Written evidence submitted by Space Scotland, Space Scotland Industry Group (SSS0016)
Space Scotland welcomes the Scottish Affairs Committee Inquiry on the Scotland’s Space Sector.
Space Scotland is a not-for-profit company set up in 2021 to support, develop, and enhance the Scottish Space sector through active engagement with Scottish space industry, academics and development agencies. Through partnerships and output-driven working group discussions, Space Scotland supports the delivery of the priorities of the Scottish Space Strategy, linking across the wider UK to support the National Space Strategy. Space Scotland represents the Scottish Space industry interests both national and internationally, ensuring there is recognition of the local expertise that can be leveraged on a global stage. The industry group contains over 50 space companies, ranging across the entire space sector supply chain. Space Scotland works with industry on a number of key properties that are focus areas with the Scottish Space Strategy, including sustainability and equality, diversity and inclusion. Working Groups in these areas have led to the development of the first Space Sustainability Roadmap, which was launched in 2021, and the Equality, Diversity and Inclusion (EDI) Guidance Pack to support business broaden their scope of engagements across all segments of the community and workforce. Space Scotland pioneers to push the boundary of how the Space sector can operate in the future, with sustainability and diversity at the heart of its processes.
This document has been prepared by the Scottish Space Industry community, supported by Space Scotland.
Editorial Team:
Dr. Hina Khan – Executive Director, Space Scotland
Prof. John Innes – Interim Chair of Space Scotland Industry Group
Mr. Ruari Brooker – HyImpulse UK
Mr. Shane Clark – Astriaus
Dr. Julian Dines – Higgs Centre for Innovation (STFC-UKRI)
Prof. Mick O’Connor – Fire Arrow
Mr. Hans Karlsen – Karlsen Associates
Environmental TaskForce (ETF) Working Group - Kristina Tamane and Andrew Fournet, ETF Co-Chairs, Kevin Scullion, Scottish Development International, Sharon Pryde, Scottish Enterprise
Mr. Daniel Smith – AstroAgency, Board Director of Space Scotland
Dr. Pamela Smith – AAC Clydespace
Mr. Luke Vanstone – Benchmark Space Systems
Scotland has a long and proud heritage of innovation and invention; however, this does not always translate into scalable companies. Why is this? Scotland’s innovative and entrepreneurial spirit is alive and kicking in many start-up companies and represented across several verticals including space, finance, health, renewables etc; How many of those start-ups will become large employers of the future? Scotland punches well above its weight in small satellite manufacture, data science and soon vertical and horizontal launch and our universities are at the forefront of academic research; Are we joined up? The ‘meta-cluster’ of space companies, public-sector bodies (such as UK Research and Innovation - UKRI) and academic institutions across a 70km radius in central Scotland is unparalleled, Why not shout about it! Space Scotland and the Scottish Space Academic Forum provide the vehicles for collaboration; however, the whole is greater than the sum of the parts and coherence of activity and messaging would benefit. Accelerating early stage technology readiness level (TRL) goods and services into technically feasible and commercially viable minimum value product’s, followed by scaling these small and medium enterprises (SMEs) into larger enterprises, is the key to economic success. Scotland has excellent Angel networks for pre-seed and seed level fund raising, however, raising >£500k remains challenging, requiring London/foreign investment which takes a significant amount of time and resources which most start-ups don’t have. The angel investor community could also be better engaged and used by space start-ups. Scotland is a nation of SMEs, and this is particularly true in the space sector, so supporting and facilitating scale-up is key to wider growth in this sector; Let’s make this easier! Skills are often cited as a problem or ‘the’ problem but what exactly is the problem; Does anyone have a clear handle on this? Considering Scotland as a space ecosystem would help in terms of understanding capabilities, strengths, weaknesses and points of leverage. There are no large dominant space companies in Scotland and there is an appetite for collaboration across what is largely an SME community, however, this will change as companies grow/are acquired; let’s capitalise on this whilst we can.
Scotland’s space sector is geographically and technically diverse with expertise across the value chain from upstream (including instrument and satellite design, manufacture, and test, launch and satellite operations) to downstream (including data analytics, applications and services). There are strengths in New Space with a highly commercial sector that has developed over several decades and supported the organic growth of various space clusters, which are geographically spread across Scotland. The commercial sector is bolstered by world leading academic institutions who support both cutting edge academic as well as industrially led research, and new University spinouts are supported through the European Space Agency (ESA) & UK Space Agency (UKSA) supported Business Incubation Centre (at the STFC-UKRI Higgs Centre for Innovation). The Higgs Centre has supported 20 start-ups over its short 5-year existence, with these companies now employing 110 people.
From the current available data, the Scottish space sector is highly skilled, with 75% of the approximately 8500 employees having at least one degree, it is research and development (R&D) intensive, about five times the UK average, and it has a labour productivity of around 250% the UK average. Moreover, in the last period for which figures are available, FY18/19-FY21/22, Scottish space sector income grew by 30%. As the industry matures, this demographic will change to include both technical and practical skills sets to address the industry needs over the coming decade. The unique strength of the sector in Scotland is its end-to-end capability that if harnessed and grown can enable further major economic, environmental, and societal impact.
Despite the spread of the sector over a significant geographical area, in general there is excellent collaboration and team spirit across the domain, driven and supported by Space Scotland, the Scottish Space Academic Forum and the Scottish Government Space Group. Leveraging these already strong partnerships between industry, academia and government will support the community to further develop and generate innovative solutions for global customers.
The space sector is an international market, and space research is similarly internationally focused. Scottish universities collaborate extensively with overseas counterparts, and science missions regularly involve large international collaborations of universities, public-sector bodies and industry. The existence of the UK Astronomy Technology Centre (STFC-UKRI) in Edinburgh is a focal-point for space astronomy missions in Scotland with, for example, major input into the recently launched James Webb Space Telescope, and the future LISA gravitational wave observatory. These forms of major science-led missions are a well-established mechanism for the development of new space technology, in collaboration with universities and industry, and have had a base in Scotland for decades. Furthermore, the supply-chain of component and sub-system manufacturers for larger space missions has enabled companies in Scotland to export world-wide. This long-standing heritage, combined with the emergence of New Space activities, means Scotland is well networked globally.
It is evident that across the UK, Scotland is held up as an example for how to develop a space industry. It thrives upon spirit of collaboration and collective support, alongside a strong base of expertise across academic, industry and commercial roles. The demonstrated commitment and successful growth of companies locating new offices and manufacturing bases in Scotland is evidence of this. The growth model used within the Scottish space sector has proven successful enough, that other areas in the UK are aiming to replicate it.
The Scottish Space Sector is often recognised internationally for its expertise in small satellite (typically <150kg) manufacture, with growing interest in Space Sustainability and application of satellite data. In fact, there are many individuals, companies and Universities that are world-leading, with limited visibility across the UK. The recently published UKSA Technology Exploitation Roadmap showcases this, as little in that document can be found within the Scottish Space Sector. Further evidence of the disparity between the expertise found in the space sector in Scotland to the reality of the funding allocation is evident when looking at the ESA funding into Scotland, accounting for only 3% from the overall UK budget, despite both a significant workforce and technical expertise residing in Scotland. Better support on the type of funding programmes available from ESA and how to access these could help companies in Scotland leverage both the technical expertise from ESA and increase the distribution of the UK budget into ESA.
Scotland is unique compared to the rest of the UK in the access to the full value chain for small satellite development and exploitation, which has also attracted international recognition. Focus and enablement of this should remain critical to future growth ambitions.
Scotland is home to many agile and newly formed companies that are pushing the envelope on technology development, innovative solutions and service offerings that may not be extensively visible across the rest of the UK. This lack of visibility can be a barrier to growth as some commercial or funding opportunities might not be extended across the whole space ecosystem, potentially leading to missed prospects. .
A significant challenge remains in scaling up. With the overwhelming majority of Scottish space companies being SMEs, continued growth in the sector is reliant on being able to scale these companies into large enterprises. There are significant constraints on these ambitions in terms of both accessing capital and infrastructure – and access to suitable scale-up focused spaces, which is especially critical for hardware companies requiring lab spaces.
Scotland is home to ‘end to end’ space value chain capability, coupling world-class research, manufacture, testing, launch and downstream expertise in a geographically succinct area. Key attributes of the sector include:
Smaller satellite manufacturing has been a long-standing strength of the Scottish space sector and should continue to be supported to ensure that it remains a key asset for the UK and Scottish space sectors. The capabilities and continued world leading development in this area are a differentiator for Scotland within the UK and provide the opportunity to position the Scottish space environment as a global space leader. Scotland’s space heritage came from science missions and component/sub-system manufacturing for larger satellites, but it was supercharged by the smaller satellite sector, attracting inward investment opportunities, new company formations, and innovative designs that leverage the engineering baseline to push the boundary of smaller satellite capability. This also led to modest UK government investments, for example the Higgs Centre for Innovation test facilities focused on smaller satellites. With increasing constellation build and resulting service offerings, this growth shows no sign of slowing down, and will help continue to develop a local supply chain.
The global market for small satellite launch is estimated at $28.4 billion from 2022 to 2031[1]. The UK government has recognised this opportunity in the National Space Strategy as a key part of the 10-point plan[2]. The advent of the satellite launch service and launch vehicle development in Scotland is an extension of the engineering prowess that has supported the satellite manufacturing segment of the industry, together with the advantageous geography across Scotland for multiple vertical and horizontal launch facilities. This positions Scotland uniquely in Europe to provide competitive and alternative launch services that can address the growing smaller satellite market needs, increasing the attractiveness of growing space business and pursuing space careers in Scotland and the UK. The additionality of launch to the existing and growing space sector needs to be supported at a UK-level to ensure the success of both the initial launch campaigns and the multi-year vision for the Scottish space economy through coordinated engagement and resourcing as required with the relevant stakeholders.
Data from satellites is constantly developing and improving and showcase significant areas for growth. Some applications cannot be fulfilled by current available datasets, although there is also a need to improve the handling of existing data. For either approach though, a significant opportunity exists, which will constantly evolve and growth with the use of novel technologies in-space, and feedback from potential end-users. Integration of the space sector and the existing tech sectors in Scotland could prove highly beneficial.
Edinburgh, with a long history and strong academic background in data analytics, has been pushing to be seen as the space data capital of Europe. Many space data spin-outs and start-ups have formed in and around Edinburgh over the last few years. Industry reports consistently show that the majority of value growth of the space sector is expected from the data applications rather than the hardware (although the hardware is of course essential in delivering the data). Thus, significant growth in this part of the sector is expected in Scotland as this key strength is leveraged.
Scotland has a rich environment of innovation, industry engagement and national facilities, such as the National Manufacturing Institute of Scotland (NMIS), the National Robotarium, the Higgs Centre for Innovation, and the UK Fraunhofer Research Centre for Applied Photonics that are already engaged with the space sector to develop products, services and applications. Deepening these cross sectoral links is a critical expansion of the space sector, encouraging growth and economic value of the sector. Ensuring that these links are supported through funding opportunities, improved awareness across the UK of these expertise, and accessibility of these cross-sector engagements for international exposure will position Scotland and the UK on a global marketplace.
Scotland has a broad innovation landscape with Innovation Centres in several sectors that can be linked and connected into the Scottish space ecosystem. Current activity with organisations such as Fintech Scotland, the Scottish Rural College (SRUC) and IBioTech Innovation Centre are exploring collaboration and knowledge exchange and starting to build traction which will see greater engagement with space sector organisations. Furthermore there has been a long engagement with the Offshore Renewable Energy Catapult, based in Glasgow on how space data can be used to support innovation and challenges within the offshore industry. Developing further cross sectoral opportunities with potential funding routes to build short pilot studies can help cement the partnerships with space companies and demonstrate the value of space data in no-space sectors.
Created in 2020, the Environmental Task Force (ETF) rose from a small group of motivated individuals to a recognised team of representatives from Academia, Government and Industry who push the Space sector to embrace a culture of “Green by design”.
The ETF works closely with Space Scotland as a Working Group and brought Sustainability both in Space and on Earth to the forefront of the sector’s thinking, with the “Sustainable Space Challenges” activity and then the first in the world “Sustainable Space Roadmap”, produced by AstroAgency and Optimat for Space Scotland’s ETF, funded by Scottish Enterprise. The “Roadmap” serves the group as a guide to deliver simple but important objectives through short-, medium- and long-term work goals. There are 13 work packages underway to support this work.
Those goals cover:
The ETF has increased the visibility and awareness of Scotland’s role in the UK’s leadership of Space Sustainability across the world working with colleagues from Australia, Portugal, UAE, Switzerland, Bavaria, France and more. The roadmap’s creation and the UK/ international collaboration behind it has been presented at events organised by the United Nations, Portuguese Space Agency, Secure World Foundation and both the Korean and Swiss governments, with future engagements planned at the Australian Indo-pacific space conference and COP28 in Dubai. The group’s openness and collaborative approach ensures continuous improvement and commitment to delivery.
Key highlights of the Environmental Taskforce and the work on Space Sustainability.
The roadmap contains some initial case studies around upstream space sustainability, such as the development of green fuels by Orbex, Skyrora and HyImpulse in Scotland, and the work from spaceports such as SaxaVord and Sutherland to support their sustainability ambitions. It also contains examples of how the downstream sector in Scotland, with 29 Earth Observation companies, are supporting various initiatives around environmental protection using space data. More work is being done at the time of writing to draw together more case studies, particularly around the downstream sector, via EO data but also Radio Frequency, with companies such as Spire supporting wildfire detection and various marine protection projects through RF.
An example of the industry/academic collaboration is shown below, which highlights activity that has helped grow the sector.
Further activity of this nature with other industry and academic partners are evident across the Scottish space landscape, demonstrating the close link between academia and industry. Edinburgh boasts a range of start-up and spin-out organisations, such as Ecometrica, Space Intelligence and EarthBlox that have leveraged academic excellence to develop commercial propositions which are feeding into the global space economy.
Scotland is a prime location for space business start-ups, and whilst this should continue to be supported, the transition from start-up to scale-up is more challenging. UK initiatives that can help this segment of the industry to grow and cement their operational activity in Scotland are limited and need to be addressed.
Scotland can take a leading position in the burgeoning New Space economy, driven by commercial applications, with capabilities across the value chain in particular around smaller satellites, with world leading capability in small satellite technology, missions and services which are exported globally. The use of these small satellite platforms enables the provision of low-cost, high-quality data.
The most significant market opportunity in space is from the data generated, and the resulting downstream applications and services, with the trend for increased provision of high-quality, timely data looking set to continue. Given the strengths of the Scottish sector across the value chain in the design and manufacture of small satellites as well as in data delivery, processing, analytics, and downstream services the sector is in a prime position to take advantage of this growing market area. There are particular opportunities, and strengths within Scotland, for provision of data and services relating to climate change and sustainability. With the publication of the Space Sustainability Roadmap, there is the opportunity for Scotland to be a leader in this area, while more recent studies have identified 29 Earth Observation companies forming part of a wider geospatial ecosystem with much to offer in supporting other sectors, as well as the environment.
The emerging small satellite launch market represents a significant commercial opportunity as well as a strategic capability which the UK has the opportunity to exploit. Scotland and the UK more generally has an opportunity to lead Europe in the provision of commercial small satellite launch services at a time where Europe finds itself without its own domestic launch capability.
Coupling these aspects of the sector together demonstrate the unique capabilities present in Scotland to becoming a leading space nation. By stimulating the demand for data and applications that are serviced from the space ecosystem, will catalyse growth across the sector, requiring the likes of satellite constellation development, enhanced collaboration with academic and R&D activities, and capitalising on the accessibility of launch. These attributes should be recognising and supported as assets of the UK space economy.
As the sector develop future activity in Scotland, it should be aware of ESA’s technology roadmap, which provides opportunity to the academic and industrial sectors, whilst still pursuing the New Space agenda. Given the existing expertise in Scotland, innovative ideas to plug gaps in the global supply chain should be supportive, in line with ambitions of UKSA and ESA. It could help develop services, uniquely located in Scotland.
No growing space sector should do so without sustainability in mind. It provides a significant opportunity for international collaboration, but the principles behind it can be difficult to implement. Support mechanisms here should be investigated.
The ability to scale the overall Scottish space sector will depend in large part on the ability to scale-up SMEs. A specific focus on how to support and enable scale-up is particularly required in Scotland, compared to elsewhere in the UK, due to the regional company demographic. Additional support for start-ups would be nice, but given the existing start-up infrastructure already in place the main focus of attention should be on the scale-up phase, where there is a significant lack of infrastructure and support.
There are a broad number of areas where Scotland’s industry can contribute positively to UK ambitions, from UK launch to space sustainability. Development in these areas are well underway, with the industry sector positioned to maximise activity that can deliver of a sustainable sector and be viewed as an exemplar for other global space nations. Demonstrated expertise in the smaller satellite capabilities and derived data solutions to enable informed decision making are key areas that set apart the space sector in Scotland and can be used to grow opportunities for the UK. Additionally activity to link into non-space industries such as fintech, robotics and agritech are underway, accessing the diverse innovation landscape in Scotland.
With the focused attention on UK launch that could be successfully realised in the near future from Scotland, providing a unique opportunity for the UK and Scottish space communities to demonstrate connectivity across the sector and other adjoining industries through the use of space data and applications. Capitalising on these expertise from the Scottish Space ecosystem is a crucial opportunity that should be realised by the UK.
A key challenge going forward will be to ensure that there is improved connection between the UK Space Agency, DSIT, Space Command and developments in Scotland. Recent visits from the Science Minister, CEO of the UK Space Agency and the head of Space Command were highly welcome and mutually beneficial. Such engagement must continue, with other mechanisms established to ensure better connection and ultimately ensure the UK’s proposition is bolstered by relevant activities in Scotland.
While the sector has undergone considerable growth, particularly over the last 5-10 years, it is dominated by start-ups, spinouts and SMEs. Support and significant investment, both public and private, is therefore required to support the growth and scale-up of existing successful commercial entities to make the sector globally competitive. Access to adequate investment as well as a suitably experienced talent pool, together with limited suitable scale-up premises (including lab spaces) are currently the most substantial barriers to the growth of the sector.
The end-to-end capability and breadth of expertise available in Scotland are often not well understood within the wider UK and global ecosystem and the narrative can often focus on one particular area of capability. This can translate to a lack of focus or investment into broader key areas of capability in Scotland. Improved UK engagement, signposting and marketing are key to this message being translated appropriately. The changes in operational activity of UKSA and more active engagement with the Scottish space industry through Space Scotland are helping to address this, and can be further alleviated following the opening of the UKSA office in Scotland.
There are a number of companies who have demonstrated continued growth and commercial sustainability; however, these organisations face challenges in fully operationalising this capability to achieve global market success and scale-up to the next level.
In general, Scotland is home to a vibrant tech start-up community but “we do not provide enough scaled, sustainable tech businesses from our ecosystem” [3]. In both Scotland and the UK there are various mechanisms intended to support early-stage companies, for example through grant funding, incubators and accelerator programmes, however there is much less support available to help companies grow and scale. These companies need different kinds of support which is not so readily available. If Scotland, and the UK more generally, are to achieve the target ambitions for growth there must be a strategy around how this will be achieved for example models such as Government as a customer to prove applications and services and stimulate future export markets.
A further challenge of operating in a global market for many of the organisations developing spacecraft or components, software or technology for spacecraft is that these are typically export controlled. Applications for export licences can take a significant amount of time, resulting in delays to delivery and, in some cases, orders being cancelled. Improved export licence application response times and the introduction of export licences focussed on the spacecraft industry would be a great help to Scottish organisations attempting to export their products.
While Scotland is home to world leading universities, which generate highly-skilled graduates, the sector lacks in experienced personnel (5-10 years space experience). There is significant competition for skilled workers across the sector, for example from Europe and the US, making it difficult for businesses in Scotland, particularly for SMEs. The space sector is inherently integrated on a global scale, and as such it is common practice for industry to recruit from a global talent pool, and for staff to relocate to Scotland for the right position. The geopolitical changes over recent years have resulted in increased difficult in this recruitment process, specifically from Europe with industry having to cover expensive VISA fees to bring in staff from outside of the UK. This is compounded with the rapid growth in the Scottish space sector, and a keen interest for companies to relocate to Scotland, driving the economic growth of the sector. The skills challenge requires rapid increases in the number of experienced staff, which places pressure on existing enterprises and talent pools. Plans for skills development must therefore go hand in hand with foreign direct investment (FDI) planning.
Historically UK investment has been focused principally on the South East of England. This is particularly true for investment in infrastructure, which in Scotland has considerably lagged other regions of the UK, for example Harwell, Westcott and Leicester. In some cases, infrastructure has been established in these areas which aligns better with key capabilities in Scotland. The lack of available and suitable infrastructure has been identified as a market failure, with some investment opportunities not being realised due to the lack of premises in Scotland. A more balanced approach from UK government on infrastructure investment into areas where there is growth potential as well as active FDI interest should be implemented. Also working with local organisations, such as Space Scotland, that have good visibility of the sector needs and gaps can help identify key areas for development.
In regards to ESA investment, the geo-return for Scotland also falls behind other regions of the UK. This is further evidenced by the fact that from ESA Ministerial Council in November 2019 (CMIN19) six companies accounted for 50% of the value of ESA contracts with reports stating that this reflected ‘the concentrated structure of the UK space industry’ [4]. Given the size and scale of the industry across the UK there is considerable work to be done in levelling up this investment, which could initially be improved by increasing the visibility of ESA programmes that are relevant to the Scottish space industry, encouraging ESA senior leadership to engage directly with Scotland, and the UK proactively engaging with the Scottish industry base on focussed ESA opportunities.
The Scottish space sector would benefit considerably from mechanisms to support the growth and scale-up of existing companies. This would include, for example the procurement of data generated by providers or in national missions, or the provision of space-focused scale-up premises, including the required lab spaces.
The procurement of data by Government departments, through a national-scale programme, could support industry and academia across the value chain from upstream to downstream. For example, data providers could make data available to downstream entities to generate value-added services for various government agencies. As the demand for these services and data grows this ultimately creates the demand for new missions. Using small satellites, this type of programme can be delivered at relatively low-cost and can complement existing infrastructure and programmes. When data and services are proven at a national level, these can then be exported globally to generate the ROI.
The current provision for scale-up spaces for high technology companies is severely limited across Scotland – which puts a significant constraint on growing existing SMEs, as well as attracting overseas companies to locate in Scotland. There is reasonable provision for start-up spaces, including the ESA Business Incubation Centre, but there is no comparable scale-up support infrastructure in Scotland.
Government should provide support to companies in funding training and supporting upskilling of staff entering the sector. Currently the onus is on industry to provide and fund this training themselves, which for SMEs proves a significant burden. More needs to be done at a national level if the sector is to have any chance of meeting ambitious growth targets.
Should government support be provided to help attract foreign direct investment there must be a serious review of the policies surrounding this together with the impact on existing businesses. This may include formal commitments to train new staff and support the overall growth of the industry.
Further, Scottish Government could support in the implementation of appropriate interventions for example replicating some existing UK mechanisms for example the newly established Space Systems Degree Apprenticeship.
Relevant and suitable infrastructure for the growing Scottish Space sector is needed to both address the current limitations and furnish the increased interest from FDI companies. Interventions for capital investment should be made available, enabling the sector to grow, and that can be facilitated through a sectoral approach ensuring the greatest impact of any intervention.
As has been noted, the investment in space sector infrastructure in Scotland has lagged other parts of the UK, with financial support for orbital launch in Scotland less evident in recent years compared to support for other parts of the space sector, despite the huge opportunity provided by Scotland’s geography and appetite demonstrated by multiple sites. Given the large initial investment required for these facilities and the need to generate early investor confidence, support for launch infrastructure and operator business models that can demonstrate demand and viability beyond first launch would be beneficial.
Launch developers setting up in the UK that are planning to launch from Scottish soil will require fully operational launch sites to be available when their technology is mature enough to begin spaceflight, in order to generate revenue. If UK spaceports are not open for business, launch providers will be forced to launch elsewhere to ensure economic sustainability and commercial competitiveness. Whilst the UK is leading in New European launch with the implementation of the Space Industry Act and other interventions, the practical side of launch remains uncertain until launch sites are active.
September 2023
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[1] Smallsat Market by 2031, Euroconsult, 2022.
[2] National Space Strategy, 2022
[3] Scottish Technology Ecosystem Review. Mark Logan – an independent review commissioned by the Scottish Government. Published 25th Aug 2020.
[4] Impact evaluation of the UK investment in ESA. Updated November 2022 and accessed online at: https://www.gov.uk/government/publications/impact-evaluation-of-uk-investment-in-esa/impact-evaluation-of-uk-investment-in-esa-executive-summary#:~:text=In%20terms%20of%20employment%2C%20we,this%20ratio%20is%201%3A8.2.