Written Evidence Submitted by AAC Clyde Space

(SPA0020)

1.1                      Company overview

At AAC Clyde Space, we are changing the economics of space data. We specialise in small satellite technologies and services that enable a growing number of commercial, government and educational organisations to access high-quality, timely data from space. This data has a vast range of applications, from weather forecasting to precision farming to environmental monitoring, and is essential to improving our quality of life on Earth.

The Group’s main operations are located in Sweden, the United Kingdom, the Netherlands and the USA, with partner networks in Japan and South Korea. Shares of the Group’s Swedish parent company, AAC Clyde Space AB, are traded on Nasdaq First North Premier Growth Market in Stockholm and on the OTCQX Market in the US. The Group has over 120 employees, 77 of which are employed in Glasgow.

AAC Clyde Space is backed by 15 years’ operational experience with in-house expertise that spans from reliable subsystems through to advanced sensors, nanosatellites (1 – 50 kg) and data delivery. We are building on this technical heritage towards our vision to deliver high-quality, timely data from space for a better life on Earth. Our aim is to become a world leader in commercial small satellites and services from space.

1.2                      UK strengths and prospects

1.2.1                 Strengths

The UK has core capabilities in satellite applications (>£11B UK income 2018/19, estimated at around 6% of the global market size) and space manufacturing (>£2B UK income 2018/19, estimated at around 3% of the global market size), with these market segments demonstrating growth over the period 2018/19[1].

Furthermore, the UK is seen as a World leader in small satellite technology, with leading small satellite manufacturing hubs in Glasgow and Surrey. The global small satellite market size is projected to grow at a compound annual growth rate of 20.5% from 2020 to 2025[2]. Therefore, if the UK is to achieve the ambitious growth targets (to capture 10% of the world’s space economy by 2030) leadership must be sustained in these established and lucrative market segments, as well as seeding growth in more nascent ones.

The UK also has a strong innovation landscape with a considerable number of start-ups in the industry with an array of support mechanisms available for early-stage organisations. Large multinational conglomerates are also well supported, for example by large-scale ESA programmes. To significantly grow UK industry, further support to medium sized enterprises is required to promote scale-up and growth to enable these businesses to become large-scale multinationals and take advantage of international opportunities.

The UK hosts a thriving, diverse space ecosystem, with space employment shown to be well distributed across the UK1. Support must therefore be provided to grow existing capabilities and expertise across the length and breadth of the UK as part of the levelling up agenda. This is critical to establishing the UK’s global position as a one-stop shop for space products and services. This is particularly true in relation to small satellites, where recent investments have been made to establish this capability and build a sustainable market for small satellite launch.

As the small satellite market evolves, global competitors are growing, challenging the position of the UK and its companies. Building strong champions in the UK that can manufacture, launch, operate and finally deliver data from the satellites is important in ensuring that the UK remains the leader in the field.

1.2.2                 Prospects

The UK possesses all the necessary expertise to become a leader in space capability. However, in recent years growth of the industry in the UK has slowed in comparison to the global rate[3]. Care must be taken to drive forward innovation for the UK to avoid being overtaken by newly established space capability in other nations e.g. Australia, Canada etc. We must remain commercially competitive on a global scale. Government investment is therefore required in order to support industry to develop capability, scale and grow and to seed R&D. International partnerships will be critical where there is complementary capability, but this should not be at the expense of UK growth.

1.3                      Space strategy

1.3.1                 Lessons learned

The UK can learn lessons from the space strategies of countries such as Australia, where there is a focus on filling market gaps that will give organisations first mover advantage, as well as outlining the role of government in the industry and support to moonshot missions to drive innovation and inspiration.

Specifically, the UK can take lessons from the regulatory environment of other countries like Australia and Sweden where the regulatory framework ensures effective, efficient and safe activities.

Compared to previous strategies, it is imperative that there is a clear plan to achieve the ambitious growth targets towards 2030. Support and investment should be evidenced against the expected growth and how this will help the UK meet these targets. This should include incremental KPIs to allow progress to be tracked.

1.3.2                 Aims and focus of the new space strategy

Technology: Focus on growing technological capability of small satellites particularly towards flexible, reconfigurable constellations to service a variety of user needs. This includes driving development in enabling technologies, such as communications (optical and radio frequency (RF)), and Earth Observation (EO). Support should be provided to accelerate technology development through the Technology Readiness Levels (TRLs) with increased appetite for risk where there is significant opportunity for reward. Critically, Government as a first customer will be a key enabler of new technology and service development and will provide the basis for future commercial growth.

Skills and diversity:

-          Training infrastructure is critical to widen the available talent pool and overcome the lack of resource in small businesses to supply internal training.

-          Focus on promoting greater diversity within the industry. The recent UK Space Agency Space Sector Skills Survey[4] highlighted the under-representation of women in the industry. More focus needs to be given to encourage young women studying STEM subjects in school and Universities and in retention and progression of women in the workforce.

-          Support to address skills gaps that are often experienced in the industry to help businesses overcome some of the challenges associated with recruiting experienced staff.

Research funding, investment, and economic growth:

-          Increased funding to enable scale-up of SMEs, in particular to support the growth of medium-sized enterprises to large multinationals. This is a critical enabler of commercial economic growth and will drive export, job creation and skills development.

-          Further investment in multi-year National funding programmes as well as continued growth in European Space Agency (ESA) programmes. Critical to this is meaningful engagement and support from the UK Space Agency, BEIS and other Government bodies with industry and academia to guide and promote these programmes.

-          Regional engagement and communication are critical to ensure participation and economic growth across all areas of the UK. This is key to maximising the UK’s potential.

-          Funding to support collaboration between Government, Industry and Academia to leverage the already strong ties across the UK space sector and maximise the utility of public funding.

Industry:

-            Focus on building on existing strengths of industry in the UK (e.g. satellite applications and space manufacturing) to support and enable future export and growth.

-            Inclusive engagement and consultation from Government to provide appropriate support to industry of all sizes across the UK.

-            Recognition of the need to support inward investment to the UK in areas that are complimentary to existing expertise. This should be used to fill gaps in the value chain, promote local skills development and protect the needs of existing UK businesses (e.g. not creating competition for the same small talent pool for staff etc.).

Civil and defence applications:

-            Providing industry visibility of the needs and opportunities available within the civil and defence sectors.

-            Establishing innovative procurement mechanisms through which industry can gain access to civil and defence customers.

International considerations and partnerships:

-          Focus on export with support to UK entities to identify opportunities and markets. The overhead for this activity, particularly for smaller organisations, can be onerous and prohibitive. Support for this as well as favourable export regulation will be a critical enabler for economic growth.

-          Support to establish international partnerships through programmes such as the National Space Innovation Programme (NSIP) International element, and the UK Space Agency International Partnership Programme (IPP). Programmes should be constructed in consultation with the sector, particularly on countries of interest. These programmes are an excellent way to ensure future commercial revenue to UK entities from international organisations. They can also help to establish new entities in the UK e.g. the Innovate UK In-Orbit Demonstration Programme managed by the Satellite Applications Catapult.

-          Focus on establishing mechanisms and agreements to facilitate international collaboration. It is imperative that these agreements provide a route to future commercial opportunities i.e. not only one-off opportunities with space agencies. These agreements also need to be accessible by all size and type of organisation.

Place:

-          Consideration that different areas of the UK possess unique strengths and challenges and therefore require different support mechanisms. This requires more localised engagement and presence of Government Agencies in order to fully support the regions.

-          Support the levelling up agenda by investing in under-represented areas of the UK to create and grow established hubs.

Regulation and legislation:

Regulation, including licensing, frameworks must be reformed to better service the burgeoning New Space economy. This includes timelines and costs which are currently prohibitive. Attention should be given to the development of innovative regulatory frameworks that are fit for purpose, provide flexibility for industry and support economic growth.

Impact of Low Earth Orbit (LEO) satellites on research activities:

Small satellites in LEO present an ideal opportunity to drive R&D activities in appropriate timelines and at accessible costs. Long-standing successful collaborations are in existence relating to innovation for small satellites in LEO e.g. with local universities and industry in Glasgow (AAC Clyde Space, University of Strathclyde and the University of Glasgow). Targeted investment is required to grow and expand these existing collaborations to form R&D hubs and to build world leading capability. When implemented effectively, this high impact R&D activity will seed commercial growth.

1.4                      Space infrastructure

In order to establish resilient UK capability, it is important for UK Government to instigate and fund UK missions in communications, EO, weather forecasting and navigation. These should incorporate a range of UK capability to generate comprehensive services and infrastructure, for example various mission types (instruments, orbits, spacecraft sizes etc.). These missions should support and develop the UK supply chain and should consist of involvement from industry of all sizes as well as academic input. This should also enable growth of the local skills base. It is important that these missions also promote innovation and allow for an element of risk in new technology development.

Furthermore, investment is required in infrastructure to accelerate the innovation pipeline, de-risk technology and new service deployment and drive growth. This should be focussed on the expertise in a particular region to build a pipeline of capability to future-proof the industry and remain at the cutting edge of technology globally.

For example, funding collaborative labs/centres between academia and industry to create a mutually beneficial ecosystem. One potential includes the development of new applications and services, from small satellites to accelerate global leadership, national capability, and sector growth across the value chain, through:

 

(June 2021)


[1] Size & Health of the UK Space Industry 2020 – Know.space (https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/987497/know.space-Size_Health2020-SummaryReport-FINAL_May21.pdf)

[2] Reportlinker market research, August 2020

[3] Size & Health of the UK Space Industry 2020 – Know.space

[4] UK Space Agency - Space Sector Skills Survey 2020