Two weeks ago, Earth suffered a disaster in space.
On Monday, November 15, 2021, Russia detonated one of its former Kosmos spy satellites with an anti-satellite weapon (ASAT). The in-orbit explosion turned a dead two-ton piece of a dead satellite into a field of debris covering 1,500 pieces of “traceable orbital debris” – and countless debris too small to be easily tracked.
This “dangerous and irresponsible” destruction of a satellite, the US State Department said, immediately endangered the lives of astronauts working aboard the International Space Station (ISS), forcing them to take shelter in place repeatedly as the ISS passed through the debris field.
It also illustrates a danger to investors in space companies – and an opportunity as well.
A threat that could persist for decades
“All nations have a responsibility to prevent the deliberate creation of space debris from ASATs and to foster a safe and sustainable space environment,” said NASA Administrator Bill Nelson. And it’s no surprise that he’s upset.
Two weeks after the test, the debris field remains so dangerous to space operations that NASA had to cancel a planned spacewalk outside the ISS this week. A US Space Command threat assessment warns that the debris cloud will pose an ongoing threat to space operations for “decades.”
The test has already affected the operations of private space company SpaceX, which has been forced to alter the orbits of some Internet Starlink satellites to avoid collisions with wandering satellite parts. The Chinese space station has also apparently been endangered by the test, and in Europe, European Space Agency director Tim Flohrer has warned that satellites orbiting “up to orbit of 600 kilometers” will now have to adjust their eye sockets twice as often as they do. used to, to avoid debris.
And the Russian ASAT test highlights another even bigger risk.
Big satellites make big targets
Consider what happened to the space society Maxar Technologies (MAXR -2.73% ) in 2019, when its 2.5-ton WorldView-4 digital imaging satellite suffered a gyroscope failure. In an instant, the $ 2 billion company lost $ 155 million in assets, along with any future income that asset would have generated for the company – $ 85 million per year, or roughly 4% of company revenue, according to data from S&P Global Market Intelligence.
It didn’t take a rocket to kill WorldView-4. A simple parts failure was all that was needed to cripple the satellite and cost Maxar 31.5% of its market cap in a single day. But the loss of WorldView-4 illustrates the risk for businesses that rely on large, hard-to-replace satellites for their business.
Consider: According to the Federal Aviation Administration, the entire United States GPS system depends on just 31 large GPS satellites built by the defense and space behemoths. Boeing and Lockheed Martin. Similar in size to Maxar’s WorldView satellites, these GPS satellites would make tempting targets in times of conflict – shooting down just a handful of them could cripple GPS capability worldwide. Moreover, as providers of surveillance photos to the US military, satellites like WorldView-4 could also be considered legitimate targets for ASAT weapons in times of military conflict.
Even in the absence of intentional and hostile action, large satellites could be accidentally rendered unusable if struck by space debris from an ASAT “test” such as the one carried out by Russia last month.
The risk for investors – and the opportunity
But is there a way to protect critical satellite systems from destruction by ASAT – or at least discourage the use of ASAT to target them?
In a nutshell: Yes. And I think that’s a solution that investors in particular should pay attention to.
The solution: Not launch a handful of large satellites that can be easily targeted by a few ASTs. Make launch a large number of smaller satellites to create redundancy, so killing a single (or even a dozen) satellite won’t significantly disrupt the constellation as a whole. And build small rockets that can be launched quickly to replace satellites that stop working (for whatever reason), to further strengthen the system. By eliminating the ability of ASATs to disrupt satellite operations, you dissuade countries like Russia from launching or even testing ASATs – minimizing the risk that such tests will leave debris fields like the one Russia just created in orbit. .
I’m not the only one to fall for this idea, of course. Indeed, you can see the cores of this idea in the “Launch Challenge” that the Defense Advanced Research Projects Agency (DARPA – the division of Mad Scientists of the Pentagon) announced in 2019 to promote “launch on demand, flexible and small payload reactive “for defense. You could also argue that part of the reason SpaceX wanted to put thousands of small Starlink satellites into orbit, instead of a few large broadband satellites, is to create redundancy in its system, so that the loss a few satellites won’t cripple the whole system.
The more this way of thinking gains traction in the Pentagon, the more I think you will find that investments in companies like York Space Systems (which builds small satellites) and Rocket lab (who launches them) will outperform companies like Boeing and Lockheed, which continue to focus on building and launching satellites so big you can see them in orbit – from Russia.
This article represents the opinion of the author, who may disagree with the “official” recommendation position of a premium Motley Fool consulting service. We are motley! Questioning an investment thesis – even our own – helps us all to think critically about investing and make decisions that help us become smarter, happier, and richer.