A PULSE POLL: THE STATE OF SPACE AND BROADER AEROSPACE R&D IN THE UK Institute of Innovation and Knowledge Exchange - IKE Institute, London, UK Prof Sa’ad Sam Medhat ISBN: 978-1-906970-20-8 www.IKEInstitute.org The Institute of Innovation and Knowledge Exchange (IKE) is the UK’s professional body for innovators. It accredits and certificates innovation practices. The Institute’s work is guided by the Innovation Council, which brings together over fifty senior business leaders representing different economic sectors. Registered Institute Number: 07670707 TABLE OF CONTENTS 04 24 Introduction UK AEROSPACE SECTOR BREAKDOWNS 05 28 A GLOBALLY GROWING SECTOR IMPACT OF BREXIT ON UK SPACE AND AEROSPACE SECTORS 11 31 UK SPACE AND AEROSPACE SECTOR CONCLUSIONS AND SUMMARY 20 32 SPACE AND AEROSPACE SECTOR R&D BIBLIOGRAPHY INTRODUCTION magine those packages that today are delivered by plane or truck could be delivered by rocket. Instead of Mauritius, think of the Moon as a luxury resort. Well, with Ithe advancements and innovations in rocketry science, rocket delivery systems and private space travel could make these things a reality. The space sector, as described by The actual value creation and revenue An emerging area is the development NASA, is an industry that refers to generation is often far removed from of large constellations of micro-satellites economic activities related to the the initial investments according to an mainly performing earth observation or manufacturing of components that go OECD report—The Space Economy broadband communications. According into Earth's orbit or beyond. in Figures- How Space Contributes to to Morgan Stanley’s Space Report, As we celebrated on July 20th this the Global Economy, 2019. Whilst many July 2019, the estimated global space year half a century of human space national and industry associations have industry could generate more than exploration, there seems to be a conducted surveys to identify activities $1 trillion by 2040 in annual revenue, renewed investment interest in space. and growth profiles, comparable data to up from the current position of $350 This interest is extending beyond quantify in detail the different segments billion. A parliamentary Space Industry manned Low-Earth orbit missions and of the space economy in different Act was also published in 2018 to unmanned scientific exploration, and is countries still remains very limited. support growth in the UK space sector, undoubtedly fuelled by the growth in which currently is worth some £15.5bn. downstream space activities such as the Recent initiatives by large public and provision of satellite technology, signals, private firms suggest that space is So, where is the UK in and Artificial Intelligence (AI) and IoT- an area where we will see significant this picture of tantalising based services. developments, potentially enhancing the US technological leadership opportunities? Many applications are, by definition and addressing opportunities and reliant on having a space infrastructure vulnerabilities in surveillance, mission Setting the Scene being set up by public and/or private deployment, cyber, and AI. Worldwide, actors. They include services and and again particularly in the U.S., this This report by the IKE Institute seeks products for consumers using satellite has led to a growth in business R&D to use available data to explore the capacity, such as communications, funding and investment. Although nature and recent dynamics of the satellite television services, geospatial often this business R&D investment UK’s space sector’s R&D. This report products, meteorology and location- has been funded by an expansion of is set against the background of the based services (e.g. a navigation device state support for space R&D. Climate global space R&D position, however, using satellite positioning signals from change concerns have also led to a due to the fact that the data is only publicly funded space infrastructure, like growth in earth observation satellites available at the aerospace level, the the United States GPS, the European with associated, and often combined, R&D component is examined in Galileo or the Chinese Beidou systems). public and private sector R&D funding. this context. © IKE Institute 4 of 33 December 2019 | UK Space Sector A GLOBALLY GROWING SECTOR his section examines the global space sector as sales are international and the TUK space sector operates within this global system. Figure 1 shows that the last decade has seen a fairly steady increase in the number Global Space Launches of space-launches a simple metric of activity by the sector. Launches appear to 2003 to 2019 have peaked in 2018 when the new American commercial launch systems became finally proved. This peak might have reduced the 2019 activity which was sharply down on 2018. Figure 1 120 Space Launches and Successful 100 Launches 2003 to 2019 80 60 There are a wide range of definitions of the space and aerospace sectors. As far as possible this report uses the concept of the ‘space sector’ as covering the 40 manufacture and operation of space borne equipment. Sometimes the operation of space-based broadcasting systems is also included within the ‘space sector’. This 20 essentially set of ad-hoc definitions means that there might be some inconsistency between sources covering the ‘space sector’. When using official statistics, the wider concept of the space and aerospace sector which covers the manufacture of space 0 2003and2004 aerospace2005 2006 systems2007 2008 as defined2009 2010 by 2011the 2012UK’s Standard2013 2014 Industrial2015 2016 Classification2017 2018 2019 (SIC) code 30.30. This is the same as Eurostat’s NACE Revision 2 30.3 and the International Standard IndustrialLaunches ClassificationSuccesses (ISIC) 30.3. Source: Wikipedia Space Timeline © IKE Institute 5 of 33 December 2019 | UK Space Sector Table 1 shows that China, the United States and the Russian Federation accounted Global Space Launches for nearly 84 per cent of all space launches in 2019. With Europe and its aging by Country Ariane 5 rocket only accounting for five launches or just over 6 per cent of all launches. The UK has only once launched a satellite using a nationally developed rocket in 1971 when the Prospero satellite was launched into low earth orbit using and Black Arrow rocket. China, the United States and the Russian Federation accounted for nearly84% of all space launches in 2019 Table 1 Global Space Launches by Country - 2019 2019 Launches 2019 Successes China 26 24 United State 23 23 Russia 19 19 Europe 5 4 India 4 4 Iran 2 0 Japan 2 2 81 76 Source: Wikipedia Space timeline © IKE Institute 6 of 33 December 2019 | UK Space Sector Mature Global Space Markets Table 2 examines the various existing global space markets by size, potential for growth and the extent of barriers to entry. This shows that the three largest markets are satellite TV, satellite navigation devices and other consumer ground equipment. Using the statistical concept of the space sector these would be excluded. However, the next big market is satellite manufacturing where the UK specialises. The next big market is satellite manufacturing where the UK specialises Table 2 Mature Global Space Markets by Size, Growth Potential and Barriers to Entry Existing Market Size Growth Trend Barriers to Entry Market (US $ B) Satellite DTH TV $98B = Medium GNSS Devices, Chipsets and Applications $31B ++ Medium Consumer Ground Equipment $19B - Medium Satellite Manufacturing $14B + High FSS Transponder Leasing $11B - Medium Network Ground Equipment $10B + Medium Launch Services $6B + High FSS Managed Services $6B+ ++ Medium Satellite Radio $5B ++ Medium Mobile Communications $4B + High Satellite Broadband $2B ++ Medium Earth Observation $2B ++ High Source: Space Industry Dynamics, Research Paper for Australian Government, Department of Industry Innovation and Science by Bryce Space and Technology, LLC – Table 1 © IKE Institute 7 of 33 December 2019 | UK Space Sector Emerging Global Space As well as examining existing satellites and EO Data driven analytics markets the report for the Australian both had high growth potential and Markets Government also examined emerging medium barriers to market entry. space markers as shown in Table 3. Smallsat manufacturing had moderate The two largest emerging markets growth potential but the lowest global broadband services and investment required per venture of suborbital human spaceflight have high about $1 million and above while also required investments and high barriers having low marker entry barriers. This to entry, but global broadband had high suggests that the UK’s lead in smallsats growth potential. Earth Observation could be challenged by new entrants (EO) using large numbers of small to the market. Smallsat manufacturing had moderate growth potential but the lowest investment required per venture of about $1 million and above while also having low marker entry barriers NASA Table 3 Emerging Global Space Markets Investment Markets Growth Trend Required per Barriers to Entry Venture Ubiquitous Global Broadband ++ ~$3B+ High Suborbital Human Spaceflight + ~$1B High Satellite Servicing + ~$500M+ High EO Smallest Constellations ++ ~$100M+ Low Dedicated Smallsat Launch + ~$100M+ Medium EO-Driven Data Analytics ++ ~$10M+ Low Commercial SSA + ~$10M+ Medium Smallsat Manufacturing + ~$1M+ Low Source: Space Industry Dynamics, Research Paper for Australian Government, Department of Industry Innovation and Science by Bryce Space and Technology, LLC – Table 2 © IKE Institute 8 of 33 December 2019 | UK Space Sector Global Satellite Revenue Apart from designing and building launch vehicles the design and manufacture of various sorts of satellites is a critical component of the global space sector. Figure 2 provides data on the global satellite market by converting all revenues into billions of US dollars. This shows that the global satellite market grew from $246 billion in 2014 to $277 billion in 2018. The annual growth rates were 3.7% in 2014-15, 2.4% in 2015-16, 3.1% in 2016-17 and 3.0% in 2017-18.