Why NewSpace is crucial to Germany

Space-enabled Germany

Why space is crucial to Germany's economic competitiveness, sovereignty, and sustainability goals Study October 2023

Foreword, Roland Berger We are living in a time of extraordinary opportunities and challenges. Germany is already facing the difficulties presented by a complex economic and security environment. As we pursue greater competitiveness, innovation, and inspiration, the space sector has the potential to serve as a focal point for addressing these challenges. In collaboration with BDI, Roland Berger has prepared this report to examine how the space sector, particularly the adoption of space-enabled solutions, can make a significant impact on our country.

Manfred Hader Senior Partner – Roland Berger Global Aerospace & Defense Leader

Germany is known for its capacity for innovation and technological leadership in various industries. However, we firmly believe that the nation can enhance its competitiveness by systematically adopting space-enabled solutions, which are currently underutilized by its industries. As we explore the potential of the space sector, it is becoming evident that it holds the key to creating value, generating employment, and strengthening Germany's position on the global stage. The space industry offers strategic opportunities that can benefit our nation in numerous ways.

This report is the result of extensive research and analysis conducted in partnership with Germany's industrial ecosystem. Our aim is to initiate discussions and actions that will enable Germany to enhance its competitiveness through space. Let us work together to create a future where the sky is not a limit, but a gateway to limitless opportunities.

Roland Berger | 2

Foreword, BDI NewSpace - commercialized space exploration and its integration with traditional industries - represents a significant opportunity for Germany. In almost every industry, NewSpace will play a crucial role in building infrastructure for connectivity, data, and AI. Satellite data will be indispensable for various sectors within German industry, including autonomous driving, smart farming, and applications within Industry 4.0. Those not at the forefront of space exploration will struggle to lead in technology on Earth. NewSpace is a key to the industrial landscape of the future.

Siegfried Russwurm BDI President

The Russian invasion of Ukraine began in space. This highlights the essential and existential nature of satellite use and the data and services they generate for military capabilities, and thus for our security.

Thanks to established companies, bold entrepreneurs, and private investors, Germany has developed a leading NewSpace ecosystem in Europe in recent years. However, industrial nations like the USA and China invest significantly more. Germany must be cautious not to repeat past mistakes in other future technologies, such as chip production, whose consequences and costs still burden us today. There is a risk of renewed dependence on foreign states and tech companies in space.

NewSpace symbolizes courage, innovation, and enthusiasm. Our country needs more of it. Let us embark together with NewSpace on a new industrial era.

Roland Berger | 3

Contents

Executive summary

5

A. The importance of being space-enabled

7

B. Why Germany is not yet a space-enabled nation

19

C. Lessons learned from other nations

26

Conclusion

33

Roland Berger | 4

Executive summary The space industry has a significant economic and societal impact that extends beyond the production of launchers and satellites. It generates "space-enabled solutions" that enhance existing industries, create new markets, and ensure the independence and resilience of our infrastructures and societies. The market for space-enabled solutions is projected to grow from approximately EUR 320 billion in 2021 to over EUR 1,250 billion by 2040, becoming a trillion-euro industry.

This growth is driven by advances in technology that have reduced the cost of deploying satellites in space, making space-enabled solutions more cost-effective for industries seeking to expand or enter new markets.

Current space-enabled solutions are based on general space applications such as communication, navigation, earth observation, and meteorology. In the coming decades, new solutions such as space-based solar power, in-space manufacturing, and space resource utilization on the Moon are expected to disrupt our economies even further.

Germany has extensive opportunities to embrace space-enabled solutions and fuel industrial growth, modernize critical infrastructure, enhance economic resilience, and accelerate the clean energy transition.

However, both public and private investments in Germany fall significantly short compared to leading space nations such as the US, China, or France. This insufficient funding is compounded by key obstacles hindering Germany's adoption of space-enabled solutions, including (i) limited awareness, (ii) talent accessibility, (iii) absence of industryspecific solutions, and (iv) uncertainties surrounding the country's political ambition in space.

By learning from the successes of nations such as the US, Germany can strategically overcome these challenges. A crucial success factor lies in opening space to other sectors, fostering collaborative efforts among different public agencies and diverse representatives from various end-user industries in space-related initiatives.

Roland Berger | 5

A. The importance of being spaceenabled

Roland Berger | 6

A

The importance of being space-enabled

Today, the space industry delivers strong benefits on Earth; in the future, those benefits can represent game-changing potential for humankind Figure 1 – Bringing benefits to Earth: Milestones in the space sector Development of telecommunications satellites , allowing for nearinstantaneous transfer of voice, images, and data on a global basis

1957

1970s

1960s

Launch of Sputnik 1, the first artificial Earth satellite

Launch of GPS satellite constellations. In 1995, the GPS system becomes fully operational

2000s

1980s

Utilization of Earth observation satellites for defense applications in the context of the Cold War, as well as civil applications (e.g., weather forecast)

Space history

Source: Roland Berger

National ambitions, combined with the falling cost of access to space, are encouraging the multiplication of space-enabled use cases in various industries, driven by a dynamic private sector

2010s & beyond

Increasing number of regulations favoring the commercialization of spatial data. Leads to more private players across the value chain

Space resource utilization Utilization of the resources of celestial bodies (e.g., Moon) for exploration missions (e.g., Regolith) or for high-value applications on Earth (e.g., Helium 3 for nuclear fusion) Industrial production in space By leveraging the benefits of lower gravity, production in space holds promise for the development of advanced materials, manufacturing processes, and scientific research with applications both in space and on Earth

Space-based solar power Capturing solar energy in orbit and transmitting it to Earth, offering a sustainable and continuous source of clean energy, supporting net-zero goals

…and many more applications that are not even known today

Future developments

Roland Berger | 7

A

The importance of being space-enabled

Space-enabled solutions enable critical applications for the wider economy, and drive innovation and sustainability Figure 2 – Perimeters of the space economy in 2021

Upstream1) EUR 96 bn Downstream

(space-enabled solutions) Focus of the study

EUR 320 bn Wider economy

Scope

Activities

Upstream activities Scientific & technological foundations of space programs, manufacturing & production of space infrastructure (e.g., satellite, launch systems)

Research activities conducted by public and private organizations, scientific & engineering support, supply of material & components, manufacturing of space equipment & subsystems, space launch

Downstream activities (space-enabled solutions) Utilization of space signals and space data for on-Earth activities that rely on the provision of a space capacity to exist & function

Operation of space & ground systems, supply of devices & products supporting consumer markets (e.g., GPS-enabled devices, set-top boxes), supply of services supporting consumer markets (e.g., satellite television broadcast)

Wider economy: Wider benefits for various economic sectors thanks to space activities leading to improved economic performance in various industrial sectors and improved quality of life for individuals

Technology transfers from space exploration to diverse commercial products (e.g., better safety and security of citizens through systems such as eCall2), technology development in various fields3))

General space applications Communications Satellite communication facilitates global connectivity and enables instant and reliable data exchange, supporting critical applications like emergency response, remote healthcare, and disaster recovery.

Positioning, navigation, timing (PNT) PNT services enable precise location data for Earth operations. They support navigation, disaster response, agriculture, and more, enhancing efficiency and safety across various industries.

Earth observation (EO) EO satellites aid in monitoring climate change, natural disasters, or commercial and military imaging, among others. EO technology supports informed decision-making for environmental protection and sustainable development.

Meteorology Satellite meteorology offers vital insights into weather patterns and climate conditions. It aids in forecasting, disaster preparedness, and agricultural planning, thereby improving resilience and resource management.

1) Upstream includes the institutional budget of individual countries to fund a large range of activities in space research, development and applications.

2) eCall system utilizes Galileo, the European navigation satellite system, to automatically alert emergency services in the event of a serious road accident, sharing positioning data to emergency services.

3) The economic ripple effect includes the creation of new businesses, job opportunities, and increased competitiveness thanks to things like international trade enabled by satcom, or technology development such as in materials, electronics, etc.

Sources: Secondary research, OECD, Roland Berger

Roland Berger | 8

A

The importance of being space-enabled

Space-enabled solutions have the potential to bring back to Earth numerous benefits along three dimensions Figure 3 – Dimensions of the benefits of space-enabled solutions

Booster for existing markets

2 1

Resilience

Source: Roland Berger

Spaceenabled solutions

3

Enabler of new markets

In light of pressing global challenges such as the digital revolution, climate change, and pandemics, which pose significant threats to the global economy, our society increasingly depends on innovative solutions. These solutions are essential for managing vast amounts of data, addressing and mitigating both natural and human-induced disasters, controlling the spread of diseases, and fortifying the global supply chain that sustains our daily lives.

Space-enabled solutions are poised to be instrumental in delivering these innovations, with numerous applications already in use or emerging across various sectors, including citizens, governments, international organizations, NGOs, industry, academia, and researchers worldwide.

Enterprises across diverse industries and other institutions can benefit from spaceenabled solutions in three ways: 1

Space-enabled solutions can boost existing markets through innovative space-enabled business models and new solutions such as smart farming.

2

They can enable new markets, for example by facilitating broad-ranged IoT applications or connectivity for smart devices.

3

Space-enabled solutions can make our infrastructure more resilient, for example by preventing internet outages that have a higher risk of occurring when relying solely on terrestrial solutions.

Roland Berger | 9

A

The importance of being space-enabled

Growth in space-enabled solutions is being driven by technological advances, which are significantly reducing the cost of deploying satellites Figure 4 – Evolution of the number of satellites delivered per year in space per orbit

Figure 5 – Evolution of the cost to access LEO per type of launch vehicle

Satellites [#]

Cost [USD / kg]

2,200

100,000

Trend

2,000 1,800

Electron

Vega

1,600 10,000

1,400

SL-1 (HyImpulse)

LEO satellite boom in 2020 with the deployment of SpaceX's Starlink constellation

1,200

1,000

Spectrum (Isar Aerospace)

Ariane 5

Ariane 6 Falcon 9

800

RFA One (RFA) Falcon Heavy

1,000

600 400 Starship

200 0

1990

LEO

1995

Others

2000

2005

2010

2015

Examples of iconic launchers

2020

100 1960

1970

1980

1990

2000

2010

2020

The convergence of technological progress, particularly in miniaturization and widespread digitization, has ushered in an era of near-Earth satellite deployment in Low Earth Orbit (LEO). Small satellites, typically weighing less than 600kg, are now accessible to non-traditional space companies, enabling entrepreneurs, startups, and academia to establish their own satellite fleets. Today, the cost of a single small satellite can be less than EUR 1 million, compared to traditional satellites that often exceed EUR 100 million in cost. This trend has led to the emergence of operators managing fleets of small satellites in LEO, organized in constellations to provide global satellite coverage, mostly represented by SpaceX and its Starlink constellation [Figure 4].

The cost of space access, measured by the price per kilogram, is decreasing, driven by SpaceX's reusable rockets [Figure 5]. Europe's upcoming Ariane 6 is also anticipated to reduce launch expenses compared to the retired Ariane 5. Furthermore, private investments have spurred the emergence of new launcher companies and launch platforms in Europe, notably in Germany, focusing on small satellite delivery. These companies complement established European launchers and launch operators, with the goal of contributing to further reductions in launch cost.

2030

Launchers developed by German / New Space companies

Sources: Secondary research, Satellite Database of the Union of Concerned Scientists, Center for Strategic and International Studies, Interviews with market participants, Roland Berger

Roland Berger | 10

A

The importance of being space-enabled

The market for space-enabled solutions is primed for a trillion-euro valuation as there are many untapped opportunities Figure 6 – Forecast of the space-enabled solutions market to 2040 [EUR bn]

Figure 7 – Expected demand for space-enabled services by sector [EUR bn] Agriculture

61

1,250

+771%

7 Automotive

+7.4% p.a.

217 +204%

71

620

+575%

117

320 Infrastructure & Transport

2021

791

Consumer, Tourism & Health

2031

2040

8 2021

15 +78%

Assessing the economic value of the space sector can lead to different values depending on the quantification method used. Roland Berger forecasts the size of the market for spaceenabled solutions in 2040 by breaking down the market into three general space applications: (i) Global Navigation Satellite System (GNSS), (ii) Earth Observation (EO) and (iii) Satellite Communication (SatCom). It further considers the demand that various industrial sectors will have in these general space applications to showcase the opportunities presented by space-enabled solutions for different industries. [Figures 6 & 7] The proliferation of smart devices, driven by the expanding utilization of the Internet of Things (IOT), is contributing to the burgeoning growth of the space-enabled solutions market. This growth is further fueled by the utilization of satellite signals, improved space accessibility, and reduced satellite costs. As services become more and more directly dependent on satellites, it is becoming increasingly plausible to assert that the global market for space-enabled solutions will reach a trillion-dollar value over the next two decades.

German key industries, such as the automotive sector, can benefit from this boom. With the future trend of autonomous driving and connected vehicles, reliable and uninterrupted communication via satellites will be essential.

2040

Note: The Infrastructure & Transport sector covers EUSPA industries Aviation, Maritime & inland waterways, Rail, Energy and Infrastructure.

Sources: Secondary research, EUSPA, Roland Berger

Roland Berger | 11

A

1

The importance of being space-enabled Booster for existing markets

Selected sectoral trends

Space-enabled solutions can help to address key market trends impacting different industry verticals Figure 8 – How space-enabled solutions can address major trends in different sectors

Agriculture

Automotive

Consumer, Tourism & Health

Infrastructure & Transport

Sector-specific trends

Associated space-enabled solution

Smart farming

Satellite technology enables smart farming by providing real-time data on weather, soil conditions, and crop health, allowing farmers to optimize their practices, increase yields, and reduce resource usage

Increasing resource efficiency

Satellite technology enhances resource efficiency in farming by enabling precise irrigation, fertilization, and pest control strategies, minimizing waste and environmental impact

Autonomous driving

By providing precise and real-time location data, Global Navigation Satellite System (GNSS) enables vehicles to navigate and make decisions with high accuracy and safety

Smart mobility

By facilitating continuous data exchange between vehicles, traffic infrastructure, and central systems, satellite communication (SatCom) enhances real-time traffic management and safety features for smart mobility solutions

Context-aware apps

The importance of context-aware services has increased since the COVID-19 pandemic. New apps have taken the approach of using location data, shared in an anonymized format with public authorities, to help map and track the spread of the virus

Telemedicine

By providing a reliable satellite communication infrastructure, space-enabled solutions allow healthcare professionals to remotely diagnose and treat patients in remote or underserved areas, offering better healthcare also to people in developing regions

Clean energy transition

By enabling advanced weather monitoring and energy resource management, by optimizing solar panel and wind farm efficiency, and by facilitating global energy distribution, satellite technologies can support the clean energy transition

General infrastructure renewal

By providing accurate geospatial data for project planning, monitoring, and efficient resource management, spaceenabled solutions can support the infrastructure renewal and the expansion of infrastructure like roads, rail, and bridges

Sources: Secondary research, Roland Berger

Roland Berger | 12

A

1

The importance of being space-enabled Booster for existing markets

Smart agriculture relies heavily on satellites, particularly for precision farming that enables a more efficient use of natural resources Selected use case

Agriculture Agriculture, particularly in Europe, has been one of the pioneering sectors in the use of spaceenabled solutions to improve farming activities, notably in sustainable yield optimization and precision farming, achieved through a combination of satellite positioning data and satellite imagery.

With the German agricultural sector accounting for approximately EUR 30 bn in gross value added and covering around 80% of its national food consumption, Germany has the potential to maximize the use of its arable land, reducing its environmental impact.

Commercial players such as ConstellR and institutional programs such as the EU's Copernicus programs and its land services provide valuable data on soil quality, weather conditions, and crop health. This wealth of information is becoming increasingly critical as agriculture faces challenges due to climate change and resource constraints such as water scarcity.

Furthermore, space-enabled solutions contribute to global food security, such as by enabling early warning systems for emerging countries, helping to prevent hunger, and ensuring sustainable agricultural practices.

The integration of space-enabled solutions in agriculture not only ensures efficient resource utilization but also reinforces Germany's commitment to smart, sustainable farming practices for a food-secure future.

Satellite-based crop analysis and early warning system for food security in emerging countries Challenge

• For development agencies, ensuring food security necessitates regular data collection for informed decision-making • Assessing local food situations often involves deploying local teams, including members from development agencies or NGOs, to challenging areas (e.g., deserts, conflict zones)

Solution

• Utilizing remote sensing data from satellites, especially during crises, to assess food needs by analyzing the vegetation index in areas of interest, identifying changes in agricultural productivity and usability, and measuring the efficiency of irrigation techniques • Establishing early-warning systems to anticipate actions in the event of crop failure

Results

• Supporting the long-term impact of agricultural rehabilitation projects in emerging countries • Facilitating the creation of wetlands • Improving the socio-economic situation in emerging countries, thereby enhancing local security and social justice

Sources: Secondary research, Difu, ESA, EUSPA, Up42, CNES, Damsat, Planet, Roland Berger

Expected demand for spaceenabled services from Agriculture sector [EUR bn.]

+12% p.a.

61

7

2021

2040

Roland Berger | 13

A

1

The importance of being space-enabled Booster for existing markets

Cars are increasingly "software-defined." A permanent link to satellites gives any automotive company a competitive edge, e.g., in autonomous driving Selected use case

Automotive The German automotive sector is a cornerstone of the national economy, contributing roughly 20% of the manufacturing value added and employing around 775,000 people. To maintain its global leadership, it must embrace cutting-edge technology to stay ahead of market trends.

Vehicles will increasingly maintain a constant connection to satellites, facilitating real-time data exchange and precision navigation, bolstered by increasingly accurate Global Navigation Satellite Systems (GNSS). This enhanced accuracy enables safety-critical applications such as autonomous driving.

Satellite-backed vehicle-to-infrastructure (V2I) communication ensures seamless information exchange between vehicles and their surroundings, including traffic lights and EV charging stations, even in remote areas. This opens the door to innovative business models such as vehicle-to-grid (V2G). The synergy between software-defined vehicles and space assets defines the future of the automotive industry in which Germany aims to remain the global leader.

Beyond individual vehicles, satellite connectivity is transforming car factories into "connected factories," optimizing manufacturing through data-driven communication between suppliers, manufacturers, and users worldwide.

Sources: Secondary research, Difu, EUSPA, ESA, Roland Berger

Satellite connectivity for autonomous land vehicle safety Challenge

Expected demand for spaceenabled services from Automotive sector [EUR bn.]

• Ubiquitous connectivity is crucial for deploying future autonomous vehicles, especially for maintaining safety functionality in combination with other sensors (e.g., LIDAR) • However, connectivity with terrestrial networks is exposed to various vulnerabilities (e.g., connectivity loss in rural and remote areas)

Solution

• Leveraging hybrid connectivity to automatically switch to the most convenient network between 4G/5G and satellite communication • Real-time collection and sharing of hazard information via satellite communication

Results

• Ensures hyper-fast and ubiquitous connectivity, even in remote and rural areas, or in case of a failure • Enhances the reliability and security of V2X systems • Improves safety functionality through accurate trajectory planning and collision avoidance • Enables faster deployment of future autonomous cars

+6% p.a.

217

71

2021

2040

Roland Berger | 14

A

1

The importance of being space-enabled Booster for existing markets

Space-enabled solutions in the consumer sector are on the verge of a massive boom – use cases stretch from leisure to healthcare Selected use case

Consumer, Tourism & Health Many people may not realize it, but spaceenabled solutions have become an integral part of our daily lives and the consumer sector. GNSS-enabled consumer solutions include a wide range of applications designed to meet diverse needs and usage conditions such as lifestyle, tourism, and health. Space technologies also enable services that make our daily lives much easier. For example, applications like Uber rely on GNSS-based location data.

These applications are compatible with a variety of connected devices including smartphones, tablets, personal tracking devices, wearables, digital cameras, and portable computers.

With the integration of technologies like GNSS, 5G, Wi-Fi, and IoT, virtually any physical device can become a connected device, unlocking innovative applications that enhance user well-being and lifestyle. The incorporation of AI adds an extra layer of connectivity, providing these devices with enhanced capabilities and sophistication.

Space-enabled telemedicine to improve access to healthcare Challenge

• Many regions in developing countries and rural regions in developed nations don't have sufficient access to proper healthcare • Furthermore, many developed economies face the risk of demographic change that is expected to exacerbate healthcare challenges, especially in remote areas

Solution

• By providing reliable satellite communication infrastructure, space tech allows healthcare professionals to remotely diagnose and treat patients in remote or underserved areas • Furthermore, remotely operated drones are increasingly being used to transport aid packages and medical supplies to remote regions and crisis areas

Results

• Space-enabled solutions offer the potential to save the lives of many people through (tele-) medical care • It offers improved and more equitable healthcare globally that also contributes to the UN Sustainable Development Goals (SDGs)

Sources: Secondary research, ESA, EUSPA, Interview with market participants, Roland Berger

Expected demand for spaceenabled services from Consumer, Tourism & Health sector [EUR bn.]

+11% p.a.

791

117

2021

2040

Roland Berger | 15

A

1

The importance of being space-enabled Booster for existing markets

Space-enabled solutions can play a major role in modernizing Germany's infrastructure and facilitating the transition to renewable energy Selected use case

Infrastructure & Transport Space technology has the potential to play a significant role in managing Germany's critical infrastructure, including its extensive rail network, power lines, bridges, dams, and essential energy and chemical facilities.

These infrastructures are crucial for the country's economic growth, but due to their current condition, extensive modernization is likely to be required in the coming years. More than 75% of companies in Germany, for example, are suffering from transport infrastructure deficiencies. To enable the required maintenance and expansion of roads and railroads, investments of around EUR 370 bn are required by 2030.

Satellite technologies such as remote sensing, radar imagery, and change detection, can help manage infrastructure more efficiently by reducing environmental impact through improved planning and resource allocation. The use of spatial data can ensure the longevity and efficiency of Germany's vital infrastructure while also demonstrating the country's commitment to sustainable development and economic resilience. Space-enabled solutions can also improve the efficiency of the transport sector through real-time navigation, traffic management, and fleet tracking, resulting in reduced fuel use, travel times, and improved logistics and safety.

Sources: Secondary research, ESA, EUSPA, Roland Berger

Optimizing the efficiency of renewable power plants to support carbon neutrality Challenge

Solution

Results

Expected demand for spaceenabled services from Infrastructure & Transport sector [EUR bn.]

• Germany is targeting carbon neutrality by 2045.

• The clean energy transition, which involves switching from fossil to renewable fuels, is intended to help make German energy production carbon-neutral • Fossil fuels like oil and natural gas have higher energy density than renewables, necessitating increased efficiency in renewable energy sources • By providing accurate weather data for wind and solar farms, satellite technology helps to optimize the efficiency of energy generation and grid integration • Space-enabled solutions can further assist in optimal site selection for renewable energy projects by assessing solar irradiance, wind patterns, and other geographical factors, leading to higher energy output • Optimizing the yield of green power plants reduces the energy-related carbon footprint and contributes to a sustainable future

+3% p.a.

15

8

2021

2040

Roland Berger | 16

A

2

The importance of being space-enabled Enabling new markets

With global coverage, satellite communication enables cutting-edge applications – Example of IoT via satellites to support industrial applications Figure 9 – Illustration of a satellite constellation enabling IOT applications Inter-satellite links (satellite backhaul)

In an era of increasing digitalization, reliable and secure connectivity is essential for both consumer and industrial applications. The use of satellites for global connectivity has gained popularity in recent years as the technology has advanced and become more accessible. Satellites enable people and businesses, even in remote areas, to access the internet and connect with the rest of the world for international trade.

Space technology offers new possibilities for businesses, such as the widespread adoption of satellite-powered IoT. Unlike traditional terrestrial networks, satellites can provide ubiquitous IoT connectivity even in challenging environments where terrestrial infrastructure is lacking, such as remote, rural, and maritime areas [Figure 9].

Additionally, satellite IoT networks are highly scalable, accommodating numerous connected devices without network capacity constraints, allowing for the monitoring of globally distributed supply chains.

With the new opportunities offered by satellites, IoT technology has attracted significant interest across various industrial sectors, including logistics, energy & utilities, and environmental monitoring.

Sources: Secondary research, Centenaro et al, Roland Berger

IoT-supporting satellites

Indirect-to-satellite communication (uplink/downlink)

Direct-to-satellite communication (uplink/downlink)

Satellite-to-ground communication (satellite backhaul)

Terrestrial backhaul

IoT gateway Ground station Wired link

IoT services

Wireless link

Roland Berger | 17

A

3

The importance of being space-enabled Resilience

Selected example

Communication satellites provide connectivity in case of emergencies, helping to avoid massive economic losses after unexpected internet disruption Figure 10 – Economic costs of internet outages for Germany over time [EUR bn] In today's digital age, a sudden shutdown of the internet would have a paralyzing effect on both the public and corporate world, causing significant damage to the overall economy. A global internet outage lasting just 24 hours could decrease the global GDP by EUR 27 billion, while an outage limited to Germany would result in damages amounting to EUR 1.4 billion [Figure 10].

Satellite connectivity can play a crucial role in stabilizing internet connections in emergency situations. Unlike terrestrial networks, which rely on extensive physical infrastructure such as cable wires and fiber optics, satellite networks can maintain uninterrupted connectivity with just a ground terminal. This technology can significantly reduce the economic and social costs of unexpected connectivity loss due to natural or human-made disasters.

Economic costs [EUR bn.], log scale 1,000

502

100

The rising number of communication satellites organized in constellations has led to a substantial decline in the cost of satellite bandwidth. As these costs are expected to continue decreasing, businesses and governments are increasingly leveraging the potential of satellite connectivity.

41

Germany's 2024 federal budget for Digital & Transportation

39 EUR bn.

10

10

11 EUR bn.

Germany's 2024 federal budget for BMWK1)

1 1 1 day

1 week

1 month

1 year Duration of internet outage

1) German Federal Ministry for Economic Affairs and Climate Action Sources: Secondary research, NetBlocks, German Federal Budget, Roland Berger

Roland Berger | 18

B. Why Germany is not yet a spaceenabled nation

Roland Berger | 19

B

Why Germany is not yet a space-enabled nation

With public and private investments below global trends, Germany must accelerate its space initiatives to secure a competitive future Figure 11 – Evolution of public space budgets for selected nations from 2017 to 2022 [in % of national GDP]

Figure 12 – Private investments in space companies offering space-enabled solutions [# deals and volume in EUR bn, cumulative 2013 - 2022]

0.3 0.25%

0.24%

0.23%

USA

0.15%

0.08%

0.06%

0.05% 0.0 2017

0.07%

0.06%

2018

2019

2020

0.06%

2021

China

48

France

43

Germany

31

62.2

France

0.11% 0.1

73.0

USA

0.2

0.13%

506

1.3

China Germany

2022

In relation to its GDP, the US invests 4 times more in the space sector and France 2.5 times more than Germany

Sources: Space capital, Euroconsult, OECD, Secondary research, Roland Berger

0.9

Number of investment deals [#]

Investment volume [EUR bn]

US companies developing spaceenabled solutions have secured 16 times more investment deals than their German peers

Germany lags behind its peers in terms of public investment in space.

To capitalize on the expanding global space economy and maintain competitiveness, many spacefaring nations are increasing their space budgets [Figure 11]. Also, nontraditional space nations like the UAE (2014), New Zealand (2016), and Spain (2023) have recently established space agencies.

Germany allocates only 0.06% of its GDP to space investments, which is significantly less than leading nations such as the USA and France, which consistently bolster their commitments to the space sector with allocations of 0.24% and 0.15% of their GDP, respectively.

Germany's private investment in space also trails other nations in terms of both quantity and size of deals with private investors, placing it behind countries such as the USA, China, and France [Figure 12]. In addition to the listed countries, other nations like Singapore (attracting USD 13.4 bn in cumulative private investment from 2013 to 2022) and India (USD 7.3 bn during the same period) have effectively integrated space-enabled solutions into their dynamic technology sectors.

Though German companies can procure space-enabled solutions from other countries, it is crucial for Germany to compete in this sector to drive innovation and growth, and to further develop the European space ecosystem.

Roland Berger | 20

B

Why Germany is not yet a space-enabled nation

In addition to limited public and private investment, four main challenges are hindering a wider adoption of space-enabled solutions in Germany Figure 13 – Challenges for the adoption of space-enabled solutions Bridging the gap between the space and non-space sectors is a key challenge for Germany to fully exploit the potential of space-enabled solutions. Four main challenges have been identified [Figure 13]:

Lack of awareness

1

Addressing the lack of awareness in various sectors about the potential benefits of space-enabled solutions is crucial. Many stakeholders are unaware of the advantages offered by these technologies, leading to missed opportunities.

2

Another obstacle is the need for talent capable of extracting value from space data. This requires individuals who can decipher the vast streams of information from satellites and translate it into usable information.

3

Linking space to non-space sectors requires precise, industry-specific solutions. Generic "one-size-fits-all" approaches are often ineffective due to companies' limited expertise in their target verticals.

4

Doubts about Germany's and Europe's political ambition and sovereignty in space pose a challenge to the long-term utilization of space-enabled solutions in industrial sectors. Concerns about potential signal disruptions due to insufficient investment in space infrastructure can deter risk-averse industrial organizations from relying on these technologies.

1

Lack of talent

2

Lack of industry-specific solutions

3

Doubts over the country's political ambition and autonomy in space

Sources: Interviews with market participants, Roland Berger

4

Roland Berger | 21

B

1

Why Germany is not yet a space-enabled nation Lack of awareness

Limited public awareness of the pervasive use and benefits of space-enabled solutions makes it challenging for politicians to justify significant spending Figure 14 – ESA survey: Have you heard of each of the following projects in the field of space activities?

[2019, %] The European Space Agency (ESA)

37%

46%

17%

European astronauts sent onboard the International Space Station (ISS)

35%

47%

18%

Galileo, the navigation satellite system

27%

Copernicus, the Earth observation program

15%

42%

The Rosetta mission

17%

35%

Sources: ESA, Roland Berger

26%

37%

30%

33%

The Ariane rockets

Yes, and I know exactly what it is about

47%

Yes, but I don’t know exactly what it is about

43%

48%

The limited awareness of the vast potential of space-enabled solutions presents a significant challenge. Space-related activities hold immense promise for economic growth, innovation, and scientific advancement.

However, without public and political understanding of these opportunities, governments may hesitate to allocate resources to space initiatives.

An ESA report highlights the limited awareness among European citizens [Figure 14]. Only 40% of Europeans believe they have sufficient knowledge about European space initiatives, with this figure standing at 45% in Germany, indicating a slightly higher level of awareness compared to the European average. While some individuals are familiar with certain programs, few have a precise understanding.

Nevertheless, there is strong enthusiasm among Europeans, with 90% expressing a positive perspective on space activities. The survey shows that space initiatives are widely recognized for their capacity to drive research, inspire dreams, foster collaboration, and enhance understanding of climate change.

No

Roland Berger | 22

B

2

Why Germany is not yet a space-enabled nation Lack of talent

Understanding how space-enabled solutions can benefit industrial sectors and how to leverage them requires skills that not all organizations have Figure 15 – Roland Berger survey [2023, %] While industry professionals recognize the relevance of employing space-enabled solutions to enhance their organization's competitiveness (c. 52%) , they also emphasize the (perceived) complexity and the scarcity of experts required to fully leverage such technologies [Figure 15].

26%

34% 22%

78%

9% 52%

22%

4% 9%

13%

Space-enabled solutions can help organizations in my industry to be more competitive Agree

Neutral

Space-enabled solutions are simple enough to be used by organizations in my industry

I don’t know

9%

78%

of industry professionals indicated that there is a lack of talent trained in the use of space-enabled solutions

To address the challenge of limited awareness of the potential of spaceenabled solutions, it is important to invest in education and training programs aimed at cultivating a skilled workforce capable of harnessing this potential. One approach could be for industrial organizations to outsource these activities to specialized and dedicated companies, rather than internalizing them. This would allow organizations to leverage the expertise of these companies to effectively integrate space-enabled solutions into their operations.

Employees are sufficiently trained to use spaceenabled solutions

Disagree

Note: Out of 23 Roland Berger industry experts interviewed covering the German market in different industry verticals Sources: Interviews with industry experts, Roland Berger

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B

3

Why Germany is not yet a space-enabled nation Lack of industry-specific solutions

To meet industry-specific needs, companies offering space-enabled solutions should customize their products, setting them apart from terrestrial alternatives Figure 16 – Roland Berger survey: Unique value proposition of space-enabled solutions [2023, %]

35%

Figure 17 – Benefits of satellites over drones for agriculture (simplified) Drone

Satellite

Coverage

Limited scale

Very large scale

Resolution

Very high (<5 cm per pixel)

High to low (>20 cm per pixel)

Revisit

Only on-demand

Up to several times per day for low resolution

Operation

Need an operator

No need for operator

Typical pricing model

Per duration

Per area covered

USD 0.5 to 5 per hectare + drone operator costs

<USD 0.5 per hectare1)

43%

9% 9%

25%

26% 43% 22% Space-enabled solutions can complement or replace terrestrial solutions in my industry Agree

Neutral

Space-enabled solutions are affordable enough to be used by organizations in my industry

I don’t know

Cost (est.)

The adoption of space-enabled solutions across various industrial sectors encounters several challenges [Figure 16].

Firstly, competition from terrestrial alternatives often presents a compelling choice for industry players.

Secondly, the lack of industryspecific solutions and a prevailing one-size-fits-all approach by space companies hinder the alignment of technical requirements with sectorspecific needs.

These challenges are further compounded by perceived or real cost barriers that may not align with the budgetary expectations of decision-makers in different industry verticals.

To effectively overcome these challenges, companies offering space-enabled solutions must adeptly incorporate evolving user requirements and customize their solutions to establish a clear competitive edge over terrestrial alternatives. Proactive communication of this competitive advantage is also crucial, as exemplified by the use of drones in agriculture for precision field mapping, in contrast to satellitebased approaches [Figure 17]. This strategic shift is pivotal to unlocking the full potential of space-enabled solutions and their widespread adoption across diverse industries.

Disagree

Note: Out of 23 Roland Berger industry experts interviewed covering the German market in different industry verticals 1) Excl. costs for setting up the infrastructure Sources: Interviews with industry experts, Secondary research, Roland Berger

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B

4

Why Germany is not yet a space-enabled nation Doubts over the country's political ambition and autonomy in space

Establishing a sovereign space infrastructure is crucial to safeguard competitiveness via space-enabled solutions Figure 18 – Assessing nation's space ambition, autonomy, and capabilities: Focus on germany1) Ambition score Political ambition

Low

Med

High

Latest space strategy (Sept. 2023) showed reduced investment in the field2) – But Germany remains the biggest contributor to ESA

Autonomy score Infrastructure

Spacecraft production and operation

Low

Med

High

Covered by national champion OHB (EO, navigation) – Limited capabilities in the field of satcom - Dynamic and innovative start-up companies seeking to generate sustainable business

Access to space

European collaboration on Ariane 6 is suffering delays – Strong start-up ecosystem focusing on the development of small launchers with launches expected in 2024+

Space surveillance

National assets supporting the wider EU SST initiative – Mostly rely on surveillance data from the US – Startups are currently developing solutions to support sustainable space operations

Capabilities score Sectors

Environmental

Low

Med

High

Covered through both national (e.g., EnMAP) or cooperation programs (Copernicus)

Emergency Services

Focus on programs developed in European cooperation (e.g., Copernicus Emergency Services)

Defense

National (e.g., SARah) and cooperation programs (e.g., Galileo, soon IRIS2) to support defense applications

Science & exploration

Programs done in cooperation via ESA – Focus on scientific missions and robotic exploration - Development of capabilities for human exploration not a priority

Industry applications

Industrial applications still untapped which could lead to reliance on "first movers" foreign systems (e.g., US and China)

Germany currently faces a precarious dependence on its space infrastructure, particularly in terms of accessing space. The European launch sector faces fierce competition from the US, and new generation launchers are not yet operational [Figure 18].

In an era defined by global tensions and intense economic rivalries, space infrastructure has transformed into a strategic asset. As a result, spacefaring nations prioritize the sovereign development, manufacturing, and operation of space assets, as well as the utilization of spaceenabled solutions across various sectors, to ensure independence from external influences.

European space sovereignty, spurred by a competitive and innovative German space sector, is crucial for fully reaping the benefits of space-enabled solutions for its industrial sector. Overreliance on non-European infrastructure poses geopolitical risks and could potentially undermine industrial competitiveness. In a fiercely competitive global landscape, space systems operated from abroad might prioritize interests contrary to Europe's, potentially leading to limitations in signal and coverage.

1) Germany's autonomy is assessed by considering national and European programs (e.g., ESA or EU) when relevant 2) Cut from EUR 370 m to EUR 314 m for the upcoming 2024 space budget Sources: Interviews with market participants, Secondary research, Roland Berger

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C. Lessons learned from other nations

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C

Lessons learned from other nations

The USA has already understood the benefits of space-enabled solutions to support a variety of industries - Several factors explain this success Figure 19 – Overview of key US success factors that have enabled its market adoption of space-enabled solutions Ambitious and inclusive space infrastructure programs

Successful implication of the private sector

Regulations supporting space market uptake

• Focus on all space domains: The USA has a robust ambition in pioneering innovation in all space domains including those not (or partially) covered by Europe (e.g., human spaceflight). This ambition not only fuels innovation but also positions US companies as leaders in space technology

• Forward-thinking procurement approach: Private sector engagement begins with public development contracts that evolve into long-term service agreements. This approach ensures a steady revenue stream for companies, empowering them to pursue private clients as well

• Commercially-driven regulations: The US government has adopted policies that encourage the commercial use of spaceenabled solutions

• Strong focus on defense programs: The US prioritizes defense programs aimed at achieving "space dominance." This strong emphasis on defense not only strengthens national security but also leads to advancements in civilian sectors

• Multi-vendor procurement strategy: Typically, two or more private companies are selected for substantial public contracts, promoting healthy competition and preventing monopolistic situations that could stifle innovation

• Inclusion of various government agencies and representative of different industry verticals on space-related discussions through different forums and platforms (e.g., US Space Council)

• Access to capital for the private sector: In 2022, globally, 422 investors funded 123 space startups in 154 deals, totaling USD 8 bn investment. Of these, 197 were USbased, making up 47% of all space investors

Sources: Bryce Tech, Secondary research, Interviews with market participants, Roland Berger

• Proactive regulatory framework for innovative markets: The USA has proactively adjusted its regulatory framework to accommodate new space markets with high revenue potential (e.g., space resource utilization with guidelines for lunar resource utilization, enabling private companies to pursue activities like mining and resource extraction on the Moon)

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C

Lessons learned from other nations

Key success factors identified in the USA can address some of the challenges in Germany – Four best practices identified can be applied Figure 20 – Key success factors in the USA mapped against Germany's challenges Challenges identified in Germany Best practices in the USA Ambitious and inclusive space infrastructure programs

Focus on all space domains

Successful inclusion of the private sector

Forward-thinking procurement approach

Lack of awareness

Lack of industryspecific solutions

Access to talent

Doubts on political ambition and autonomy in space

Strong focus on defense programs Inclusion of various government agencies and representative of different industry verticals

Multi-vendor procurement strategy Access to capital for the private sector

Regulations supporting space market uptake

Commercially-driven regulations Proactive regulatory framework for innovative markets

Effectiveness of best practice in addressing the challenge Source: Roland Berger

High

Medium

Low to None

Relevant best practices considering the German context Roland Berger | 28

1

C

Lessons learned from other nations

Ambitious public programs rewarded by service contracts have proven successful in the rise of commercial players in the USA Case study

Key actions

Supporting commercial players through a recurring public demand and multi-supplier approach

• Use of both public and commercial assets for public needs (e.g., US NOAA's CDP1)), allowing the private sector to benefit from a secured public demand

Overview Foster the leadership of private companies developing spaceenabled solutions using remote sensing data thanks to a recurring domestic public demand from various private entities

• Selection of more than one private company in public contracts to avoid monopolistic situations, often awarding both legacy space companies and NewSpace companies (e.g., NRO's EOCL2) program) • Offer lucrative service contracts for selected US companies, allowing them to address the global commercial market thanks to secured revenues from the US public customer • An ecosystem organized around agencies playing the role of centralized procurement bodies for all US federal needs (e.g., NRO and NGA are consolidating all satellite imagery needs of US agencies)

Areas to explore for Germany • Consider paving the way for broader private sector adoption of space-enabled solutions by first endorsing public organizations to do so (e.g., ministries, government agencies) • Consider triggering a wider private adoption of space-enabled solutions by having a recurring public demand through anchor tenant contracts

1) Commercial Data Program – Company awarded will provide satellite weather data to the NOAA for 5 years from March 2023 to March 2028 2) US National Reconnaissance Office awarded three companies the Electro-Optical Commercial Layer program, or EOCL, a 10-year contract to provide satellite imagery

Sources: Interviews with market participants, Secondary research, Roland Berger

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C

Lessons learned from other nations

The US model of public-private partnership is designed to support the country's leadership in space by sustaining the global hegemony of US players Figure 21 – Typical US public-private relationship in the space sector: A model supporting US domination in space The spark

The development Development contracts

Low latency global connectivity US public sector ambition in space

Permanent presence on the Moon

US public sector

US private sector

Lucrative service contracts

Demonstrates progress

• US public sector is financially supporting the development of solutions to address the needs of its ambition • Progress is demonstrated to US agencies (e.g., reaching of development milestones such as in-orbit demonstration)

The internationalization Services Non-US players

US agencies

US agencies

Interplanetary logistics…

• US public sector has an ambition related to space (e.g., human spaceflight, in-orbit servicing) leading to associated needs for a service (e.g., space-enabled solutions using EO data, spacecargo services, satelliterefueling service)

The long-term contracts

Services addressing US ambition

• Completion of development milestones leads to the selection of 2 or 3 private players (sustaining competition to drive innovation and avoiding monopolistic situations) • Selected players are rewarded with long-term lucrative US public contracts

Service contracts

• "First mover" advantage of US private companies generated by US public ambition • Positioning of US companies allows them to offer new services to the market, incl. to non-US public or private players (e.g., European space agencies)

Non-US stakeholders

Sources: Interviews with market participants, Roland Berger

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C

Lessons learned from other nations

The USA has a "Space Council" ensuring that space activities support a range of sectors and create a wide array of benefits Case study

Key actions

Support the adoption of space-enabled solutions on the commercial market in the USA

• Continuous multi-sector stakeholder alignment notably through a dedicated "US Space Council" to coordinate efforts and align stakeholders from various government agencies (e.g., USGS, NOAA1)), private sector, and research institutions for commercial applications

Overview Key actions and measures taken by the US public sector promote the market adoption of solutions utilizing signals and data from its institutional satellites

• Easy access to space technology for the private sector through initiatives such as NASA's Technology Transfer Program allowing companies to readily identify technologies with an easy-touse technology licensing application system • Proactive steps to update the regulatory framework to favor a wider use of space signals and space data for industrial sectors since the early 1990s, which played a pivotal role in shaping the landscape for a US commercial spaceenabled solutions market 2)

Areas to explore for Germany • Consider establishing joint sectoral working groups to improve the alignment between various industrial sectors and space organizations • Assess the impact of proactive actions on current regulatory framework to facilitate the adoption of spaceenabled solutions

1) The United States Geological Survey (USGS) is involved with NASA in the US flagship Earth Observation program Landsat, while the National Oceanic and Atmospheric Administration (NOAA) operates its own satellites for weather forecasting, and oceanic monitoring 2) Examples include the Issuance of Presidential Decision Directives (PDDs). PDD/NSTC-3, issued in 1994, providing policy guidance for responsible commercial use of remote sensing data and PDD/NSTC-6, in 1996, focused on GPS technology, promoting its dual-use for military and civilian applications

Sources: Interviews with market participants, Secondary research, Roland Berger

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C

Lessons learned from other nations

Outside the USA, France has an ambitious investment plan to boost economic and industrial competitiveness, including by supporting space-enabled solutions Case study

Key actions

Launch of an ambitious investment plan covering better adoption of spaceenabled solutions

• An ambitious budget to develop a competitive industry through services and space infrastructure, with recurring calls for projects supported by incremental investments

Overview The EUR 54 bn plan "France 2030" covers 10 areas to strengthen France's leadership in key areas incl. space, with EUR 1.5 bn

• A clear objective of doubling the number of organizations (public and private) using spaceenabled solutions for their activities (eventually leading to a total of 400 organizations, compared to 200 currently in the country)

• Investment in satellite constellation technologies to develop space-enabled solutions that meet the needs of national industry

Areas to explore for Germany • Assess the impact of integrating the space sector into large public investment initiatives to boost Germany's competitiveness (both in terms of investment attractiveness and industrial competitiveness thanks to space applications)

• Investment beneficiaries include both established players and NewSpace companies

Sources: Minister of Economics, Finance and Industrial and Digital Sovereignty, CNES, Secondary research, Interviews with market participants, Roland Berger

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Conclusion Space-enabled solutions have the potential to empower Germany in sustaining and developing its leadership across critical sectors of its economy. Much like digitalization, space serves as a powerful catalyst, magnifying the country's industrial capabilities and competitive advantage exponentially.

However, Germany is in danger of losing out and must act now to systematically overcome inherent political, societal, and industrial obstacles.

This study presents and analyzes lessons for German policymakers to explore, with the aim of initiating ambitious initiatives that will enable our nation to maintain a pivotal economic role for decades to come.

Our industry has worked hard and flourished over decades to become a globally recognized leader. We must now strengthen our technological leadership and innovation power, allowing us to pioneer the space-enabled revolution. This ambition is necessary if we want our industry – also with the help of space technology - to become a leader in addressing the new and mighty challenges of our times and enter new markets.

Let's not miss this moment.

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Authors & Contributors Roland Berger

BDI

Disclaimer

Manfred Hader Senior Partner Global Aerospace & Defence leader manfred.hader@rolandberger.com

Matthias Wachter Managing Director NewSpace Initiative m.wachter@bdi.eu

Darot Dy Senior Manager Defence & Space segment leader darot.dy@rolandberger.com

Ramona Schmitt Coordinator NewSpace Initiative r.schmitt@bdi.eu

This publication has been prepared for general guidance only. The reader should not act according to any information provided in this publication without receiving specific professional advice. Roland Berger GmbH and BDI shall not be liable for any damages resulting from any use of the information contained in the publication.

David Born Manager RB Institute david.born@rolandberger.com Steffen Geering Specialist RB Institute steffen.geering@rolandberger.com

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