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signing ceremony
Thierry Breton, the EU commissioner responsible for space, holds up a signed agreement between the European Commission and European Space Agency after a ceremony Tuesday in Brussels. (credit: ESA)

Jumpstarting European NewSpace

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On June 22, officials from the European Commission and the European Space Agency gathered in Brussels for a signing ceremony. After many months of negotiations, the two sides had finally reached an agreement, formally known as the Financial Framework Partnership Agreement, governing how they will cooperate on programs such as the Galileo navigation satellite constellation and the Copernicus series of Earth observation satellites.

“Our objective is to position Europe as the hub of space entrepreneurship in the world,” said Breton.

Those officials said the signing marked a new, and more cooperative, era between the two organizations, whose relationship had become strained as the EU’s space ambitions grew. “We do not only cooperate, we work together,” said Timo Pesonen, director general of the European Commission’s Directorate-General for Defence Industry and Space. “In this ‘fresh start’ spirit, we have worked.”

The signing ceremony was a brief element in a half-day “launch event” for the EU’s broader space program. EU officials highlighted the Galileo and Copernicus programs, which remain the two flagships of EU space efforts. They also discussed a third flagship, a “secure connectivity” satellite system still in very early stages of development that proposes to offer both broadband connectivity to close Europe’s digital divide as well as secure, quantum-encrypted communications for European governments.

Another initiative the EU highlighted at the event was a new program intended to promote space entrepreneurship in Europe, called Cassini. “Our objective is to position Europe as the hub of space entrepreneurship in the world,” said Thierry Breton, the EU commissioner whose portfolio includes space, at the event.

“We have in Europe the creativity, the startups, the entrepreneurs, the research and innovation capacity,” he argued, but no centralized effort to support the continent’s emerging space industries. “I see the future of the European space industry as a combination of strong institutional leadership and a European approach to NewSpace.”

That European approach, which the EU plan to pursue with the Cassini program, will offer €1 billion (US$1.2 billion) “to boost startups and space innovation,” Breton said. “It will hopefully help entrepreneurs to start and scale in Europe.” Details on exactly how Cassini will operate have yet to be released, but he said it will include creation of an “incubator network” for European space startups.

“If there is one billion euros to be placed into NewSpace startups, I would really, really, really think it should put in terms of contracts and not in terms of investment,” Henri said.

Cassini is the latest effort to address perceptions that European space startups are falling behind counterparts in the United States and, more recently, China because of a lack of funding. In a later panel discussion, Josef Aschbacher, director general of ESA, said that public spending by US government agencies, civil and military, on space is between five and seven times more than in Europe.

The gap, he argued, is even greater in private investment. “In 2019, the private sector put $5 billion into space” in the US, he said. “In Europe, in the startups and SMEs [small and medium enterprises], it was $188 million.”

Some European space startups, though, say funding is not the only, or even biggest, problem they face. “I don’t think the development of the NewSpace ecosystem in Europe is linked to a lack of money and cash in the financial markets, but rather a lack of contracts in the institutional market,” said David Henri, chairman and CEO of Exotrail, a French satellite propulsion company, during a panel discussion at the Paris Air Forum June 21.

He argued that it would be better for EU’s Cassini program to fund contracts, rather than invest in startups, claiming that there is plenty of private capital available for those startups if they can find a government anchor customer. “If there is one billion euros to be placed into NewSpace startups, I would really, really, really think it should put in terms of contracts and not in terms of investment,” he said. “If you put one billion euros in terms of contracts, you can trust the startups to raise about ten times that amount on the financial markets.”

Nicholas Capet, CEO of French antenna manufacturer Anywaves, agreed about the lack of contract opportunities. He argued that prime contractors like Airbus Defence and Space and Thales Alenia Space, each of which recently won contracts to being work on a second generation of Galileo satellites, rely on subcontractors they have worked with for decades, offering little opportunity for new entrants like his companies. “These big players do not want to take a risk with a startup like us.”

“Maybe you could put towards some programs, a few million euros,” he suggested to the EU. “If we want to get the chance to become a big major company, we need some contracts that have intermediate sizes, that allow us to make our proof.”

An EU official on the panel defended plans for Cassini. “Messages that we received said that some venture capital would really help,” said Ekaterini Kaavada, director of innovation and outreach at the Directorate-General for Defence Industry and Space. “It is an element that should be in our toolbox.”

She suggested the upcoming secure connectivity program could offer some contracting opportunities geared towards startups. “If we introduce startups and SMEs on the new flagship program from the beginning, from day zero,” she said, “we will be in a position to shape the following steps of the procurement.”

Another obstacle is the perception of risk. “We are always first looking at the Americans, and they have people there who take risks. We know who they are: [Jeff] Bezos, [Elon] Musk, and others. However, the financial sector also takes quite a lot of risks,” said Paul Verhoef, director of navigation at ESA. “In Europe, this is culturally a problem.”

That problem could affect the taxpayer-funded Cassini program. “What is the public sector really capable of, given its responsibility to the taxpayer, to take as risk?” he asked, suggesting that neither the ESA, EU, nor member states have really considered how much they would be willing to risk and lose on an investment in a space startup. “Are we going to be able to accept in Europe that some of this money may be lost?”

Jean-Jacques Dordain, a former ESA director general who moderated the discussion, argued the issue is bigger than the danger of losing an investment. “You can lose even more money by not taking risks,” he said.

signing ceremony
French president Emmanuel Macron meets with Exotrail and examines one of its electric propulsion systems during the VivaTechnology event in Paris in mid-June. (credit: Exotrail)

Supporting launch vehicles

One part of the European NewSpace ecosystem that has not struggled to raise funding is the small launch, or microlauncher, industry. Despite dozens of companies worldwide pursuing such vehicles, some of which are already in service or soon will be, several European startups have raised tens of millions of euros to fund vehicles that could start launching as soon as next year.

One of those companies is Germany’s Isar Aerospace, which has raised more than $100 million. That is enough to take the company through its first launch, said Josef Fleischmann, chief operating officer of Isar, during another panel of the Paris Air Show. (He declined to comment on rumors that the company is in the process of closing yet another round.)

Isar wants to be a “neutral and independent launch solution out of Europe,” he said. “We need to be able to compete with the US and China.”

“The return on investment is obviously an issue,” Astorg said. “There are about 10 to 15 startups in Europe developing microlaunchers. At the end, probably one or two will succeed.”

Besides raising private capital, Isar Aerospace won last month a competition by the German space agency DLR, beating out two other German microlauncher companies, HyImpulse Technologies and Rocket Factory Augsburg (RFA). The company will receive €11 million for development funding and a launch contract from ESA.

That competition was backed by an ESA program called Boost! (yes, the exclamation point is part of the name) to support commercial launch technologies. “We are convinced that we need innovation, and diversity leads to innovation,” said Daniel Neuenschwander, director of space transportation at ESA, on the panel.

The Boost! program is primarily funded by two ESA members, Germany and the United Kingdom, and so companies in those countries are the biggest beneficiaries. In the UK, Orbex and Skyrora received a combined €10.45 million in April to support key technologies for their small launch vehicles under development.

France is not a participant in Boost!, but Jean-Marc Astorg, director of launchers at the French agency CNES, said his agency had other ways to support small launchers. (He later said France would consider joining Boost! at the next ESA ministerial meeting in late 2022.)

Astorg said he remained skeptical there was much demand for small launchers, particularly those with payload capacities of less than 300 kilograms. However, he said they may be more demand for “minilaunchers” with capacities of about 1,000 kilograms.

He estimated that the development cost of a microlauncher system to be €100–150 million. “The return on investment is obviously an issue,” he said. “There are about 10 to 15 startups in Europe developing microlaunchers. At the end, probably one or two will succeed.”

He saw such vehicles as most interesting for demonstrating technologies that could be used on larger vehicles, like versions of the Ariane 6 and Vega C. An example he cited was an autonomous flight safety system intended for use on those vehicles that could first be tested repeatedly on small launchers. “What could be done on microlaunchers could be applied to bigger ones,” he said, including testing systems for future reusable launchers.

Innovation and competitiveness are key elements of a broader European launch strategy. The Ariane 6 and Vega C were supposed to help that, but by the time they make their first launches next year they may have problems competing with American and other launch vehicles that are offering higher flight rates and lower prices.

“We used to dominate the launcher market, at least from a commercial perspective. Today, not anymore, and that’s something where Europe needs to seriously work on,” Aschbacher said at the Paris Air Forum.

At the EU space launch event last week, Breton mentioned as one of his priorities establishing a “launcher alliance” in Europe. “There is no space policy without autonomous access to space,” he said, but argued that the European industry needed to adapt to changes in the broader launch market. That alliance, he said, would create “a shared roadmap for the next generation of EU launchers, a roadmap building on both traditional and NewSpace actors.”

“Cooperation is good, but competition is also good,” Torres said. “In my opinion, competition is more important than cooperation at this stage.”

That alliance, like many other aspects of the EU’s space plans, is still in formulation, and Breton offered few details beyond that it would include both established and entrepreneurial companies as well as ESA and national space agencies. “We are now working on the terms of the alliance, and hopefully we’ll launch it very quickly because we don’t have time to lose,” he said.

Breton and several other EU officials have mentioned the concept of a launcher alliance on several occasions since the beginning of the year, without going into details. At the NewSpace Atlantic Summit in Portugal in early June, Matthias Petschke, director of space in the Directorate-General for Defence Industry and Space, compared it to other industry alliances established in the past in Europe in fields ranging from batteries to plastics.

“With this initiative, we are going to look into a number of challenges for the European launcher industry,” he said.

Some of those European launch startups, though, are uncertain, if not skeptical, about the benefits of such an alliance to them. Jörn Spurmann, chief commercial officer of RFA, said at the NewSpace Atlantic Summit that the alliance should work to build the demand for launches by European vehicles rather than funding the supply of new ones. “I think we should very actively go away from fully funding launch system and satellite projects,” he said.

Raúl Torres, CEO of Spanish small launch vehicle startup PLD Space, said on the same panel that he wanted to know more about the alliance, but thought that working together was less effective than competing against each other. “Cooperation is good, but competition is also good,” he said. “In my opinion, competition is more important than cooperation at this stage.”

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