Canada is taking steps to support its growing space sector, including Canadian Space Agency programs like the space technology development program (STDP) and the Lunar Exploration Accelerator Program (LEAP), as well as space-focused accelerator programs like the Creative Destruction Lab’s Space Stream. This has led to a number of promising Canadian space startups across a variety of sectors.
A new white paper by space sector consultancy Novaspace, however, suggests that there are still quite a few more “novel approaches” to be done for Canada to develop a robust space-focused economy, and in particularly on setting the Canadian government up as an “anchor customer” that allows for SMEs (small and medium-sized enterprises) to scale up into full space enterprises.
A “Cohesive Strategy” and an “Virtuous Cycle”
Led by CEO Pacome Revillon, Novaspace is the result of a 2024 merger between Euroconsult and SpaceTec Partners. Euroconsult’s reports have received regular SpaceQ coverage; they’ve predicted explosive growth in the satellite sector, and have highlighted the growing importance of the defence sector for commercial space. More recently the combined Novaspace has predicted an $8 billion Earth Observation market by 2033, buoyed by “AI, cloud computing, and advanced downlink capabilities.”
This new report, written by Novaspace Partner and Managing Director Nathan De Ruiter and Maria Lily Shaw, Senior Consultant, and in collaboration with Space Canada, turns the combined firm’s eye onto the future of the Canadian space sector.
It pointed to the new Canadian National Space Council (NSpC) as a good start, but Novaspace believes there is still more to be done on that front. In particular, they believe that Canada must create a “cohesive national strategy” as “the foundation of every successful space enterprise,” which will help the country better understand desired outcomes and “align efforts across the commercial, civil, and defence sectors, creating a unified pathway for the sustainable development of the space ecosystem.”
As to exactly the kind of efforts that should be “aligned,” the report went into no small amount of detail.
First, it highlighted the “evolving role of commercial players.” While commercial space companies traditionally focused on manufacturing hardware and software for governments, Novaspace noted that in many respects the model has been reversed, pointing to the ESA’s Moonlight program and NASA’s Commercial Lunar Payload Services (CLPS) as situations where governments act more as one client among any on private-sector missions into space. Canadian companies, Novaspace said, “do not compete on a level playing field” on that front, as their counterparts elsewhere in the world “receive significantly more support from their governments in much more favourable forms.” Novaspace said that this inability to “secure timely and effective government backing” harms the competitiveness of Canadian companies.
To fix that issue, Novaspace said that a national strategy should focus on “ a virtuous cycle,” where consistent support through government orders for space companies serve as anchors that “bolster their credibility, which in turn attracts private investment and commercial customers.” Canada is already “a historical pioneer in space,” with “robust” space expenditure growth: in particular, they pointed to growing defense spending in the space sector that “represents nearly 30% of Canada’s total space expenditures for 2024,” which will be “an important opportunity to drive commercialization of space in Canada.”
Novaspace sees “satellite communications, EO, space domain awareness, space exploration, and human spaceflight” as key to Canada’s space efforts, pointing to the Federal government’s market load to Telesat Lightspeed, financial commitments to the RADARSAT+ series, to WildFireSat, and defence-related space objectives. They believe that “there is significant opportunity for Canada’s private space sector to contribute to the government’s objectives, provided the appropriate support structures are in place.”
(They also highlighted “Canada’s contribution to NASA’s Lunar Gateway.” A note of caution regarding Lunar Gateway may be warranted, however, considering the immense policy and spending changes that may be taking place in the United States.)
Roadblocks to space sector scale-up
Another issue that Novaspace highlighted: “building a balanced space sector.” Canada has a wealth of SME’s in its space sector—accounting for 93% of all Canadian space companies in 2022—and Novaspace grants that they play “a critical role in driving innovation, agility, and specialization.”
The issue appears at higher scales. “A thriving space sector,” Novaspace said, “requires not only a vibrant base of SMEs but also the presence of strong prime contractors and major satellite operators,” which are needed for “executing flagship projects that create robust supply chains and attract global investment.” Without these kinds of companies, Canada “risks becoming dependent on foreign companies for critical space capabilities.”
And this is where Canada’s current funding situation runs into problems. The CSA’s LEAP and STDP foster innovation and mitigate uncertainties, and DND’s IDEaS program provides support for defence-related space R&D. All of these are helpful to grow startups into thriving SMEs. But the levels of support seen in these programs don’t necessarily scale up.
Novaspace said that the current system runs serious risk of turning Canadian space companies into “technology orphans;” ones where “the development of space products and services stalls at an early stage…due to limited support for further advancement and scaling.” This is exacerbated, they said, by how funding is usually “project-specific and time-limited,” focused mostly on hitting milestones instead of establishing government as an anchor customer. And as there is “a lack of coordination between government departments in Canada,” procurement is often slow and cumbersome, with Canadian companies relying on loans “awarded after long delays,” while counterparts in the United States and Europe benefit from substantial and “rapidly awarded grants.”
Agile commercial procurement
So what is to be done, according to Novaspace? In short, to focus on developing the Federal Government as a long-term and reliable customer that allows for SMEs to scale up into more substantial players.
They pointed to four major elements:
(1) Providing companies with opportunities to qualify and test their technologies and capabilities (in space);
(2) Awarding procurement contracts in which the government is an anchor customer, rather than an owner/operator;
(3) Streamlining the long government procurement timelines; and
(4) Shifting away from technology- or mission-specific contracts to longer-term commitments, providing reliable/stable support.
To make this happen, they examine several different vectors for business support, and fixate on contracting mechanisms, “specifically agile commercial service procurements.” These focus on establishing government as an anchor customer for solutions developed by the commercial sector. They noted that “this implies that a solution needs to be developed before it can be supported,” but believe that “government may also start to test solutions prior to full operations” through pilot studies, and then “commit to purchasing future capacity” to stimulate commercialization.
Novaspace also pointed to “the regulatory framework, a skilled workforce, international collaboration, and economic growth & market demand” as key potential drivers of commercial involvement in the space sector.
They noted several international examples of this kind of approach. NASA’s CLPS program is well-known to SpaceQ readers, and was the foundation of Firefly Aerospace’s successful Blue Ghost mission earlier this year, which featured Canadian technology aboard. Novaspace said that this demonstrates several “best practices,” where the companies own and operate the landers/rovers and can subcontract, confident that NASA will buy future capacity and serve as an anchor customer.
But Novaspace also pointed to the Space Development Agency under the Department of Defense, NOAA’s Office of Space Commerce, and the National Geospatial-Intelligence Agency’s (NGA) Luno program as examples of American government organizations and programs that help to support the American space sector.
ESA’s Moonlight program, which invites European companies “to develop the lunar telecommunication and navigation services that will be required to carry out future lunar missions effectively,” is also cited as a key example of how to approach these relationships.
Developing an anchor customer
From those examples, Novaspace pointed to three key possibilities:
- Adopting a phased approach with pilot studies: use a phased approach with feasibility studies or pilot projects in early stages of the program. While this is somewhat similar to how IDEaS and LEAP awards are handled, Novaspace said that the goal here should be to “mitigate the risk of ‘technology orphans’” and of “supporting the mid- to late-stage development of space products and services.”
- Consider introducing a separate procuring entity with greater flexibility: pointing to the commercialization models of the NOAA’s Traffic Coordination System for Space (TraCSS) and of the Space Development Agency, Novaspace said that “the separation from traditional, often bureaucratic processes has facilitated rapid acquisition and significantly reduced the time from contract award to project completion.
- Shifting from mission-specific programs to longer-term commitments: for real scale-up of Canadian space sector SMEs to happen, they will need those anchor customers to cement their reputation with other customers and provide steady revenue. In particular, Novaspace said, “this concept is especially important for defence-related needs.” Blue Ghost et al are seen as the models to follow here, where governments are “transitioning away from owning and operating the final product/service in favour of becoming a client,” and in particular a long-term and reliable client that a scaling company can depend on.
One example that Novaspace highlighted: RADARSAT+. While RADARSAT+ is important and vital, as is the relationship with MDA Space, Novaspace said that what RADARSAT+ “does not include—and what remains a critical gap—is a formal mechanism for acquiring commercial EO data.” In order to help Canadian EO companies to scale up, the CSA should consider developing a new initiative that focuses specifically on acquiring, evaluating, and integrating commercial sources “alongside sovereign assets.”
This would involve defining evaluation criteria for the commercial vendors, entering into pilot contracts, determining a suitable contract (Novaspace pointed to NASA’s Multiple-Award Indefinite-Delivery, Indefinite-Quantity contracts with Firm-Fixed Price task orders), and establishing “a continuous and repeatable process to onramp new commercial data vendors.”
Changes like this, turning the government into an anchor customer for commercial services and missions, would help Canada “overcome its commercialization roadblocks” and “solidify Canada’s standing as a leader in space and innovation.”
