trending Market Intelligence /marketintelligence/en/news-insights/trending/fslUhhP4tH3x2u_nVM4rew2 content esgSubNav
In This List

Macquarie sees drones taking on greater role in utility inspection work


Energy Evolution | Battery makers & miners turn to blockchain to solve transparency concerns, incentivize investment


Energy Evolution | Hitting net-zero targets across industries, featuring 8 Rivers President Damian Beauchamp


Energy Evolution | Funding the energy transition, with Jigar Shah of DOE's Loan Program Office


Perspectivas América Latina 2023 Emerging Trends & Growth

Macquarie sees drones taking on greater role in utility inspection work

As the regulatory climate gradually warms to unmanned flying machines, utilities are increasingly exploring the ways they can use the technology as part of their operations and maintenance work, Macquarie Capital analysts said.

"The use of drones for inspections of [transmission and distribution] and generation assets in the electric, gas [and] water utilities industry in the U.S. ... has come up in a number of our recent trips with utility management teams," Macquarie Capital analyst Angie Storozynski said in an Oct. 12 email. "The companies highlight the use of inspection drones as a way to further reduce their [operations and maintenance costs] and ensure safety."

Advances in recent years have made drones more useful and more appealing to infrastructure operators, including utilities, Macquarie noted in a report on increased drone use in a variety of industries. Innovations in drone design and construction, improvements in artificial intelligence and developments in wireless networks have all expanded what unmanned aerial vehicles are capable of, the report said.

As drones become better able to carry sensitive equipment longer distances and as machine learning gets more advanced, drones could be able to take on a greater role in utility operations and maintenance work, the report noted. For instance, drones with advanced cameras and sensors can collect more detailed and precise inspection data than a person would be able to.

SNL Image

MIR Innovations drones have been used for inspecting power utility infrastructure.
Sources: Macquarie Capital, MIR Innovations

The Federal Aviation Administration in 2016 gave utilities more freedom to use drones to inspect their infrastructure, but the vehicles are still limited to flying 1,500 feet from their operators and have to remain within the operator's line of sight, Macquarie said. Since the FAA approved drone use at utilities, more than 20 companies, including Southern Co., Dominion Energy Inc., Xcel Energy Inc., PG&E Corp., Duke Energy Corp. and Exelon Corp. have increasingly substituted drones for satellites or helicopters in inspections, according to the Macquarie report.

"The utilities companies have benefited from early drone adoption, but we feel that the current FAA regulation on flying the drones within-line-of-sight still limit their full effectiveness and cost-saving potential," the analysts said.

The Edison Electric Institute and a drone provider have applied for a waiver that would allow drones to travel 10 to 20 miles, which they said could allow for more efficient inspections.

Still, Macquarie said the regulatory climate for drone technology is improving.

"North America lags behind Asia and Africa in terms of commercialization due to a combination of legacy (i.e. established air traffic controls) and regulatory hurdles, but we are seeing a gradual liberalization of commercial drone regulations as governments look for ways to drive automation while creating high-value jobs across multiple sectors," the report said. "As the regulatory environment becomes more accommodating, we think drones and AI could play a bigger role as an economic driver ... and/or cost optimizer."