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Strap in for the space race

By Mathieu VILLARD
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Investing in the space economy remains speculative especially in small companies, however it might not be as out-of-this-world as it seems. As of now, relocating to Mars is not possible and the Four Seasons hasn’t drawn up plans for a luxury lunar retreat just yet, but there are already numerous other opportunities to be seized.

According to research released this year by Bank of America, in 2021 the global space economy was estimated at US$469 billion – an increase of 60% from estimates made a decade prior. The valuation is now predicted to hit US$1.1 trillion by 2030.

The meteoric falling cost of space launches

The cost evolution is mind-blowing, from NASA’s space shuttle launch coming with a US$1.5 billion price tag and costing US$54,000 per kilogram for a low-Earth orbit, to the Space X Falcon 9 and Falcon Heavy coming in at approximately US$2,000 per kilogram.

Though space exploration was originally a government-only domain, interest and investment in the sector has allowed private companies – often supported by government grants – to progress in the renewed space race. Beyond this, several companies have announced cash awards for achieving milestones. Google, NASA, X Prize and even some high net worth individuals have dangled prizes worth tens of millions of dollars to spur on companies pursuing space flight.

Private and public investment dollars, along with substantial innovation, has driven costs down significantly. Space X and Rocket Lab – a U.S. company offering launch services, satellite components and spacecraft – have formed the basis for a competitive market.

High potential for commercial activities

Almost 90% of space industry revenues are derived from satellites and related products and services, and 45% of total revenues are attributed to commercial satellite usage, according to Bryce Space and Technology, Organization for Economic Cooperation and Development.

Currently, the most common applications are:

- Communications/Telecom: Connotes satellites used for relaying of audio, television, and telephone signals around Earth
- Remote sensing/Earth Observation (EO): Designed for Earth observation from orbit. Common uses include meteorology, cartography, and environment monitoring
- Navigation/GPS: Network of artificial satellites that transmit continuous microwave radio signals to calculate precise geographical positions
- Machine to Machine (M2M)/Internet of Things (IoT): Refers to data transmission between remote machines through satellite networks
- Big Data: Space-borne monitoring satellites used to process and extrapolate patterns from collected Earth imagery data
- Security: Used for reconnaissance, monitoring and operational military activities.
- Space Situational Awareness: Used to keep track of elements in Earth’s orbit. Monitors objects such as asteroids, comets, and space debris (i.e. inactive satellites).

Even the ESG focus on Earth will drive demand for space activities

ESG frameworks are increasingly being added to annual reports for companies large and small, detailing progress towards environmental, social and corporate governance goals. Bank of America Global Research expects this will become more closely linked with the space industry in the years to come, as a significant amount of environmental data can only be gained from satellites.

The climate crisis will strengthen this link as it’s expected to be a key driver of satellite technology and data demand. Companies focused on ESG will be concerned not only with how their operations are affecting the environment, but also how the changing environment might impact their operations. As a result, it’s expected that demand for satellite services, data, analytics, and monitoring will increase.