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BAE Systems Invests In Fast Growing Space Sector By Howard Wheeldon, FRAeS, Wheeldon Strategic Advisory Ltd.

sabreWith the global Space market economy revenue expanding at an ever faster pace and, according to the Space Foundation, having reached a new record of $314.17 billion in 2013, it is pleasing to know that space is one market in which the UK is already extremely well placed.

With Government support UK companies have been hard at work over the past two decades developing a range of highly sophisticated and specialist technologies including telecommunications satellites, imaging equipment and other crucial electronics components many of which are now out on space missions. The UK has a long record of success in sophisticated science based product development and the space market presents a huge opportunity for specialist companies to engage in. One particularly interesting example of a sophisticated product development is that of SABRE (Synergetic Air-Breathing Rocket Engine) and that is being developed by Reaction Engines and who BAE Systems have today announced an important investment and formation of a collaborative partnership.

Five years since the Space Innovation and Growth Strategy (SIGS) was launched and that in turn led to the creation of the Space Leadership Council, the UK Space Agency and the Satellite Applications Catapult opportunities for UK companies to further develop in the space market have probably never been better.

The twenty-year SIGS growth plan that dated from 2010 was updated last year by the Space Growth Action Plan. Covering the period 2014 to 2030 the new plan had as its aim a target of raising UK market share of an anticipated £400 billion global space enabled market to 10% by 2030. The plan also set an interim goal of growing the UK space industry to a turnover of £19 billion by 2020. It may also be worth noting that the UK is now also home to the European Centre for Space Application and Telecommunications (ECSAT).

These thoughts together with the positive view of expansion opportunity open to UK companies engaged in the space arena play very well into reasoning why BAE Systems has decided to make such an important strategic investment and formation of a working collaboration with Reaction Engines Limited. The BAE Systems investment will not only provide scope for Reaction Engines to accelerate development of SABRE™ – a new aerospace engine class that combines both jet and rocket technologies and has the potential to revolutionise hypersonic flight and the economics of space access – but will takes BAE Systems into what is undoubtedly a very fast growing and highly specialist area in which the company is ideally suited to support, help grow and benefit.

The UK space sector is estimated to have current revenues in the region of £11 billion. In turn this supports around 75,000 jobs the majority of which carry STEM (Science, technology, Engineering and Mathematics) based skills. With an already well established world-class science and technology based space industry and one that has innovation writ large all over it the UK is in my view well placed in terms of meeting the global leadership challenges laid down in the Space Growth Action Plan. Being already heavily invested on space based science laboratories and with specialist equipment produced by UK companies in use on very many international space missions growth opportunities in an ever increasing space business landscape are there for those willing to invest. Again, this makes BAE Systems new investment look very opportune.

Under the terms of the agreement BAE Systems will invest £20.6 million in Reaction Engines, acquiring 20 per cent of the share capital in the process and the company has also entered into a working partner relationship with the Abingdon, Oxfordshire based company.

Not only is this an excellent example of innovation investment opportunity by BAE Systems it is clearly excellent news for Reaction Engines in that it has a shareholder and partner that can bring significant knowledge and additional skills into the important project. In detail, the establishment of the working partnership will also allow Reaction Engines to draw on BAE Systems’ extensive aerospace technology development and project management expertise. Moreover it will provide Reaction Engines with access to critical industrial, technical and capital resources to progress towards the demonstration of a ground based engine and which is a key milestone in the development of the technology. Under the agreement, BAE Systems will also enter into a preferred supplier relationship with Reaction Engines in certain agreed areas and will have representation on the board of Reaction Engines.

So who are Reaction Engines? Formed in 1999 to develop technologies required for an advanced combined cycle air-breathing rocket engine called SABRE (Synergetic Air-Breathing Rocket Engine) the company has remained privately owned. Sabre is a new class of aerospace engine designed to enable aircraft to operate from standstill on the runway to speeds of over five times the speed of sound in the atmosphere and that has a range of as much as 20,000 kilometres which is equal to travelling half way around the world. SABRE can then transition to a rocket mode of operation, allowing spaceflight at speeds up to orbital velocity, equivalent to twenty five times the speed of sound. Reaction Engines’ technology has undergone extensive independent technical assessments which have confirmed its viability and potential vehicle applications.

In technology development terms my understanding is that the breakthrough for Reaction Engines came through the development of ultra-lightweight heat exchangers that are 100 times lighter than existing technologies that allow the cooling of very hot airstreams from over 1,000 degrees centigrade to minus 150 degrees centigrade in less than 1/100th of a second. Two decades of research have in addition led to the creation of advanced rocket nozzles, combustion chamber design, contra-rotating turbines, lightweight airframe structures, robust lightweight thermal protection systems together with engine and vehicle analysis software tools.

The company is headed by Mark Thomas CEng FRAeS and who was himself a former Chief Engineer for Technology and Future Programmes in Civil Large Engines at Rolls-Royce and who I met earlier this year in Derby just before he left the company to join Reaction Engines. He heads an impressive team including Chief Engineer Alan Bond plus others that started their respective careers elsewhere in the UK aerospace and defence industry.

The UK Government is expected to confirm grant funding of £60 million for Reaction Engines to further SABRE’s development towards a ground based test engine and to investigate its applications for space access vehicles. Together with BAE Systems’ investment, this significant injection of capital will support Reaction Engines’ transition from a successful research phase into development and testing of the engine, including plans to expand its workforce of skilled engineers.

Just as the whole aerospace and defence arena is, space is at the very heart of the Science, Technology, Engineering, and Mathematics (STEM) subject area that we talk so much about.  As I have said, space is highly skilled area of expertise and it is one that quite rightly the Government is very keen to promote. The links to defence are strong too and the space industry is inextricably linked in terms of future security and defence planning. With publication of SDSR 2015 now just three weeks away and likely to emphasise very heavily on innovation this new and highly significant investment by BAE Systems in Reaction Engines demonstrates that the company is already one step ahead.

CHW (London – 2nd November 2015)

Howard Wheeldon FRAeS

hwheeldon@wheeldonstrategic.com

Tel: 07710-779785

 

 

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