This is the first in a series of articles written in long form exploring the drone technologies, it’s market, Private Equity Investments in the industry, and what could a future involving drones and related technologies would mean for us. Together, these articles will provide a detailed overview of the industry, potential market size, private equity deals closed so far, who are the movers and shakers, and what is the logical destination the investment community would be hoping for.
The swarm troopers are ready – a revolution silently brews
It’s not Agriculture anymore, call it “Precision Farming”…
Rob Kenning is a farmer, growing corn as long as he can remember. His entire life has been about farming and he has hundred of acres under his disposal in USA’s corn belt, a region that produces 40% of the world’s crop. He has bad years and good years, and the good years compensates for the bad. That’s the way his story goes. More than anything, he understands the responsibility he has; to grow sufficient food for the growing population. He is 63 and represents the majority of the aging population who are into farming in the United States of America, a country where 63% of the population employed in farming has an average age of 55 years. That’s why the mature thought about the responsibility, a responsibility perceived by a majority of the farming community he belongs to.
“Land is limited, the acreage under agricultural food production is shrinking, and the population is growing. The world population is expected to grow from 7 billion currently to 9 billion in 2050, and if we take these factors into account (shrinking acreage), we will have to increase food production by 70-100%. It’s quite clear that the odds are against us”, says Rob.
“If I take my entire lifespan, I will be farming for 50 years, and considering one year as a single cycle of farming, I have only 50 shots to take, and I cannot afford to waste even one of them to get it right. It’s not enough to spend this time on trial and error”, he adds.
“With increasing input costs, an input as energy intensive as fertilizer, we need cutting edge technology that has data gathering and analysis at it’s heart and that pumps up useful actionable information through predictive modeling, to enable us to make the best decisions. Decisions that will help increase yield, monitor growth of crops, reduce input costs, and improve our chances against the odds. A decision making capability that does not come to weeks after I need it, I need it in real time, and I cannot wait, I have only 50 shots to get it right and screwing even one of them is not an option”.
Rob is no ordinary farmer. His kind of farming might become the order of the day in the coming years. He is armed with an android tablet with an antennae plugged into it through a micro USB cable. The tablet has the map of his farm on an app “Farm Pro”, an agriculture specific app developed by DroneDeploy. Rob is working on his flight plan of a DJI manufactured quadcopter DJI Phantom 2 Vision + on the app.
He can see acres and acres of his corn farm neatly divided into rows on the map, and all he has to do is build the flight plan by swiping his finger over the map, decide on the speed, and height he wants his drone to fly at, the take off point, and the way point where he wants the drone to land. Viola, his flight plan is ready. Now all he has to do is arm the drone, and power up the rotors. The automated flight system of DroneDeploy takes care of the rest. It’s that simple. While on flight, the drone navigates through acres and acres of his farm analyzing crop health, area that requires irrigation, sections that needs to be sprayed with biocides, maturity level of crops, and projected yield. The sensors mounted on the drone and the camera capture critical data related to soil quality, weeds, pests, and has the ability to created a time lapse video through which Rob can see the progress and identify any anomalies in the pattern. Robert can now work towards optimizing his input allocation with greater efficiency saving water, reducing input costs for fertilizers and biocides, all with a trickle down effect on energy consumption by industry, and finally lower toxic releases to ground water. All this with a certain probability that he will be increasing the yield in the most optimal way, with real time actionable data and at a monthly cost of only $249 per month that DroneDeploy would charge for providing its software solution. The drone with the onboard sensors cost him around $1,200 and the running cost is so less that it’s almost hard to even account for it.
What is more important is that Rob finally feels that he is in control of his yield, input costs, and his efforts and toil can deliver to the population in a much better way, not only in terms of providing food, but consuming less energy, and emitting lesser green house gases and water pollutants. “It’s not farming anymore, it’s Precision Farming”, he says, with a wink in his eyes and a smile that gives a peek to his gold tooth.
Hostile weather? The oil pipelines are in good shape?
Alaska is pretty far from this place, with temperatures miles below freezing point and an intergalactic length of pipelines. British Petroleum is testing Aeryon scout drones at Prudhoe Bay in Alaska, a proof of concept of inspecting pipelines that run through the region. If successful, they will replicate the model across all the assets that it has across the globe. The drones are fitted with cameras and thermal imaging sensors analyzing the flow of crude, and looking for leaks and damage through corrosion across the pipeline. It has the ability to fly at near ground level of the pipelines, something impossible to achieve with conventional airplanes. It’s a task that was earlier accomplished by on ground engineers and pilots flying sorties across the pipelines using advanced cameras and thermal imagery equipment, an event frequently disrupted by the extreme weather conditions in Alaska.
With drones they don’t have to worry about the weather too much. Flying them through an autonomous flight path is hassle free and much less expensive. With them, pipeline inspection, potential leak detection, three dimensional mapping, change detection through time lapse videos, all of these have become quite easy. Brian, who is overseeing the testing of the concept looks like a happy man when he talks about it. He is nested inside his down jacket with the holy ghost cover on. Thick gloves protect his hand and fingers from a frost bite, and flecks of snow flakes tenderly caress his red beard. “If this thing sails through, I will be a much happier man”, he speaks with a hopeful joy, “it will save me a lot of trouble and make my life much easier”, he says.
“In drones, and the technology that’s coming with it, I see in them the potential of being a ‘must have’ asset”. Brian points to his temperature controlled fiber tent, “I can sit inside my office and manage all the inspection work that is assigned to me. An outing will only be necessary if some anomaly is identified and if any section of the pipeline needs to be fixed. And even in that case, the drone can hover above the damaged section, and on-ground engineers can plan on the fix and step out fully prepared with the right tools”. Brian chuckles and rubs his hand, “can’t wait to keep myself warm all day long, eh”.
No such slack…
At its petrochemical factory situated on the banks of Dian in south-west Holland, Shell is using remotely operated Drones for “Flare Stack Inspection”. The petrochemical complex is spread over 2500 hectares of land and produces over 4.5 million tons of products per year. The site has many production units, running complex processes that manufacture base chemicals originating from petroleum. The raw materials used in these processes are highly flammable,
and the production processes operate at ultra high temperatures and extraordinarily high pressures. Isolated at one end of the plant are flare stacks towering 18 meters high. These are structural steel chimneys used for burning the flammable gases that are released from high pressure valves as a byproduct waste. The gases are burnt at varying degrees of heat intensity depending upon the flow of the gases from the pressure valves. The steel flare stacks are also subjected to aggressive corrosion due to their presence in an industrial plant and the atmospheric conditions. These steel flare stacks need to be checked regularly for any damage due to the unforgiving conditions they operate in. It is for this reason, these flare stacks are shut down for a number of times in a year for inspection, a process that shuts down the production of the plant at a great expense.
To cut down its costs, Shell is using a drone with a technological solution provided by Cyberhawk Innovations to check the condition of the flare stacks and the flare tips without going through the costly expenditure of shutting the plant down during every inspection. The aerial vehicle studies the stacks, the flare tips, and saves images which can be studies over a period of time to identify any structural deterioration in the stacks. Shell is testing this as a concept and so far is happy that now production has to be shut down only in the event of any manual fixing of damage or perceived damage. The inspection in itself does not come with the huge cost it earlier did.
Bounties of a revolution
As I gleaned through hundreds of articles, Quora Q&A, YouTube videos, I knew the list of possibilities that you can do with these drones. Rhinos are already being saved by poachers in Africa, and the technology has already been put into practice at the Jim Corbett National Park in India. The police departments are already deploying them for security, and traffic management. Event management companies can use it for crowd management, DJI powered UAVs are already being used in movie production and then we have an endless list of hobbyists.
Amazon and Alibaba are wedded and committed to the idea of a package delivery through drones. I am pretty convinced that the applications of drones and related technologies are so far reaching that we are looking at an industry that holds great promise. There are issues and challenges, most notably regulatory.
As I read, I keep on writing my story and I understand that it’s not just about drones or UAVs. It’s about all the associated technologies where the UAVs will be the enablers. Payload products such as cameras, infra-red sensors, Doppler machines, technological solutions such as apps, data cloud, predictive modeling, machine learning solutions such as independent flight and air traffic management, the list is fairly long. It’s not just the UAV’s that we are talking about, it’s the whole ecosystem that’s being developed around them. Don’t worry about the regulations, they will fall in place eventually.
While you read and indulge in wonderment, it’s time for me to carry on, and put the pieces together. Next in agenda is a study on the “history of private equity investments in drone and related technologies”.