(Bloomberg Opinion) -- There are already 170,000 small, unmanned aerial vehicles licensed in the U.S., and the Federal Aviation Administration predicts another half-million more of them to be airborne by 2022. Drones are everywhere, doing all sorts of things, including delivering hamburgers and beer to golfers. They're taking group photos, scouting properties and being shot down by neighbors.
They're also competing, and the competition is serious. Lockheed Martin Corp. has launched a $2 million competition pitting human operators against artificial intelligence in races through obstacle courses at speeds of more than 80 miles per hour. Tiny, sensor-laden electronics might sound like a game -- but as Lockheed's interest suggests, they should sound like business.
As the drone value chain improves -- chip sets shrink, cameras become more advanced, machine learning techniques mature -- it creates reasons to scale. At the same time, drone applications become ever more apparent.
Around the world, trillions of dollars' worth of industrial infrastructure is aging, while worker safety and terrorism concerns increase, and climate change increasingly strains power grids, manufacturing facilities, and oil and gas production. Drones offer a cheaper and more effective way of monitoring infrastructure than traditional methods of sending workers to dangerous, remote terrain.
Drones are being used today by grid companies to spot faults or overgrown foliage in transmission and distribution lines across the U.S. Monitoring overgrowth is increasingly important in hot, dry areas increasingly prone to fire -- such as in Northern California, where PG&E Corp. may owe as much as $17.3 billion in liabilities from the 2017 fires in wine country. Drones were also used by Duke Energy Corp. to help restore power lines in Puerto Rico after Hurricane Maria knocked out 80 percent of the island's electricity access.
Those threat-detection capabilities are money savers, and power-restoration services can be literal lifesavers. But there's another set of services, more prosaic but potentially just as significant, for the future: operations and maintenance.
New research from Bloomberg NEF assesses the economics of drone inspections in power plants and oil and gas inspection. At offshore wind farms, drone inspection may prevent significant failures resulting in downtime and lost revenues. BNEF calculates that the use of drones on offshore wind farms in Europe could shave off more than $1,000 per turbine per year in inspection costs (reducing the cost of producing electricity by 1 percent).
The same savings apply to solar farms, where drone inspection can lower costs even further, on a proportional basis.
As drones improve, so will the services that they can provide. Drones that only collect video footage are limited to inspection. With machine vision, enhanced sensors, and grabbing arms and probes, drones may be able to fix minor faults in wind turbines, clear away overgrown foliage, and defend assets from intruders. Advances in 3-D vision and computational photography, cheaper communications networks, and lightweight batteries all promise to produce a drone that can fly for longer, act independently, and replace dangerous or boring human labor.
Bloomberg NEF's research also finds that in-house drones are cheaper for inspection than third-party drone inspection as a service. Although in-house drone inspection requires upfront costs in training pilots and buying the drones themselves, it has better economics than using a third-party service.
Then there's the world of oil and gas. Drones with potent "sniffers" can detect methane leaks coming from oil and gas pipelines at 1,000 times the accuracy of traditional methods, saving pipeline owners significant money that is lost from leaked product and potentially from fines. Even this relatively simple application could have significant business (and pollution and climate) implications, as there is an enormous range of reported values of actual emissions in the oil and gas supply chain.
Not everything is immediately up and up for industrial drones. Regulation in most countries demands that drone pilots stay within line of sight of drones, while heavy batteries limit their flight time to 20 minutes. The market is fragmented, with a variety of startups offering complex services and overlapping solutions. Those conditions, though, can and probably will change. Technology improves, and regulations evolve. That buzzing rotor sound overhead is economics. It's also business.
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To contact the authors of this story: Nathaniel Bullard at email@example.comClaire Curry at firstname.lastname@example.org
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This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.
Nathaniel Bullard is an energy analyst, covering technology and business model innovation and system-wide resource transitions.
Claire leads BNEF's Digital Industry research. Her team analyses emerging technologies like IoT, AI and blockchain to determine the impact they will have on industry. The team covers the digitalization of electricity, manufacturing, and the oil & gas and mining sectors.
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This article was written by Claire Curry and Nathaniel Bullard from Bloomberg and was legally licensed through the NewsCred publisher network. Please direct all licensing questions to firstname.lastname@example.org.