The Space Industry Is Hitting $ 1 Trillion in Revenue by 2040: Citi

A Falcon 9 rocket carries 49 Starlink satellites into orbit on February 3, 2022.


The space industry is expected to reach $ 1 trillion in annual revenue by 2040, with launch costs down 95%, Citigroup analysts said in an extensive report released this month.

A further drop in the cost of accessing space would create greater opportunities for technological expansion and innovation, unlocking more services from orbit such as satellite broadband and manufacturing, the bank added.

Citi’s estimates for industry matching forecasts published in recent years by Morgan Stanley, Bank of America and other. The value of the global space economy reached $ 424 billion in 2020, according to Space Foundation researchhaving grown 70% since 2010.

“Revenues from manufacturing, launch services and ground equipment will make up the bulk of the revenue growth in the satellite business,” Citi said. “However, the fastest growth rate is expected to come from new space applications and industries, with revenues expected to rise from zero to $ 101 billion over the period.”

Private investments in space companies, particularly from venture capital, have consistently broken annual records over the past decade. Last year, space infrastructure companies received $ 14.5 billion in private investment, according to to the Space Capital quarterly reportwhich tracks approximately 1,700 companies.

A flurry of space companies went public last year through SPAC deals, but most of the shares are struggling despite the growth of the industry. the changing market environment, with rising interest rates hitting technology and growth stocks hard, have also seen space stocks decline. The shares of a dozen space companies have fallen by 50% or more since their debut.

Despite Citi’s optimistic outlook, the company stressed that much remains speculative in the industry, “such as space solar energy, moon / asteroid mining, space / freight logistics, space tourism, long distance rocket travel, and research and development and construction of microgravity “.

“A similar analogy would be trying to predict the value of the internet today compared to nearly 20 years ago, when the term ‘smartphone’ was relatively unknown and before broadband replaced dial-up internet connections,” analysts said.

Launch costs plummet

According to Citi, a $ 1 trillion space economy would come about through a drop in launch costs, which she says “have already fallen precipitously since the 1980s,” about 40 times lower.

The cost of a rocket launch is typically broken down by dollar per kilogram. From 1970 to 2010, Citi noted, the average launch cost stabilized at around $ 16,000 per kilogram for heavy payloads and $ 30,000 per kilogram for light payloads.

The bank blamed the private sector for the sharp drop in costs. “Lower launch costs were experienced by SpaceX with the launch of Falcon 9 in 2010,” said Citi. The rocket lowered the average cost per kilogram to about $ 2,500, 30 times lower than NASA’s Space Shuttle costs and 11 times lower than the previous historical average.

“Basically, with the new generation of space being driven by the commercial sector, the launch industry is witnessing a centuries-old shift from being largely cost-plus to value based, in order to open up new markets and maximize profitability, ”Citi said. “Previously, the launch market had a limited number of government-supported companies that were more concerned with military capabilities and revenue and job creation than increasing operational efficiency.”

The increasingly common practice of reusing rocket thrusters is reducing costs. Citi estimates that launch costs could drop to around $ 30 per kilogram by 2040 at best. If the rockets “are still only reused about 10 times” each by 2040, which SpaceX is already doing, the cost still drops significantly to about $ 300 per kilogram, the company said.

Satellite boom

The satellite market makes up the largest chunk of the space economy, with over 70%, and Citi says the sector “is undergoing a paradigm shift in demand.”

Although satellite revenue comes primarily from services such as television, the bank sees an expansion in applications ranging from consumer broadband to mobile connectivity to the Internet of Things.

The bank believes SpaceX’s and Starlink’s extensive satellite networks by Amazon The Kuiper project wants to accelerate this change through “greater accessibility” to Internet services around the world.

Another area where Citi sees strong gains is satellite imagery, which the company estimates represents about 2%, or $ 2.6 billion, of the current space economy. The bank expects an industry-driven expansion of space-as-a-service applications, reaching $ 17 billion in annual sales by 2040.

Regulations and space junk

Expanding the space economy won’t be easy, however, the company said, noting that the hostile environment of space, high upfront capital costs, and the long timeline to see returns on space projects all pose risks of significant growth.

Citi stressed that the perception of space “as a mere hobby for billionaires” poses another risk, as the industry “must gain public acceptance before it can be adopted in various sectors.” While investments by private entities have reduced the costs of accessing space, with more people and spacecraft flying for a fraction of what governments have been able to accomplish, the perception that space companies are projects ego-driven households of wealthier individuals can damage the industry’s potential, the company said.

Regarding human spaceflight, Citi noted that the failure rate for manned launches is historically less than 2%. But this “is still too high for space passenger flights,” he said, as commercial aviation suffers breakdowns at a miniscule rate of about 0.0001 percent.

Regulatory risk is another barrier to the industry, Citi noted. There are several federal and international entities responsible for approving and regulating space companies.

Then there is the space junk. Such debris poses “a rapidly growing threat to orbiting satellites, future launches and expanding opportunities in the space ecosystem,” Citi said. Tens of thousands of man-made objects are tracked in orbit around the Earth, with many times they should be in orbit but are too small to track.

“This increases the risk of ‘Kessler syndrome’ becoming a reality: the idea that space junk orbiting the earth, without the air resistance to slow it down, will reach a saturation point where it simply collides with other junk. and space fragments into smaller pieces, to create a debris field that prevents the launch of new satellites, ”Citi said.

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