7.23.24
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- Privatization and Market Growth
The World Economic Forum estimated the Space economy at $630 billion for 2023, and expected it to grow to $1.8 trillion by 2035. Many massive changes are going on within the space industry and space technology sector. The most important include:
- Small Sats—small satellites that can be launched dozens at one time by one rocket. They are relatively inexpensive to manufacture, lightweight and easy to launch, and they can have their software updated by ground stations. These are the satellites that are powering global internet access systems like SpaceX’s Starlink.
- Low Earth Orbit satellites—satellites that orbit the Earth at much lower altitudes than earlier generations of satellites. This makes them ideal for internet service and satphone communications, as there is a shorter time lag for signals to and from the Earth.
- Reusable Rockets—Earlier generations of rockets were use-once only. Today’s innovative rockets, pioneered by SpaceX, can be reused multiple times—saving massive amounts of time and money and dramatically lowering the cost to launch a satellite or space vehicle.
- Private Rocket Launch Services—launch services provided by private firms such as Elon Musk’s SpaceX. Historically, space launches were strictly the provenance of government agencies. Today, private industries are providing these services with advanced rockets at much lower cost. In addition to SpaceX, such firms already providing services, or planning to, include Boeing, Blue Origin, Northrup Grumman Innovation Systems and Sierra Space.
- Private (non-government) Space Industry Innovation, Research and Development (R&D)
New technologies and services will continue to broadly shape the space industry of the future. The major shift in space technologies is that they have rapidly become dominated by private industry—shifting away from government-managed research efforts, government laboratories, government management of space projects and launches, and government micro-management of space related contracts and the rules and obligations spelled out in those contracts. Much, if not most, of the funding is coming from private investors, including venture capital firms.
The space industry of the future is shaping up as one led by private companies, and many of those private companies have U.S. roots, whether they are rocket manufacturers, launch services or satellite communications services providers. This is a huge change, as space activities in the past all originated through, and were almost entirely funded by, government agencies such NASA.
SpaceX’s reusable rockets are a massive game-changer, dramatically reducing the cost of making a space launch. SpaceX has not only been able to become a reliable, low cost provider of launch services, it has also successfully manufactured rockets capable of carrying larger and larger payloads. At Plunkett Research, we expect the future of space commercialization to be dominated by SpaceX and a few other private firms. Meanwhile, SpaceX has already garnered a majority market share of space launches.
Another example of just how big this privatization trend is: A Houston, Texas-based firm, Intuitive Machines, recently landed the first American vehicle on the moon in over 50 years.
- Russia Loses Rocket Manufacturing and Launch Business Contracts
The U.S. and EU for many years relied on Russia for the manufacture of certain powerful rocket engines and/or for rocket launch services. The war in Ukraine and geopolitical tensions in general have encouraged Western nations to rapidly develop replacement resources outside of Russia. This has been a rapid, massive boost to SpaceX. Major, developed nations such as the U.S. will no longer be willing to rely on non-allied nations for space industry services.
- Increased Militarization and Politization of Space
Space will increasingly be a hotbed of political tensions and militarization. China has set up a “Rocket Force” as a special branch of its armed forces. This does not bode well for global relations, and it will force the U.S. to focus on and invest in better space-based defense capabilities. Russia is said to have developed a rocket-based weapon that uses a nuclear blast to wipe out large numbers of satellites in one launch, potentially devastating a rival’s satellite communications and Earth-observation capabilities in seconds.
India is increasingly active in space as well, while North Korea continues to increase the size and scope of its rocket-based weapons. There is extreme risk that hostile or competing military orbiting bases or moon-based facilities could be developed. Israel has very successfully demonstrated that anti-missile systems, such as its Iron Dome, can provide high levels of protection against incoming missiles. Watch for an acceleration of investment and development of such systems by major nations worldwide.
- Manufacturing in Space (including Pharmaceuticals)
Innovative, privately launched orbiting labs, lunar landers and satellites create can be put to good use by specialty manufacturers. The weightless aspect (and/or extremely low temperatures and near-perfect vacuum) of space creates unique opportunities to conduct advanced manufacturing in this environment, sometimes more effectively than on gravity-bound earth, and sometimes in ways that cannot be accomplished at all on Earth. For Example, Varda Space, well funded by venture capital firms, seeks to manufacture complex, specialty pharmaceuticals in space. UK-based Space Forge is a company that is exploring space manufacturing potential.
- Mining in Space
Asteroids and moons often contain vast quantities of rare and/or precious ores. Researchers at the highly respected Colorado School of Mines are keen on this possibility. Mining in space could potentially reduce environmental impacts on Earth, while providing rare metals for solar panels and electric vehicles. NASA has identified 12,000+ asteroids that are relatively close to the Earth. (In addition to mining, some firms are interested in the potential to tap extremely powerful solar rays in outer space in order to generate electricity on Earth.) Thanks to the availability of venture capital, intense demand for rare metals, and advances in the private space launch and space vehicle sector, mining in space could easily become a significant reality over the long term. Firms investing in this sector include Karman+, TransAstra, AstroFOrrge, Origin Space and Asteroid Mining Corporation. Watch for continued funding of research and development in this sector. At the same time, watch for consolidation of the industry around a few, very well funded companies.
- Space Tourism
Initial success in space tourism services will likely spawn further interest among affluent consumers and lead to advanced, private space flight vehicles and itineraries over the long term. While personal space flights are extremely expensive, a large number of consumers are clearly willing to pay the fees and take the risks. Leading companies operating or making plans in this sector include Virgin Galactic, SpaceX, Blue Origin and Boeing.
Source: Plunkett Research, Ltd., www.plunkettresearch.com
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