Climate Focus Fuels Satellite Big Data
COP26 in late 2021 saw several plans and promises being announced to address the climate crisis, many that touched upon themes related to deforestation, ocean resource protection and carbon emissions, among others. Countries agreed on rules for international carbon markets, pledged to end deforestation and land degradation, and to cut down on methane emissions. In recent years, we have seen further interest in climate-related finance and investment vehicles. At the same time, technology adoption in the satellite industry has improved tremendously: from higher resolution sensors with next-gen capabilities to cloud-based geospatial solutions.
The interest from the climate community is expected to be a key driver for the satellite big data market, which hinges itself on the Earth Observation and M2M/IoT satcom markets. NSR’s Big Data Analytics via Satellite, 5th Edition market research report presented a revenue opportunity of over US $22 billion from 2020 to 2030. Annual revenues are forecast to reach over US $3.7 billion by 2030, spread across a few key verticals, including Transportation, Energy, Gov/Mil and Services.
This is expected to grow at a CAGR of 17% during the next decade and will be one of the fastest growing segments for the Satellite-based Earth Observation market, forecast to overtake data and value added services segments in the long-term. How does the climate discussion fuel this growth, and where will the demand come from?
Opportunity is Downstream of Regulations
Energy and Transportation players have little incentive to measure and monitor carbon emissions, or track fuel efficiency beyond its impact to the bottom line. This push comes primarily from current and upcoming regulations that hold such commercial players accountable at various levels and drives the use of geospatial analytics through a combination of open-source datasets alongside IoT, M2M satcom and satellite imagery. The Electronic Logging Device (ELD) mandate, for instance, is important for satellite big data adoption in the IoT/M2M markets for transportation applications. Updates to the carbon emission regulations in Europe are expected to push interest in satellite data driven monitoring solutions, bringing in demand from Oil & Gas players for leak detection, and from mining and utilities players to track greenhouse gas emissions.
Several countries made pledges toward ocean action to protect coastal and marine habitats, and these too can be mapped to a variety of use cases for satellite data, including, but not limited to decarbonization of the shipping industry and blue finance initiatives. These are direct drivers of revenue opportunity in the satellite big data industry, particularly in the Services, Infrastructure and Civilian Government verticals.
Satellite Big Data Markets Evolving
The satellite big data market is comprised of different verticals with different types of distribution networks and channels. In most cases, it sits at the meeting point of vertical expertise and big data/cloud/data science “know how”. Rising climate concerns, as discussed above, drive the need for satellite data-intensive solutions across these verticals, ranging from agriculture and water management to carbon offset markets for supply chain traceability and insurance services that incorporate weather/climate information.
In the Earth Observation segment, players are more aware of customer pain points and adopting new business models, most notably, that of offering data and services via subscriptions. Cloud adoption too is on the rise, with growing interest from cloud computing majors. Moreover, platform-as-a-service, applications and marketplace models have grown in number recently. For most up and coming EO data providers, persistence, global coverage and revisit frequencies remain the main selling points.
Data types are also on the upswing, to meet regulatory requirements. Hyperspectral constellation plans that provide high quality data into various greenhouse gases and alternative datasets such as infrared monitoring, passive microwave (for soil moisture etc.) are expected to further boost the climate focus of the EO big data segment.
In M2M/IoT satcom applications too, near-real time monitoring industrial/infrastructure and transportation markets will drive the market for edge computing solutions. The increasing digitalization of energy players, majors and juniors alike, is expected to further add to the market demand. Customer demand here will range from the need for improved operational efficiency to predictive maintenance requirements. Remote IoT-based monitoring of assets will drive demand for IoT analytics. Vertical specific solutions will increase, ranging from heavy equipment and livestock monitoring to coal refineries and electrical utilities.
The Bottom Line
The satellite big data ecosystem has evolved significantly in the last few years, and has become more robust with regulations and investments driving new use cases. Key verticals here include Transportation, Gov/Mil, Services/Enterprise and Energy.
As climate action takes center stage this decade, it will fuel existing and new addressable markets , particularly as banking and financial services interface further with the space infrastructure markets. And with it, the regulatory landscape will continue to evolve in the near term, presenting more opportunities for new applications across customer verticals to push this market forward.
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