The Bottom Line

Earth Observation Growth Engine: SAR

The Synthetic Aperture Radar (SAR) imagery market has traditionally been limited to government and commercial programs with large and expensive satellites. However, new and emerging players are paving the way for operators to establish a foothold in the market with smaller and more nimble satellites and flexible delivery methods.

SAR’s key capabilities were highlighted during the Ukraine war, and market gaps and challenges were identified at the same time. But, with the oft-heard argument about availability of too much EO data and not enough solutions to address customer problems, an underlying question comes to forefront: Is there room for further SAR data procurement? What is driving the demand for SAR EO (Earth Observation) market: the data or the associated downstream products?

NSR’s Satellite Based Earth Observation 14th Edition report shows a total revenue opportunity of $16.9 Billion from 2021-2031 for SAR markets, which amounts to 24% of the total EO market, growing from $821 Million in 2021 to $2.4 Billion in 2031 at an 11% CAGR. NSR also forecasts that revenues are expected to grow the most for Information Products (IP) and Big Data segments.

IP Opening Up Opportunities

The growth for IP is driven by efforts from upstream and downstream players at the same time. Indeed, upstream players are expanding their capabilities to offer SAR products that can address customer needs, whereas downstream ones are closely related to the push for Big Data Analytics, with larger and more frequent volumes of data coming down from new and higher revisit satellite constellations for sub-verticals such as maritime, precision agriculture  and national security.

Factors such as increasing data pipeline efficiencies, development of ground processing systems, improvement in analytical tools and integration with cloud positively impact the adoption of IP. Scaling of IP can bleed into geospatial big data analytics segment, which is growing rapidly at 29% CAGR, driven in large part by the Services vertical.

Defense and Intelligence to Dominate

But as with many other EO sectors, the Government and Military segment is still a strong and early adopter of commercial SAR imagery for Defense & Intelligence (D&I) applications due to their in-house capabilities to work with commercial SAR data developed over the years using their own assets. They will continue to drive a major chunk of demand throughout the forecast period and will develop further their relations with commercial players. Recently, the U.S. Government paved the way in the utilization of SAR through indefinite delivery, indefinite quantity (IDIQ) contracts with companies such as Umbra for national security objectives. The National Reconnaissance Office (NRO)  to validate commercial SAR capabilities and strengthen the industry for national security purposes. However, most demand for this vertical will be for Data, which is 56% of total D&I market revenues in 2031. This is due in large part to their ability to internalize process for the development of downstream products, requiring less help from outside organizations.

Weather is also an important SAR vertical, primarily driven by IP/services for downstream analytics as new data sources are included in forecasts, due to growing complexities of models with climate change. Public Authorities is another segment with a majority of demand for IP, driven by disaster monitoring and other solutions for better policy implementation.

High Resolution Market Upsurge

The increasing demand for high resolution imagery, driven by D&I needs for Intelligence, Surveillance, Reconnaissance (ISR) applications, is also another factor in the SAR market, walking in step with the demand for Very High Resolution (VHR) in optical markets. In addition, weather, services and public authorities will contribute to further the demand for HR imagery, but the opportunity for VHR is expected to increase fast during the forecast period, mainly due to confluence of supply and demand in the long-term.

Companies are focusing on improving satellite capabilities for next-gen satellites, which is one reason Capella Space is launching the Acadia satellites.  It aims to improve image quality, increasing range resolution and minimizing time from order-to-delivery. The company is utilizing inter-satellite links for faster data-delivery and will demonstrate compatibility of OISL with SDA Tranche, which can be valuable for government customers for persistent SAR monitoring applications.

Further, there is high potential for market disruption in SAR segment owing to the adaption of higher revisit frequency. There is lot of movement in HR and VHR markets, but MR will also be key for monitoring solutions, especially for wide area surveillance.

SAR and Optical Work in Tandem

The recent deal between ICEYE and Satlantis for a 4 satellite constellation to fly with two ICEYE SAR satellites in formation and SATLANTIS VHR optical imaging satellites shows the greater integration of optical with SAR. The satellites will be closely coordinated to increase the effectiveness of detail assessment over areas of interest. The dual-instrument approach will provide customer benefits such as versatility, reliability, and ease of use. This approach is expected to increase among operators across multiple sensors to enhance the solution offering for the customers in the long term, which, when successfully demonstrated and implemented, will and further drive the growth of VHR SAR markets.

There has been a slow uptick in SAR players investment in 2022 that shows the continued support for the expected growth, with Capella Space raising $97 Million as part of Series-C to expand their offerings and Synspective raising $100 Million as part of Series-B for development of their SAR constellation. But added to this, there has been an increase in government interest too in the segment with contracts for various applications such as disaster monitoring, marine monitoring, national security, national land management.

A number of marketplaces/platforms have also emerged to address the challenge of meeting requirements of customers across many applications. They utilize multi-source data and provide solutions for specific customer needs using data fusion. These companies are expanding the customer base for satellite data and analytics through partnerships with local players in the region, and as a result, increase overall  and regional sales of the satellite operators.

The Bottom Line

The market demand for SAR continues to grow with Defense and Intelligence and Public Authorities being key customers. There is a surge in the number of contracts issued by the government for assessment of commercial SAR capabilities and utilization of SAR imagery for various applications. Many have established themselves, but quite a few emerging players are still under development stages of their constellations.

These SAR constellations are expected to be operational in the short and medium term, increasing the overall commercial SAR supply in the market. Despite growth in SAR supply, data will remain a smaller part of the total market opportunity compared to cumulative service revenues driven IP, VAS and Big Data. This trend is mainly driven by availability of free MR data in the short term and increasing reliance on analytics solutions in the long term, which means SAR products are key engine drivers for EO SAR markets.