Citi
September 20, 2022

A New Age for Space: Citi GPS report

September 20, 2022
Citi Private Bank
SUMMARY

With falling costs and rising private sector involvement, the outer space industry could become increasingly influential over the coming years and decades.


Space has long been seen as the final frontier.

But what if that frontier is moving ever closer to Earth, opening up tantalizing prospects for mineral mining, space logistics, harnessing solar power collected from satellites, space travel – even the colonization of Mars?

None of this is far-fetched (except maybe the Mars part).

That’s because, as the authors of a recent Citi Global Perspectives & Solutions (GPS) report spell out in intriguing detail, a combination of factors is bringing such activities within touching distance of being commercially much more feasible.

Chief among them is lower launch costs, which are now about 30 times lower than they were in 1981, when NASA launched its first Space Shuttle.

This holds out the prospect of transforming space into a trillion-dollar industry by 2040, compared with about $370 billion in 2020, the GPS report’s authors estimate, with growth running at a compound annual rate of 5% over the period. This will be propelled by growth across the satellite industry, government space budgets and a proliferation of new applications and industries. More on that later.

Private sector cost drive

But SpaceX has pioneered rocket and vehicle launch reusability to the point that it is now the game changer in space economics. Downward pressure on costs really started to be felt in 2010 with launch by SpaceX of Falcon 9, and Falcon Heavy eight years later.

The Citi GPS authors estimate that current launch costs, at $1,500 per kilogram ($1,500/kg), could come down another roughly 95 percent to about $100/kg by 2040, driven by reusability, scale, lower input costs, and cost-efficient production methods. 

In a best-case scenario, driven by a revolution in materials and operating costs along with fuel efficiency, Citi estimates launch costs in 2040 could fall further to around $33/kg.

In a bear case scenario of rockets still only being reused around 10 times by 2040, the estimate is about $300/kg.

Material difference

It gets better. Materials such as steel, carbon composites and 3D printing will drive costs down further still. Aluminum-titanium (Alu-Ti) rockets with kerosene-fueled engines have been the market standard for several decades.

But new entrants are using materials like stainless steel, carbon composites and liquid methane fuel to drive a better combination of reusability and affordability. Steel is 60–70 percent cheaper than Alu-Ti alloys and 95 percent cheaper than carbon composites, lowering the cost of initial vehicle production.

Then there is fuel. Methane rocket fuel has long been considered a middle ground fuel for launch vehicles: it’s not as easy to work with as kerosene and not as energetic as hydrogen. But industry leaders are increasingly considering it as an alternative to kerosene, for several reasons, such as the fact that it generates greater thrust thanks to its energy density, and burns cleaner, allowing greater engine re-use without refurbishment.

From space-as-a-service to asteroid mining

So, what new applications will these developments open up?

Most of the focus of growth will continue to be in the satellite market, which currently makes up over 70 percent of the space industry.

But it is expected to undergo a paradigm shift away from traditional applications such as video broadcast, toward a broader range of applications such as consumer broadband; mobility; big data from satellites; and the growing applications to tackle greenhouse gas (GHG) emissions, deforestation and biodiversity loss – with some of these even morphing into a kind of space-as-a-service business model.

For example, satellite imagery and better analysis tools for large amounts of data could be crucial in helping nations and companies address many of the UN Sustainable Development Goals, particularly monitoring GHG emissions, deforestation and biodiversity.

But the fastest growth is expected to come from new space applications and industries, such as space-based solar power, space logistics and Moon and asteroid mining. These areas could generate around $100bn in annual sales by 2040, the GPS report authors believe.

Cargo rockets traveling through low-Earth orbit have the potential to meet the demand for extremely fast shipping over long distances. As space tourism becomes more widespread and accessible, commercial passengers will become increasingly comfortable with the prospect of inter-city space travel.

When it comes to mining, NASA has estimated that the mineral wealth of the asteroids in the asteroid belt might exceed $100 billion for each of the six billion people on Earth. The report’s authors believe that mining the Moon could be worth about $12 billion in annual sales by 2040.

The result of these developments is that today’s generation is at the forefront of a new space era – one that will be far-reaching, inclusive and potentially more disruptive.

Indeed, while the last space race was driven by the Cold War superpowers, the new space age looks quite different – more private companies, wider access to other industries, more disruption and significant potential to change our everyday lives.

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