Japanese heavy machinery maker IHI has developed a satellite engine that will sell for one-third of the competition's prices, in hopes of tapping growing demand for low-cost space launches for GPS-based services, particularly among startups.

The company aims to commercialize the engine, designed for smaller satellites of around 150 kg often used in communications and weather forecasting, by 2022. The new engine is expected to be priced at around 30 million yen ($284,000).

While the company's European rivals rely on iridium and other expensive materials, IHI uses stainless steel for strength and fire resistance. It also utilizes 3D printers to reduce the number of required parts and production time.

The engine accounts for roughly 20% of the total cost of a satellite. IHI's product further cuts costs by eliminating the need for hazmat specialists to deal with the fuel, since it runs on methanol instead of the toxic hydrazine.

More startups around the world are making inroads in space, including Elon Musk's SpaceX. In Japan, Interstellar Technologies is developing a small-size launch vehicle, while Axelspace is working on a supersmall satellite.

The global space industry could grow to over $1 trillion in 2040 from the current $350 billion, Morgan Stanley predicts. The Japanese government is encouraging more players to enter the field, with the goal of doubling the country's space industry from the current 1.2 trillion yen by the early 2030s.

Roughly 10,000 small satellites will be launched around the world between 2020 and 2029, according to space consultancy Euroconsult -- a fivefold increase from the previous decade. Demand for satellites is only expected to increase in areas like communications, weather forecasting and agricultural planning.