Source:CaseforSpace201518SSTLwebsite(2013),UK’s Space Innovation and Growth Strategy 2014-2030 is good for business,Availablefrom:www.sstl.co.uk/Press/UK-s-Space-Innovation-and-Growth-Strategy-2014-203(accessed28thFebruary2015)19BBCwebsite(2014)retrievedfromwww.bbc.co.uk/news/uk-scotland-2974395820ClydeSpacewebsite(2015),“Clyde Space wins £1m Outernet contract”,Availablefrom:www.clyde-space.com/news/417_clyde-space-wins-1m-outernet-contract(accessed15thMarch2015)21InJune2015Spireannouncedthecreationof50newjobsatitsofficeinGlasgow.Spire’ssatellitemanufacturingpartnerinGlasgowisClydeSpace.http://www.bbc.co.uk/news/uk-scotland-scotland-business-33066479

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Newgeographicalmarketspresentfurtheropportunities.TheSizeandHealthoftheUKSpaceSectorsurveyhasreportedincreasedexportintensityinsalestoforeigncustomerswhicharegrowinginmostregionsatsustainedrates.ThecompositionofcustomerlocationisalsochangingwithAsianturnoverdoublingsince2010/11,salesinEurope(outsidetheUK)growingby50%andsalestotheAmericasby11%(Fig.7).22

FIG.7.REALGROWTHRATEOFTURNOVERBYCUSTOMERLOCATION.SOURCE: UK SPACE AGENCY & LONDON ECONOMICS (2014)

22UKSpaceAgency(2014),The Size and Health of the UK Space Industry,Availablefrom:www.gov.uk/government/uploads/system/uploads/attachment_data/file/363903/SandH2014final2.pdf(accessed28thFebruary2015)

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Current Launch Scenario Currently,theonlywaysmallsatellitescangetintospaceisthroughrideshareopportunities.Launchedas“piggyback”payloads(Fig.8),theyusetheexcesslaunchcapacityonarockettravellingintoorbitortotheISS.

FIG.8.PIGGYBACKPAYLOADTOSPACECOPYRIGHT: FORBES

Therearemultipledrawbackstothisapproach: A Therequirementoftheprimarypayloadmightchange,puttingthesmallsatellite’smissioninjeopardyandcreatinglongdelays.Delaysinlaunchcanamounttoayearormore.

A Theprimarypayloadmaybegoingtoacrowdedorbit,oraninclinationoraltitudethat’snotdesirableforthesmallsatellite,sothesatelliteoperatoroftenhastomakedowithasecondbestorworsesolution.Theabilitytonominateanexactorbitisessentialwhenbuildingaconstellationoverseverallaunchesandiskeytoclosingabusinesscaseforsmallsatelliteoperators.

A Thecertaintyofafixedlaunchpriceisavitalrequirementforwinningon-orbitdeliveryworkcontract.However,thisisdifficultforsmallsatellitestoachieve,particularlyinthenegotiationorearlystagesofalaunch.

A Transportingsatellitesandteammemberstointernationallaunchlocations,negotiatingcustomsandotherexportregulations,incursadditionalcosts.

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A Thedecisionaboutifandwhentolaunchlieswiththelaunchprovider.Additionalpayloadsfromanothernationmaybejeopardizedbypoliticallymotivateddecisionsorinstability.

Thus,launchisakeydependencyforsatellitemanufacturers,totheextentthatabusinesspartnercandelayaproductorserviceordictatewhenitbegins.Suchrelianceonpartnershipsrepresentsarisktoabusinessmodelandit’slikelytobeunsustainable,accordingtoaSpaceWorksreport:“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 Anumberoflaunchcompaniesaredevelopingsolutionstotheseproblemsandweoutlinesomeoftheseinthesectiononsmallsatellitelaunchproviders;theyareenablingsmallsatellitestomeettheirspecificmissionrequirements,atanaffordablecost.24

Science in spaceMicrogravityplatformsareusedbythesciencecommunitylargelyforresearch,particularlyin:

A Biosciences:forproductdevelopmentandresearch,especiallyindiseasemodelling,tissueengineering,biopharmaceuticals,vaccinedevelopment,cellbiologyanddrugtestinganddelivery.Changesinthehumanbodyandcrystalstructuresarealsoofinterest.

A Physical and materials science:opportunitiesincludeenergy,nanotechnology,advancedmanufacturing,aerospaceandIT.Areasofspecificfocusincludenanomaterials,analyticaldevices,energysourcegeneration,propulsionandcombustion.

MosthighlyprizedandofferingthelongestexposuretomicrogravityisaslotsecuredontheInternationalSpaceStation(ISS)butit’salsoexpensiveandsubjecttocompetition.Othermicrogravityplatformsincludeparabolicflights,droptowersandsoundingrockets.

23SpaceWorks(2014),Trends in Average Spacecraft Launch Mass,seewww.spaceworksforecast.com/docs/SpaceWorks_Spacecraft_Mass_Trends_2014.pdf(accessed28thFebruary2015)24SpaceWorks(2014),Trends in Average Earth-Orbiting Spacecraft Launch Mass: Exploring market potential for a dedicated nano/microsatellite launch vehicle,Availablefrom:www.spaceworksforecast.com/docs/SpaceWorks_Spacecraft_Mass_Trends_2014.pdf(accessed28thFebruary2015)

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Exposuretomicrogravitythroughsub-orbital,re-usablevehicles(SRVs),orspaceplanes,canincreasethefrequencyofexperimentsandactasaprecursortotheISS,atanaffordablecost.Theyalsohaveadvantagesoversoundingrocketsandparabolicflightsindurationofmicrogravityandleadtimeforexperimentstostart.AcomparisonofthedifferentplatformsisseeninTable2.

TABLE 2: MICROGRAVITY PLATFORM COMPARISON25

*BASED ON XCOR LYNX SRV

Ifanewaplatform(anSRV,forexample)withcomplementarypropertiestoexistingoptionsbecomesavailable,scientistswillfindauseforit.However,thisonlybecomesviableifsufficientfundingisinplace,forhardware,flightandgroundbasedpreparation.Thecostalsoneedstocompetefavourablywithexistingplatforms.LowcostaccesstospaceviaSRVslikeVirginGalactic’sSpaceShipTwoandXCOR’sLynxcouldresultinincreasedinterestfromcommercialplayers,especiallyintheBiotechandAerospacesectors.Expandingtheplatformsonwhichexperimentsareperformed26 willalsohelp.NASA,forinstance,hasselectedVirginGalactic’sSpaceShipTwoforpayloadexperimentsintheirFlightOpportunitiesProgramme.NASAhas,todate,announced12differentexperimentsforSpaceShipTwo’sfirstresearchflight,includingin-space3Dprinting,on-orbitpropellantdepots,asteroidformationandbiologicalgeneexpression.27 Whilemicrogravityexperimentsfromthescientificcommunitycouldbesubjecttoresearchcouncilsanduniversities’budgetconstraints,demandfromcommercialplayersisunlikelytodiminishandshowseverysignofincreasing.Atotalof818microgravity-relatedpatentswerefiledbetween1980-2005butthepastdecadehasseenmany

25SuborbitalResearchAssociation,seewww.suborbital-research.org/wp-content/uploads/2013/11/SRA-and-Lynx-Mission-Eng.pdf(accessed23rdJune2015))26NASAwebsite(2014),NASA,Virgin Galactic Announce Payloads for SpaceShipTwo Flight,seewww.nasa.gov/ames/nasa-virgin-galactic-announce-payloads-for-spaceshiptwo-flight/#.VPItV_msWSp(accessed28thFebruary2015)27Ibid.

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more,withafurther580applications28.Thissuggestsagrowingtrendinmicrogravityresearchbyindustry,withapplicationsinbiotech,materials,instrumentationandaerospacesectorsbeingthemostpopular(Fig9).

FIG.9.TOP20PATENTCATEGORIES.SOURCE: UHRAN, M. (2012), MICROGRAVITY RELATED PATENT HISTORY29

MicrogravityresearchintheAerospace,Defence,PharmaceuticalsandBiotechnologysectorsisalsolikelytoincreaseinterestthroughtheUKacademiccommunity’sparticipationintheEuropeanprogrammeforLifeandPhysicalSciences(ELIPS),whichisfundedbytheEuropeanSpaceAgency(ESA).

28Uhran,M.(2012),Microgravity Related Patent History,Availablefrom:www.isscasis.org/portals/0/docs/2012%20patent%20history.pdf(accessed28thFebruary2015)29Ibid.

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Human SpaceflightAsidefromsupportingthesmallsatellitemarketandscienceresearch,lowcostaccesstospacecouldencourageanincreasinginterestinspacetravelfromthegeneralpublic.Launchrevenuescanbegeneratedfromopeningupthespacemarket,allowingnon-professionalenthusiaststoexperienceajourneythathas,uptonow,beenpossibleonlyfortrainedastronauts.Thisistheaimofcommercialspaceplanecompanies,likeVirginGalacticandXCORAerospace,whoareconductingteststomakethisarealityinthecomingyears.30PubliclyavailabledataforcurrentspaceflightexperiencebookingsonVirginGalacticandXCORisseeninTable3.

TABLE 3: SPACEFLIGHT EXPERIENCE BOOKINGS

SOURCE: VARIOUS PUBLICLY AVAILABLE WEBSITES (APPROXIMATIONS)

MorehighnetworthindividualsliveinLondonthananyothercityintheworld,31andthisisanimportantsourceofdemandforspaceplaneandspaceportoperators.A2014reportonthebusinesscaseforaspaceportintheUKestimatesthat,inthefirsttenyearsofoperation,thenumberofspaceflighttouristsusingsuchafacilitycouldnumberaround5,000.Thiswouldgeneratearevenueof£500mforspaceplaneoperatorswithcorrespondingbenefitsforthespaceportoperator.32 ItislikelythatmannedspaceflightfromtheUKwillalsoincreaseawarenessoftheUK’sspaceprogrammeandstimulate,tosomeextent,STEMengagement,ashasoccurredintheUS.33

30Publiclyavailabledataandcompanywebsites31KnightFrank(2014),The Wealth Report,Availablefrom:www.thewealthreport.net/resources/thewealthreport2014.pdf(accessed28thFebruary2015)32SatelliteApplicationsCatapult(2014),Spaceport UK: Forging Ahead With Commercial Confidence,Availablefrom:www.sa.catapult.org.uk/market-reports(accessed28thFebruary2015)33Interview,DaleKetcham,August2014

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Heavy lift focusRatherthansmallsatellitesecondarypayloads,thebiggestmarginsforexisting,launchproviders,areinheavysatellites.AccordingtoMarkAlbrecht,PresidentoflaunchserviceproviderILS:“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 Mostcompetitionamongexistingkeyplayersisstillcurrentlyintheheaviersideofthesatellitemarket,ascanbeseeninFigure10.

FIG.10.SELECTEDHEAVYLIFTLAUNCHPROVIDERSSOURCE: VARIOUS

Theexpectedgrowthinthesmallsatellitemarket,whichweaddresslaterinthissection,isunlikelytobesatisfiedbyexisting“piggyback”launchoptionsonsuchrockets.Instead,thegapinthemarkettoprovidecompetitiveservicesforsmallsatellitesstandstobeaddressedbynewlaunchvehicleentrants,fromspaceplaneoperatorstoverticalvehicles,withSpaceWorksreporting:“Though no clear winner has emerged, compelling evidence suggests the industry has a need for small launch vehicles.”35

34SpaceNewswebsite(2004),Availablefrom:www.spacenews.com/ils-abandoning-lower-end-launch-market/(accessed28thFebruary2015)35SpaceWorksEnterprises,Inc(2015),“2015 Nano/Microsatellite Market Forecast”

MARKET DRIVERS

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Small satellite marketSmall satellite constellations enable new types of mission to be deliveredcosteffectivelyandareagrowingtrend.Overtime,small,low-cost,highlyefficientsatelliteswillenablenewcustomermarketsandapplications.TheIGSestimatesthatdownstreamrevenuesfromuserequipment,space-enabledapplicationsandserviceswillgrowfrom£8bnto£37bnby2030.Thiswillinturnstimulatedemandfornewandimprovedspaceinfrastructure,includingsatellitesandsupportinggroundinfrastructure.“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.”(SpaceIGS2014-2030,SpaceGrowthActionPlan)Anumberofworld-leadingcompaniesengagedinthissectorarebasedintheUK,includingSSTL and Clyde Space.Theirnextgenerationsofspacecraftwillhaveevenshorterschedulesfromordertoorbit,reducedfixed-pricecostandenhancedsystems’capabilitiesandquality.OthersmallsatelliteplayersincludeUSbasedPlanet Labs,who,atthetimeofwriting,hashad133satellitessuccessfullylaunchedintospace.ThecompanyisaimingtoprovidecontinuousglobalcoverageoftheEarthfromitsconstellationofCubeSatsanddeliveractionableinsightstocustomersacrossarangeofdifferentindustries.AnotherAmericancompany,Spire,maintainsanofficeinGlasgowwhereit’spartneringwithClydeSpaceonaCubeSatconstellation.Spireplanstooperateaconstellationofsatellitestomonitortheoceansandprovidefivetimesmoreweatherdataprofilesthanwaspreviouslypossible.Perhapsthemosthigh-profilemanufacturerinthesectorisSpaceXwhichplanstobuild,launch,andoperateover4,000smallcommunicationssatellitesandthusprovideinternetaccesstounconnectedorunderservedpartsoftheworld.Atthetimeofwriting,thetimeframeofwhenthisconstellationwillbeoperational,wasunknown.OneWeb Ltd.,astart-upfoundedbyGregWylerandbackedbyAirbus,Intelsat,VirginGroupandQualcomm,amongstothers,sharesasimilarvisionandplanstolaunch648satellites(900includingspares),eachweighingaround150kginto18orbitalplanes,with36satellitesineachplane,atanaltitudeofaround1200km.Thefirstsatellitesareexpectedtobelaunchedin2019.

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Small satellite market forecastsAlthoughlaunchdemandexistsforarangeofsatellitemasses,analysisbyAirbusDefence&Spacesuggeststhat,thosesatelliteswithamassoflessthan200kgareunderservedbyexistingspaceaccesssolutions(Fig.11).

FIG.11.PERCENTAGEOFSMALLLAUNCHMARKETVALUE2010-2014

SOURCE: AIRBUS DEFENCE AND SPACE (2015)

OtherindustryexpertsappeartoagreeasisapparentfromacommentmadebyArianespace’sCEO:“We may need micro-launcher for growing 50-300kg SmallSat market. No formal proposal yet, but need to consider it.#IAC2015’36 Tomaximisethechanceofbeingcommerciallyviable,theUK’ssmalllaunchercapabilitymusttargetthemarketsegmentofhighestrevenueperlaunch(consideringtotallaunchpayloadmassandorbitattained).It’sdifficulttopreciselydeterminethisoptimumsegmentassatellitemarketforecastsarenotwhollyreliable;theyfocusonvolumeanddonotincludelaunchpricepoints.Additionally,recentmarketdevelopmentsindicatethatthesmalllauncherperformanceatwhichrevenueismaximisedwillevolveandshouldthereforebeleftopenforthemarkettodecide.Satellitesbelow100kgareanincreasinglyimportantsegmentofactivitywithinthesmallsatellite(smallsat)sectorbutnotthesoleareaofmarketfocusforasmalllauncher.ThemostconservativefiguresarefromEuroconsult,whichestimatesthatatotalof510smallsats(nanosats,microsatsandminisats)willbelaunchedinthenextfiveyears,approximating100 smallsats per year.Themarketvalueofthesesmallsatsisestimatedat$7.4bn,todevelopandlaunchthesatellites.Euroconsultreportsthatmarketgrowthwill

36PeterB.deSelding,SpaceNews,Twitter,13October2015.

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remainstrong(+17%)asthesmalldecreaseovertimeinpricesandinlaunchmasses(forsatellitesgreaterthan50kg)isoffsetbylargernumbersbeinglaunched.37 Northern Sky Research (NSR)forecaststhelaunchofover2,500sub-100kgsatellitesduringthenextdecade,approximating250 per year.Itslatestreport,Nano and Microsatellite Markets, 2nd Edition,forecaststhatactivityinthesegmentwillgeneratecumulativerevenuesexceeding€4.2bnformanufacturingand€1.1bnforlaunchservicesby2024.NSRbelievesthat,inthecomingyears,morethanhalfofalllauncheswillbefuelledbyconstellationdeploymentandreplenishment.38 ThemostoptimisticforecastisbySpaceWorks,whichhascoveredtheuseandlaunchofnanoandmicrosatellites(1-50kg)foranumberofyears.The2016forecastisforthelaunchofasmanyas3,000nano/microsatellitesbetween2016-2022,approximately 400 per year.39Accordingtothisreport:“In terms of quantity, the eruption of commercial companies and start-up activities will continue to drive the nano/microsatellite market”ThecommercialpotentialofsmallsatellitesisevidentinthesuccessofUS-basedPlanetLabsandSpirewhohave,todate,raised$183mnand$66.5mn,respectively,40inprivatecapital.PriortoitsacquisitionbyGoogleinJune2014for$500mn,SkyBoxImaging(recentlyrenamed,TerraBella),acommercialhigh-resolutionsatelliteimageryprovider,hadalreadyraisedover$90minthreeroundsofprivatefunding.41 Othercompaniesplanningtousenano/microsatellitestoprovideawiderangeofcommercialservicesincludeDauriaAerospace,DeepSpaceIndustries,GeoOptics,Tyvak,Outernet,PlanetaryResourcesandSpaceQuest.Whilenotallofthecurrentlyannouncedconstellationswillbefullyrealised,themanyindevelopmentandlowerdeploymentcostswillenableseveraltobecomeoperational.Whethertheincreasednumberofsatelliteswillequatetosignificantlymorededicatedlaunchesisdifficulttoforecast.Thenumberofsatelliteslaunched(volume)andlaunchmarketvalue(revenues)arenotnecessarilycorrelated.

37Euroconsult(2015),“Prospects for the Small Satellite Market,”seewww.euroconsult-ec.com/shop/space-industry/64-prospects-for-the-small-satellite-market.htmlaccessed25thSeptember201538NorthernSkyResearch(2015),“Nano and Microsatellite Markets, 2nd Edition,”seewww.nsr.com/news-resources/nsr-in-the-press/nsr-press-releases/nano-and-microsatellite-boom-to-lead-space-industry-diversification/accessed21stJune201539SpaceWorksEnterprises,Inc.,(2015),“2015 Nano/Microsatellite Market Forecast”40CrunchBasewebsite,seewww.crunchbase.com/organization/planet-labsandwww.crunchbase.com/organization/nanosatisfiaccessed1stJune201541Ibid.

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Smallsat launch providersThereareatleast20launchvehiclesindevelopmentaroundtheworldthataredesignedforsmallsatellitepayloads(weighingupto1,000kg),accordingtoarecentOrbitalATKsurvey42.Anumberofnewprovidersareattemptingtoaddresstheopportunityofferedbythecurrentgapinthemarketfordedicatedsmallsatellitelaunch.Thesesystemsallowsmallerpayloadstolaunchwhentheywant,totheirorbitofchoice.Some,butnotall,canbeseeninFig.12.

FIG.12.PLANNED,DEDICATEDSMALLSATELLITELAUNCHERS(N.B.FIGURESAREESTIMATES)SOURCE: LAUNCH COMPANY WEBSITES, ADDITIONAL SOURCES (2015)43

42Seewww.parabolicarc.com/2015/09/23/multiple-small-satellite-launch-vehicles-development/?utm_content=bufferb31ee&utm_medium=social&utm_source=twitter.com&utm_campaign=bufferaccessed25thSeptember201543Seealsowww.parabolicarc.com/2015/09/23/multiple-small-satellite-launch-vehicles-development/?utm_content=bufferb31ee&utm_medium=social&utm_source=twitter.com&utm_campaign=bufferandwww.eucass2015.eu/wp-content/uploads/Philippe_ADELL_JPL.pdfaccessed25thSeptember2015

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Atfirstglance,usingabasiccost/kgmeasure,noneoftheselaunchvehiclesareaseconomicalasthepiggybackrideshareoptiononaheavyliftrocket.Whetherornotsmallsatellitemanufacturersoroperatorswillconsiderpayingapremiumfordedicatedlaunchwillbelargelydependentonthepricingschedulesemergingsmallsatellitelaunchproviderscanoffer.Spaceportlaunchrateswillbeakeyfactorindeterminingthosepricingschedules.However,theindicationsarethatamodestpremiummaybejustifiedifitcomeswithgreatercontroloverthechoiceoforbitandtimeoflaunch.“To know you are to go on a certain date…that is quite powerful,”saysRobStaples,BusinessManagerofLaunchatSSTL.“The small satellite market currently struggles with the timeliness of a mission.” Thepreviousexamplesshowthatdedicatedlaunchprovidersdifferbetweenthosethatlaunchintheair(fromacarrieraircraft)andthosefocussedonverticallaunchfromtheground.OfferingUKlaunchcapabilitiestoaccommodatebothisthepreferredoption,inordertostimulatemorethanonetypeofprovider.AccordingtotheCivilAviationAuthority’sreportonspaceplaneoperationsfromtheUK,severalstudieshaveindicatedthattheonlysuitablelocationintheUKforaverticallaunchsitewouldbethenorthcoastofScotland.Therefore,separatespaceportsitesforspaceplaneoperationsandverticallaunchcouldbeestablished,assumingstrongcommercialbusinesscasesaredevelopedbythesesiteoperators.Giventhetrendstowardslowersatellitemassandconstellations,there’sapossibilityofdedicatedsecondarypayloadmissionsbeingofferedbyexistingheavylaunchproviders.Forexample,JonathanHofeller,DirectorofBusinessDevelopmentatSpaceX,saysthecompanyisconsidering“dedicatedrideshare”launches,withitsFalcon9rocketcarryingacollectionofsmallsatsthatwouldordinarilyflyassecondarypayloadsonotherlaunches.“We’re trying to push a new normal, in some sense,”hesays,“where we can foster missions that are dedicated to secondary payloads.”44It’slikelythatSpaceXwouldworkwithathirdpartytoaggregatetheindividualsatellitesforlaunchonthosemissions.Whetherincreasednumbersofsatelliteswillalsoequatetosignificantlymorenewdedicatedlaunchvehicles,isdifficulttoforecast.IftheUKisnotpreparedtoaddresstheopportunityinthegrowthofthelaunchmarketoverthenextdecade,furtherconsolidationbytheUSandRussiaisthelikelyresult,withcompetitionemergingfromIndiaandChina.Ifthisisthecase,thenrelyingonothernationsforlaunchcapabilities,bringswithituncertaintyaroundschedules,pricingand,ultimately,accesstospace.

44Spacenews.com(2015),“SmallsatDevelopersEnjoyGrowthInLaunchOptions”,seewww.spacenews.com/smallsat-developers-enjoy-growth-in-launch-options/accessed21stJune2015

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Opportunities for the UKThetwomostcompellingreasonsforinvestmentinlowcostaccesstospacearegainsthrough:First mover advantage.IndustrywelcomestheUKgovernment’scurrentpaceandmomentumtowardsestablishingalaunchcapabilitytotakeadvantageofthegrowingmarketopportunity.AdheringtoastringenttimelineiscrucialtomaximisetheoverallgrowthpotentialofUKbasedspacelaunchservicesandtogainadvantageoverpossiblecompetitionfromotherplannedspaceports,suchasinSwedenortheUAE.Predicted growth in satellite constellations.ThenumberofEOsatelliteconstellationscreatingimagesoftheEarthwithhighertemporalresolutionisincreasing,andthepreferenceisforsun-synchronousandpolarorbits,achievablefromtheUK.Inaddition,smallcommunicationsatelliteconstellations,suchasOneWeb,areplannedtooperateinnear-polarorbits.However,forecastinglaunchmarketrevenuesisdifficultgiventherangeofvariablesinplay,including:

A thenumberofsmallsatellitesthatcouldbelaunchedinanysinglelaunchevent;

A whetherornotannouncedcommercialsatelliteconstellationsarerealised.

AsanillustrativeestimateofpotentialUKrevenue,ifweassumefivelaunchesperannumandanapproximatecostof£5mperlaunch,baselinefigurescouldbeintheorderof£25mperannum.45Addingannualrevenuesof£50mfromhumanspaceflight46increasesthisto£75mperannum.Applyingthespacesector’sgrossvalue-added(GVA)47multiplierof2.248(whichimpliesthateach£1generates£1.20worthofGVAinthesupplychainandsupportingsectors)givesaroughestimateofdirecteconomicimpactof£165million.However,thisassessmentdoesnotincludethelongtermbenefitsthatUKlaunchcapabilitywouldbring-newopportunitiesandthechancetodevelopskills(furtherworkisrequiredtoinvestigatethedirectandindirecteconomicimpactoflowcostaccesstospacefromtheUK).Furthernon-calculablebenefitsinclude:greaterflexibilityforsatelliteoperators,enablingthedownstreamapplicationsmarketandprovidingaEuropean,dedicatedsmallsatellitelaunchlocation.

45EstimatesbySatelliteApplicationsCatapult46SatelliteApplicationsCatapult(2014),Spaceport UK: Forging Ahead With Commercial Confidence, p.14Availablefrom:www.sa.catapult.org.uk/market-reports(accessed28thFebruary2015)47Estimatingindirectcontributionofthesector,beyondtheboundariesoftheindustryitself48UKSpaceAgency(2014),The Size and Health of the UK Space Industry,Availablefrom:www.gov.uk/government/uploads/system/uploads/attachment_data/file/363903/SandH2014final2.pdf(accessed28thFebruary2015).Amultiplierof2.2.impliesthateach£1ofspaceeconomyGVAgenerates£1.20worthofGVAinthesupplychainandsupporting sectors

GROWTH POTENTIAL

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Geopoliticalreasonsareafurtherconsideration.Currentlaunchoptionsareconcentratedandvulnerabletogeo-politics.RussianlaunchprovidersexperiencedadropinordersasaresultofdoubtsoverreliabilityandtheconflictinUkraine.GivensanctionsimposedonRussiabywesterngovernments,thereisacontinuingriskofretaliatorysanctionswhichcouldimpactonthesupplyofRussianlaunchvehiclestonon-Russianfriendlypayloads.Politicalfactorscanalsoaffectlaunchvehiclesirrespectiveoflocation.Forinstance,oneofthemostpopularrockets,theAtlasV,isreliantonRussian-builtRD-180engines.In2015,inresponsetoRussianthreatstobanexportsoftheseengines,USCongressprohibitedthefutureuseofRussianenginesfornationalsecuritylaunches.49Althoughthebanhassincebeeneffectivelyoverturned,itunderscoresthedangerofrelianceonanothernation’stechnologyandlaunchcapabilities.

49http://spacenews.com/spending-bill-lifts-rd-180-ban-puts-ula-back-in-competitive-game/#sthash.AAokOti8.dpuf

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A Pursuingalowcostaccesstospaceagendawillenableaverticallyintegratedsmallsatelliteindustrythatismorecompetitiveintheglobalmarketplace;acompletemissionpackage.

A Whilstrevenuesfromlaunchservicesarenotexpectedtobeassignificantasotherpartsofthevaluechain,thestrategicimportanceofalowcost,domesticlaunchcapabilitycannotbeunderestimated.ItwillsupportboththeestablishedanddevelopingUKsatellitemanufacturingindustryandhelpfacilitatehumanspaceflightandscienceresearch.Ifnoindigenoussmalllauncherisdeveloped,shorttermrequirementscouldbemetthroughinternationalcollaboration.Anumberofinternationallaunchoptionsarecurrentlybeingbuiltorplanned,butregulatoryagreementwillbekeytosuccessfulcollaboration.

A LaunchfromtheUKoffersanalternativesolutiontothecontinuedconsolidationofsmalllaunchmarketpowerbynon-Europeannations.ItpresentsanopportunityfortheEuropeanspacesectorasawhole.

A Thereisgrowingdemandforsmallsatelliteconstellations:inearthobservationandsatellitecommunications.Withitsleadingcapabilityinsmallsatellitemanufacturing,theUKisreadytotakeadvantageofthisandcanwinalargerpercentageofordersthanitsoverallshareintheglobalspaceindustrymightsuggest.

A Aspaceportisthekeyinfrastructureforlowcostaccesstospacecapability.Consideringbothhorizontalandverticallaunchsitesisvitaltoattractingthebroadestrangeoflaunchoptions.

CONCLUSIONS

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Ashasbeendemonstrated,thereisconsiderableopportunityfortheUKintheareaoflowcostaccesstospace.Toensurethisopportunityisrealised,anumberofactionsarerecommendedforindustry,Government,Catapultandacademia.

1. Co-ordination across the value chainAone-stopshopsolutionforsmallsatellitecustomersrequiresthedevelopmentofverticallyintegratedcapability.Toachievethis,theprimaryactionforindustry istooffercompetitivesolutionsandservices.Therearethreemainwaysitcandothis:

A DefinetheUK’suniquesellingpoints(USPs)forsmallsatellitelaunch,byworkingwithGovernmenttoclarifyandquantifyvalueandcommercialbenefitstocustomers.

A Assistinsecuringapipelineofcustomersthroughdialoguewithemergingsmallsatellitelaunchproviders,brokersandsatelliteoperatorstopromotelaunchdemandfromtheUK.Committedcustomersareessentialtosupportbusinesscasedevelopmentforlaunchvehicleprovidersandspaceportoperators.

A Continuetodevelopacaseforindigenouslauncherdevelopment.TheUKSpacePropulsionWorkingGroup,forexample,shouldactivelymonitorthefastgrowingmarketforsmallsatellitelaunchservicesandpotentialsourcesofinvestment.

IndustryshouldalsosupportGovernmentinitsactionitemstoensureasuccessfuloutcome.Additionally,aregular‘AccesstoSpace’eventwouldharnesstheexpertiseofUKcommercial,researchandinstitutionalbodiesandactasavehicletoreviewprogressonthelowcostaccesstospaceagenda.

Theprimaryactionfor Government is to create a regulatory environmentthatpromotesgrowth.Thiscanbeachievedthrough:

A Clearlysettingouttheregulatoryrequirementsforeverystageoflaunchandassessingtheassociateddelayfactorsandcoststoindustry.Regulatoryprocesseswillbenecessaryatseveralstagesofeachlaunch-fromprocurement,licensingandsafetycontrolstopost-launchconfirmationoforbitachievedandupperstagedisposal.ThereareconcernssimilartotheInternationalTrafficinArmsRegulations(ITAR),inrespectofblockingordelayingfactorsandpotentiallyhighcosts.

A CreationofafavourableregulatoryenvironmenttolaunchandoperatesmallsatellitesfromtheUKwiththeaidofastudybenchmarkingUKlicensingcompetitivenessagainstothermajorspace-faringnations.

RECOMMENDATIONS

28

ThreecoursesofactionarerecommendedfortheSatellite Applications Catapult:

A BusinesscasedevelopmentforverticallyintegratedcapabilityacrosstheUKsatelliteindustryvaluechain.TheCatapultshouldalsohelptheUKSpaceAgencyandindustryqualifytheUSPsforsmallsatellitelaunchfromtheUK.

A DevelopmentofanIn-OrbitDemonstration(IOD)programmeto:helpde-risknewsmallsatellitetechnologies;showcaseUKcapabilityinspaceapplicationsandactasapotentialanchorcustomerforsmallsatlaunchproviders.

A Supportthedevelopmentanddemonstrationofdownstreamapplicationsthroughpublicandprivatesectorcollaborationtodeliverongrowthtargets.

Academiashould: A InpartnershipwiththeUKSpaceAgency,commissionasurveytoestablishdemandformicrogravityresearchiflowercostplatforms(e.g.spaceplanes)withgreatermicrogravityexposurewereavailable.

A Focusoncommercialisingworld-classacademicresearchinupstreamanddownstreammarketsandexploitopportunitiesthroughinternationalpartnerships.

A Developtheskillsbasetosupportworld-classexpertiseacrossthesatelliteindustryvaluechain.

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2. Establishing an operational spaceportAUKspaceportwouldbeapillarofgrowthfortheUKandEuropeanspaceindustry,enablinglowercostaccesstospaceandcreatingeconomicbenefitfarbeyonditsperimeter.Toachievethis,thefollowingactionsfromindustry,Government,Catapultandacademiaarerecommended:

Industryshould: A AdviseandworkwithGovernmentforprogressonITARandotherregulatorydiscussions,includingliabilityindemnification.

A Investigatethebenefitsofco-locatingmanufacturingfacilitieswithaspaceportsite(build,assembly,andtest).

Governmentshould: A DevelopacostefficientsolutiontoITAR,throughdialoguewiththeUSGovernmentandlaunchindustry,toestablishspaceplaneandorbitaloperationsintheUK.Anagreementshouldensurethatadditionalcostburdensarenotplacedonlaunchoperators’suppliers,asthiscouldrenderaUKlaunchserviceuncompetitiveintheglobalmarket.

A AttractinitialanchortenantstoaUKspaceportviaflightdemonstrationsonsmallsatellitelaunchvehicles.Agovernmentanchorcustomerhasbeencriticalforallspacelaunchsystemstodate,includingcommercialones,andisevenmoreimportantfortheemergingsmallsatellitelaunchmarket.NASA,forexample,recentlyannounced$17mworthofagreements,withVirginGalactic,RocketLabandFirefly,tolaunchexperimentalsatellitesthroughitsVentureClassLaunchServicesprogramme.50

A Accommodatelauncherdiversitybybuildingonexistingindustrystudies51andcommissioningafullreportintothefeasibilityofaverticallaunchsiteintheUK,therebyincreasingtherangeoflaunchoptions.

50https://www.nasa.gov/press-release/nasa-awards-venture-class-launch-services-contracts-for-cubesat-satellites51SurreySatelliteTechnologyLtd(2013)“Towards a UK launch infrastructure”.Unpublishedstudy,partoftheSpaceCollaborativeInnovationTeamInitiative(SpaceCITI)programmewithintheUKSpaceAgency’sNationalSpaceTechnologyProgramme(NSTP)

30

A DefinethebusinessenvironmentfortheUK’ssmalllaunchservicewiththeestablishmentofatariffforspaceportinfrastructure.Thiswouldclarifyissuesofownership,actionsallowedandpaymentsbetweenthesiteandspaceportbuilders,operators,launchandpayloadproviders,aswellasregulators.Giventhatthereareuncertainties,candidatebusinessmodelmatricescouldbesetouttoclarify:

a. Theinfrastructurethatwillbeavailableatthespaceport/launchsite.

b. Howthecostofinfrastructuretosupportlaunchwillinitiallybepaidfor.

c. Whetherthecostwillbefullyamortisedthroughchargesordiscountedtotakeintoaccountneteconomicimpact.

Satellite Applications Catapultshould: A FurtherpromotethebenefitsandbusinesscaseforaUKspaceport.

A WorkwithlicensedUKspaceport/stoensureacompletebusinesspackageincludingregulation,licensing,integration,launchandsatellitedataexploitation.

Academiashould: A Investigatethebenefitsandcostsofco-locatingresearchfacilitieswithaspaceportsite.

A WorkwithsmallsatellitelaunchprovidersandGovernmenttoensureUKsciencepayloadshavereliableandlowcostaccesstospace.

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Risks to smallsat market opportunity A New launch providers not as price competitive–IfSpaceXcanofferacostofapproximately$5,000/kgtoLEO(withtheambitiontogetthatcostdownfurtherto$1,000/kg),newentrantsmaynotbeabletobenefitfromtheeconomiesofscalethatlargerlaunchvehicleproviderscantakeadvantageof.Newmarketentrants,torecoverthecostofvehicledevelopment,maybeforcedtochargehigherpricesthanrideshare/piggybackopportunitiesintheshorttomediumtermofthelifeoftheirdedicatedsmallsatellitelaunchvehicle.Ifthesededicatedlaunchoptionsarenotpricecompetitive(particularlyduetolaunchrates),satellitemanufacturers/operators/brokersmaycontinuetochoosethepiggybackoptiononapurecostcomparisonbasis.

A Regulatory concerns–Whilst“buying-in”launchcapabilitytotheUKcanbeattractivebecausenon-recurringcostsarealreadymetinthedevelopmentofthevehiclebynon-UKplayers,thisposesarisktooperationfromtheUKifregulatoryagreementsarechangedoradjustedbasedonfactorsoutsideofthecontrolofthelaunchvehiclemanufactureroroperator.

A Spaceplane launch focus – by only seeking to enable spaceplane operationsintheneartomediumterm,andnotverticalsmallsatellitelaunchvehicles,launchoptionsarethenlimited.

A Launch decision disintermediated – Domestic satellite manufacturerslikeSSTLandClydeSpacedonotnecessarilybuythelaunchcapacity/decidewherethesatelliteislaunchedfrom.Thisisusuallythedecisionofthesatelliteoperator,oradecisiondisseminatedtoalaunchbroker–inwhichcasetheremaybemultiplenon-UKoptionsavailablefortheoperatortochoosefrom.However,ifthereisacompetitiveservicebeingofferedfromtheUK,thenmostoperatorswouldlikelyconsiderit.

Regulatory Blockers A Liability indemnification-TheOuterSpaceAct1986wasestablishedtoensurethattheUKmaintainscompliancewithinternationalobligationsundertheUNOuterSpaceTreaty1967.ThelicensingregimeundertheUNOuterSpaceAct(OSA)enablestheUKGovernmenttopassitsliabilitytoitslicensees.FollowingaconsultationprocessandtheDeregulationAct2015madelaw(March2015),theUKGovernmenthasacceptedtosetamaximumamountofalicensee’sin-orbitliabilityonapermissionbasis;whichisprogresssincetheoriginalunlimitedliabilityrequirement.52 Whilstthereformisastepintherightdirection,theinsurancepremiumsrequiredforsatelliteoperatorstoself-insureand

52UKParliament(2015),Deregulation Act 2015,Availablefrom:www.legislation.gov.uk/ukpga/2015/20/section/12/enacted(accessed7thApril2015)

APPENDIX

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indemnifytheGovernmentagainstin-orbitriskstillrepresentasignificantcostandareburdensomeforentrepreneurslookingtocreatenewsmallsatellitebusinessesinthesector.ThisadditionalcostreducesUKsatelliteoperators’globalcompetitivenessinthespaceindustry.Inthesameconsultation,theUKGovernmentdecidedtodeferadecisiononwaivingthecappedliabilityandinsurancerequirementforthein-orbitoperationofCubeSatsandothernanosatellites.53

A License fees-EachspacecraftisrequiredtoobtainaseparatelicensefromtheUKSpaceAgency,theapplicationfeeforwhichiscurrently£6,500.UKSpaceAgencyhasstatedthatitiswillingto consider licensing constellations of identical satellites under thesamelicense,butthereisnostandardprocessinplace,creatinguncertainty.Theissueiscompoundedforconstellationscomprisinganumberofsatellitesthatarebecomingincreasinglycommon.

A Two years of audited financial statementsisaverydifficultrequirementtomeetfornewbusinessstart-ups.ThiseffectivelypreventsnewcompaniesfromobtainingalicenseandstartingnewsatellitebusinessesintheUK,moreoverthelicensingprocessneedstostart6monthspriortothelaunchandittakesaslongtobuildthesatellite.UKSpaceAgencyhasstatedthatexceptionscanbemadewithguarantees,butthislacksaconsistentandpredictableprocessforbusinesses.

A Lack of transparency and clear procedure-alicenserequiresapprovalfromUKSpaceAgency,BIS(DepartmentforBusiness,Innovation&Skills)andOfcom.TheexistingproceduresintheUKareunclearandlacktransparencyastothetechnical,financial,andlegalassessmentsrequiredfortheManagementofSatelliteFilings.Thelackofcertaintyregardingtheweightingofthelicenseeresponsestoallthequestionsthatneedtobeansweredisdiscouragingandblockingforapplicants,butisalsoaproblemforlargeestablishedbusinesses,makingitdifficultforcompaniestoattractfundingandgrowthcapital.

AllstakeholdersshouldworktogethertoaddresstheserisksandchallengestoimplementingthelowcostaccesstospaceagendafromtheUK.

53UKSpaceAgency(2013),Reform of the Outer Space Act 1986: Summary of responses and Government response to consultation,Availablefrom:www.gov.uk/government/uploads/system/uploads/attachment_data/file/295769/gov-response-osa-consultation.pdf(accessed15thMarch2015)

Published by the Space Growth Partnership“Working together to develop and deliver the UK’s Space Innovation & Growth Strategy”

www.spacegrowthpartnership.org

ReporteditedbyAdrianaHamacheradriana@hipgeeks.comDesignbyHelenBooseywww.helenboosey.co.uk