Northern Sky Research

The Push & Pull of Satellite Servicing

Feb 14th, 2018 by Carolyn Belle   More from this Analyst | Profile

Satellite servicing technologies have long been in development, only now coalescing into integrated systems ready to hit the market.  Just this year, life extension services have been contracted for three satellites, adding to two other deals already finalized. This process has been a combination of technology push from manufacturers and start-ups alongside indirect market pull as operators constantly seek ways to advance their bottom line. Given this dual push-pull dynamic in an industry slow to adopt new solutions, how will emerging supply balance demand?

Several satellite servicing players have risen to cultivate this market:

  • Effective Space Solutions: Leveraging a smallsat design with all electric propulsion and a jetpack model, ESS’ first two Space Drones should launch in 2020 with company plans for a larger fleet moving forward. A contract to extend the life of two satellites was finalized in January with an unnamed regional operator, perhaps in Asia where competition is heating up. 
  • Space Logistics, LLC (Orbital ATK): Based on the GeoStar-3 platform, the Mission Extension Vehicle (MEV) operates on a jetpack model. The first MEV is slated to launch at the end of 2018 and service Intelsat 901 starting next year, with a second MEV launch scheduled for 2020 and plans for a fleet of up to 5 MEVs.
  • Space Infrastructure Services (SSL/Maxar): SIS is launching as part of the DARPA RSGS program in 2021 and has a follow-on contract with SES. SIS operates on a short-term engagement model, offering refueling and a broader suite of robotic capabilities than the first iterations of competitors’ servicers.
  • Airbus Defence & Space is in early stages of developing a servicing vehicle, while several start-ups are pursuing the market with a long-term time horizon or focus on non-GEO services.

For GEO satcom operators, amidst a challenging environment beset by tumbling capacity pricing, rapid technology development, and uncertain non-GEO constellation deployment, demand for innovative solutions to fleet management is blossoming. Maintaining legacy market share while reducing risk and CAPEX is paramount. The world’s two biggest fleet operators, plus a regional player, have signed up to test the value of satellite servicing in accomplishing this objective. In its industry-first In-Orbit Servicing Markets report, NSR found demand is emerging at an average of 12.5 commercial GEO missions per year in the next decade, across life extension, salvage, robotics, and de-orbiting applications, as operators seek to optimize CAPEX, OPEX, and fleet operations.

While there is traditional hesitancy to adopt new technologies in the adoption curve for IoS, this does not reflect the value of IoS but the risk posture characteristic of the space industry. If IoS were a fully-tested and launched capability today, GEO operators beyond SES and Intelsat would be weighing its utility and signing contracts.

Yet NSR found that servicing vehicles will not be able to fully address commercial demand until the mid-2020s. With the first provider not scheduled to enter service until 2019, and the second to follow in 2020, requisite time to demonstrate capabilities, ramp up operations, and fully deploy servicing fleets limits servicer availability.

This disparity presents a challenge to building a stable market but will only slow and not halt development. Evidence of customer interest and ongoing demand is key for service providers to secure funding and make the investment to finalize development and quickly launch servicing vehicles. Yet despite a clear and compelling value proposition in many cases, operators will be unwilling to include servicing in their planning until certain it will be available when needed. This dynamic results in gradual revenue growth, ramping up to nearly $500M annually by 2027.

Bottom Line

Multiple providers are deploying satellite servicing vehicles in the coming years, building on years of technology development towards a capability anticipated to be useful for the industry at large. Demand is also manifesting, with several GEO operators already under contract. The technology push and market pull are driving market development in tandem, but slow rollout of services means that demand for theoretical services exceeds availability until the mid-2020s. Competition among service providers will nonetheless be strong, and those able to demonstrate capabilities and consolidate market share early will be well positioned to enhance their fleets and grow the market.