Satellite refueling and other in-orbit services market could reach $3 billion over the next decade

This article originally appeared in the June 4, 2018 issue of SpaceNews magazine.

A transition is happening in the satellite business. Fast-moving technology and evolving customer demands are driving operators to rethink major investments in new satellites and consider other options such as squeezing a few more years of service out of their current platforms.

Which makes this an opportune moment for the arrival of in-orbit servicing.

Sometime in early 2019, the first commercial servicing spacecraft is scheduled to launch. The Mission Extension Vehicle built by Orbital ATK on behalf of subsidiary SpaceLogistics, will the first of several such robotic craft that are poised to compete for a share of about $3 billion worth of in-orbit services that satellite operators and government agencies are projected to buy over the coming decade.

Servicing satellites in geosynchronous orbit is a “nascent industry” with significant future potential, said Carolyn Belle, senior analyst at the Cambridge, Massachusetts, research firm Northern Sky Research. Companies are weighing “service-or-replace trade-offs.” In an uncertain business climate, satellite manufacturers and operators are looking for new ways to manage their fleets, and might find life-extension services a compelling option.

NSR in January published the industry’s first study on the in-orbit servicing market.

Several types of services will be offered, the main one being life extension, Belle said. Service vehicles will dock with satellites for refueling and other station-keeping missions. “Various vehicles are in development, and each offers different capabilities,” said Belle. Life extension of GEO satellites will be the first serious opportunity for the servicing industry, based on the number of satellites that are reaching the end of life, both commercial and government.

As the menu of in-orbit servicing options grows and technology advances, “the business case evolves,” she said. “In-orbit servicing provides the satellite industry with an attractive value proposition in an environment of falling capacity prices, rapid technology changes, and uncertainty in capital expenditures.”

Besides life extension, other services that will be offered include de-orbiting, salvage operations, satellite repair and alteration. Salvage is performed when a satellite is deployed in an incorrect orbit or if there’s a malfunction with the satellite propulsion system.

“After years of demonstration and tests, recent contracts and upcoming missions show signs of a solidifying business case for in-orbit servicing,” said Shagun Sachdeva, NSR analyst. But the industry still has obstacles to overcome, and will need government help on the regulatory front.

The $3 billion estimate for the overall market predominantly is for life extension work. De-orbiting or re-orbiting satellites and payload upgrades will be a small percentage of future work, at least until more advanced autonomous vehicles are deployed that are able to reliably fix solar arrays, antennas or add new payloads after a satellite as been in orbit.

Belle said about 153 GEO satellites, most commercial, would be target customers. “We looked at demand based on what operators would be interested in buying if the services were available.”

An appetite for in-orbit has been building for years but the technology is now just beginning to show glimpses of future promise. “Most pieces have been tested in orbit,” Belle said. The timing is advantageous for servicing firms. “Commercial players are being pinched by declining capacity prices globally, concerns about emergence of non GEO constellations and what potential that might have on their business.”

CEOs and investors are being cautious about capital expenditures, the biggest of which is buying new satellites. And they are looking for ways to buy time and not have to make major financial commitments until the market settles.

“At this time operators aren’t entirely sure what their market is going to be for the next 15 years, what they should replace their satellites with,” said Belle. “How much of the emerging technology should they take advantage of? If they wait a few years, will there be a new capability available?”

Operators have to think more strategically, she said. That makes them much more willing to look at life extension opportunities. In-orbit servicing could add three to five years to the operation life of satellites whose propulsion systems were designed to last 15 to 18 years.

Servicing satellites in low-Earth orbit could one day become a viable market, but not any time soon. SSL is developing the Restore-L robotic servicing vehicles for NASA, set for a 2020 launch. It will refuel satellites in LEO, but that portion of the satellite sector is not ready to jump into servicing.

“The market not quite as advanced as GEO and has a much different business case for how services will be used,” said Sachdeva. A key difference is that LEO satellites have a shorter life span. “Their relatively low manufacturing and launch cost is another major reason.” Life extension might not be a priority for LEO operators but they are might over time become interested in other applications like relocation and de-orbiting.

The next event to watch is the launch of Orbital ATK’s first mission extension vehicle known as MEV-1. The company in December got approval from the U.S. Federal Communications Commission to conduct “rendezvous, proximity operations and docking” with Intelsat-901 in a graveyard orbit.

The industry at large would like more clarity on how the government will license and oversee these missions.

The Defense Advanced Projects Agency created a self-policing industry group called the Consortium for Execution of Rendezvous and Servicing operations, or Confers. The consortium will propose “rules of the road” for commercial on-orbit activities like repairing and refueling satellites.

The group had its first meeting May 21 in Marina del Rey, California. DARPA is bringing together companies involved in satellite servicing to define best practices and develop voluntary standards. The agency has a major stake in the future of in-orbit servicing. It awarded SSL a contract to develop a robotic servicing spacecraft for GEO satellites that could be the first to support both commercial and government satellites.