13 December 2022

The Scottish space sector is the fastest growing in the UK, with Glasgow second only to California in building the most small satellites in the world and some of the highest levels of activity across Europe.

These exciting developments look set to continue, with an aim to raise the value of the sector in Scotland to £4 billion by 2030. As the world braces itself for the ‘New Space Race’, Scotland looks set to become, once again, a pioneer of innovation.

We examine the commercial opportunities that these developments present.

Third party services

Currently, one of the most common uses for small satellites in low orbit is the production of space data using remote sensing technologies. This allows for the monitoring of land, surface and weather changes, amongst other things. The satellite data generated from this has already been utilised by the agricultural, communications, insurance and banking industries. For example, in agriculture, this data can be used to improve crop yield by observing fields, analysing the soil and providing information regarding the optimal water and fertiliser levels. This provides excellent opportunities to provide satellite data to third parties as a service, and with Scotland home to over 170 data science companies, it is an apt location for businesses to analyse such data.

In addition, there are a raft of ancillary services associated with the sector, including insurance, IT, market research and consultancy services, engineers and the production and supply of component parts. The opportunities in space also extend beyond the production of data. For example, advances have been made in providing broadband to remote locations that otherwise would not be serviced and space tourism is also beginning to take off. As the associated costs of launching to space continue to reduce, the ability for businesses to utilise new creations and data from the space sector will only grow, as too will third party offerings.

Investments

With a rise in activity and developments, there has been a recent wave of funding opportunities, with the UK Government, Scottish Government and European Space Agency all releasing recent rounds of funding. Scotland has become an attractive place to set up and invest: it has 40% lower operating costs compared to the rest of the UK, a pool of talented engineers, government support and initiatives and universities dedicated to space exploration and development. As such, it is also attracting private investors, with the newly launched Dealroom platform from Glasgow City Council highlighting but a few.

The environment

As the world prepares to meet the net-zero targets outlined in the Paris Agreement by 2050, and some countries aim for more ambitious targets, there is potential for the developments in space to help bridge the gap in becoming more environmentally friendly whilst keeping up with society’s modernisation.

Remote sensing technology and satellite data can also be used to provide data on climate. For example, this method can produce information on land surface temperature, sea level, wind speed and drought and heavy precipitation. The benefits of this data have already been realised by the insurance industry, with a Climate Risk Index tool currently under development that has the potential to enable insurance companies to provide financial products to those who are shown by the data to be at a high risk of droughts and wildfires. The data can also be used by policy makers to create policies in anticipation of extreme weather events.

As pressure is placed on businesses to improve their production processes to a more sustainable model and the effects of climate change continue to pose risks to the assets and operations of more and more businesses, it looks likely that this climate data will begin to play an important role at a commercial level.

What next?

Whilst many of the current operations focus on low orbit, small satellites, it is clear that continued space exploration will result in further developments within the sector. For example, on 26 November 2022, the first Scottish led experiment was sent to the International Space Station. The experiment aims to determine whether it will be possible to take advantage of space’s microgravity environment to manufacture goods that we are unable to produce on earth, in this case, metal alloys for use in medicine.

In addition, five Scottish spaceports are set to open in Shetland, Sutherland, Argyll, Prestwick and the Outer Hebrides over the next few years, offering both vertical and horizontal launches. Once opened, this will allow for end-to-end services within Scotland, from design and manufacturing to launch.

With yet unknown manufacturing potential, commercial flights, environmental benefits and Scottish spaceports within sight… watch this space!

Regardless of the stage or role of your business within operations, we can provide advice regarding investment agreements, service agreements, intellectual property and employment matters. Please contact BTO’s Corporate team.

Erin Findlay, Trainee Solicitor (Author of article): efi@bto.co.uk / 0141 221 8012