New applications with commercial potential
Spaceflight acts as a key enabler of technology and business. The infrastructure built and made available by the space industry opens up significant commercial opportunities for new value chains in other sectors, such as value-added downstream services.
The Federal Government’s space strategy aims to put a stronger focus on applications, and to open up new markets especially in the private sector. Its motto "Into space for the benefit of humankind" means that concrete application potential should be transferred from the space industry to as many other industrial sectors and end users as possible. New potential and new markets can be identified by professional expertise and by idea-generation grants.
The potential and challenges that come with new commercial markets differ widely from one segment of the space industry to the other. In the area of satellite-based telecommunication, private-sector downstream markets (e.g. for antennas and receivers) have come to play an eminent part in the economy. The leverage effect of an investment into space infrastructure (satellites, ground segments) is estimated to be a factor of ten.
New applications and commercial markets have also been unfolding in the area of satellite-based Earth observation. Remote sensing in combination with other methods now makes it possible to deliver accurate elevation data for topographic maps, support precision farming, and monitor the environment.
Another major field is that of robotics. It will be playing an increasingly important role in space exploration, satellite efficiency improvement, as well as in space debris management. New markets for robot systems are also developing around the various on-orbit services.
New users and new markets
Globalisation and the recent enlargement of the EU have brought new countries, markets, and new users and customers within reach of the space industry. Growing international markets and countries with no space industries of their own hold considerable potential as customers for German firms. In particular, the emerging economies in South East Asia and Africa are likely to become increasingly important markets. The commercial potential of these new markets could give a boost to several space industry segments, such as satellite communication, the use of remote-sensing data for administrative and commercial purposes, as well as satellite systems and payloads.
New business models and funding concepts
Spaceflight activities are mostly associated with high investments, be it in the area of infrastructure (satellite, ground segment), be it the missions themselves, or the development of application oriented services. The recent years have seen considerable growth in the application-related, commercial side of space activities as well as in downstream markets, such as telecommunications and satellite navigation. This has brought on new forms of funding, which are based not on government institutions alone but also rely on private-sector players. New business models and alternative financial facilities are being developed for this purpose.
Revenues on the market for satellite-based services increased massively between the years 2005 and 2009. Most of the financial input came from the private sector, with an increasing number of banking and venture capital firms acting as investors.
Some space activities, such as Earth observation, cater for a demand from both governmental and corporate customers, and require major space infrastructure investment. In these cases public-private partnership (PPP) is suitable as a financial model, organised as a collaborative venture between a public institution and the private sector. A PPP funds the development of technology, production and operational services, which will eventually become available for commercial exploitation. This makes it possible, or easier, for companies in the space sector to strategically develop new markets.
The venture capital conzept
Another widely discussed approach to funding is the venture capital principle, which uses private investment, or venture capital, to advance innovative business ideas in the space sector. Public spending from sources such as the National Space programme, injected into application-driven developments, specific space missions and the development of strategic space competencies, are intended to unlock new commercial potential.
The aim is to hold on to competitive key capabilities in Germany, and to encourage space technologies that are primarily application-driven.