Navigant Research Blog

Drones for Utility Asset Management, Part 2: Unlocking Future Potential

— January 3, 2017

Drone - CityThis post is the second in a two-part series. The first looked at regulatory developments in 2016 that are paving the way for the commercialization of drones for utility asset management in the United States.

Potential drone applications in the electric utility sector are vast, ranging from line and substation inspection to storm damage assessment and vegetation control. Drones mounted with video cameras, lidar, infrared, and hyperspectral imaging equipment stand to improve data collection and analysis, enable aerial mapping and 3D modeling of grid assets, and improve overall awareness of grid conditions.

Used strategically, drones hold promise to reduce inspection and maintenance costs, replace human workers in high-risk conditions, and increase the reliability and efficiency of grid operations. However, the market remains largely untapped.

The Future of Grid Monitoring

As the regulatory framework governing drone operations gradually takes shape, it is possible to imagine a not-too-distant future when drones are deployed for a variety of uses, including:

  • Monitoring vegetation overgrowth and risk, enabling quantitative, data-driven vegetation management programs
  • Replacing helicopter inspections of transmission lines, lowering costs and reducing the number of risky helicopter flights near power lines
  • Performing daily autonomous inspections of substations and other critical equipment, alerting grid operators to equipment damage, abnormalities, or maintenance needs
  • Surveying and assessing storm damage and other disasters, facilitating the development of targeted recovery plans and reducing grid downtime

These functions and others could either be performed by grid operators with in-house expertise or contracted out to drone companies in a drones as a service model.

Taking Technology to the Next Level

The potential for drones to transform utility asset management will increase as the technology becomes lighter weight, less expensive, more durable, and increasingly autonomous. Singapore-based H3 Dynamics offers an example of the possibilities presented by autonomous drone technology with its Dronebox system. The system consists of solar-powered drone charging stations designed to facilitate remote asset management with minimal human interference. Drones housed in the Dronebox can take off, land, and recharge autonomously and routinely, enabling the regular inspection of hard-to-reach transmission lines and other critical infrastructure. They can also be dispatched remotely on an as-needed basis.

H3 Dynamics’ Autonomous Dronebox

Dronebox(Source: H3 Dynamics)

Managing Big Data

Like other smart technologies deployed for grid monitoring and management, drones will produce ever greater volumes of data. One of the challenges facing grid operators will be translating that data into action to improve the efficiency, resiliency, and responsiveness of the power generation and delivery system.

Currently, grid operators are struggling to convert mounting volumes of data into real-time operational improvements. Making the most of drones for utility asset management will require advanced software systems and institutional processes to ensure high quantities of data translate into high quality action. While drones will likely save money in the near term (through streamlined inspections, displaced costly helicopter missions, improved storm damage recovery times, and reduced personnel needs), taking full advantage of the data drones produce will likely be a longer process with a steeper learning curve.


Drones for Utility Asset Management, Part 1: The Year in Review

— December 29, 2016

Drone - WindThis post is the first in a two-part series. This post reviews major developments in drone use for utility asset management over the course of 2016. The second will assess opportunities for enhanced utility applications in 2017 and beyond. 

2016 marked a major milestone in the march toward the commercialization of drones for utility asset management in the United States. Most notably, the Federal Aviation Administration (FAA) in late August implemented new rules governing the use of drones for commercial applications.

Known as Part 107, the rule grants utilities and other commercial entities broad authority to operate small unmanned aircraft systems (sUASs) weighing 55 lbs or less without applying for permission from the FAA. Within 12 months of implementing Part 107, the FAA forecasts as many as 600,000 sUASs will be in commercial operation.

Limitations of Part 107

While Part 107 marks a major victory for stakeholders eager to harness the promise of drone technology, the new rules come with a variety of restrictions, including:

  • sUASs cannot be operated at altitudes above 400 feet or within 400 feet of a structure.
  • Operators must maintain uninterrupted visual line of sight with a sUAS.
  • sUASs may not be operated above individuals not directly involved in the operation.

These and other requirements limit the ability of utilities to deploy drones for tasks such as monitoring remote transmission lines beyond the visual line of sight (BVLOS). But utilities and drone companies are already taking active steps to advance the path to commercialization of BVLOS flights in preparation for a more expansive regulatory framework.

Pushing the Boundaries

In February, Xcel Energy became the first US utility to conduct an FAA-approved BVLOS demonstration flight, using a UAS to survey transmission lines in the Texas panhandle. The utility is also undertaking a year-long research project in North Dakota testing the effectiveness of UASs for surveying and assessing infrastructure damage in disaster settings.

Following passage of Part 107, Edison Electric Institute and Sharper Shape, a California-based drone company that already flies BVLOS missions for utility asset inspections in Europe, applied for an FAA waiver to conduct BVLOS drone flights in the US utility sector. As 2017 gets underway and more waiver requests are granted, the number of utility BVLOS flights is set to rise.

Regulatory Developments to Watch

While Part 107 marks a significant step toward the commercialization of drones, development of a robust regulatory framework is still very much a work in progress. Other FAA developments to watch that will affect utilities include those governing commercial use of drones to survey and monitor critical infrastructure as well as related rules restricting drone flights near critical infrastructure in order to contain security threats. The FAA is also establishing committees to address safety issues posed by UASs and to develop rules governing drone operations BVLOS, both of which will affect utility drone applications well into the future.


Regional Energy Integration Captures National Attention as California Quietly Leads the Way

— November 7, 2016

IT InfrastructureCalls for a North American supergrid enjoyed a brief plug during the final presidential debate when Hillary Clinton, clarifying a past statement publicized by WikiLeaks, stated: “[W]e trade more energy with our neighbors than we trade with the rest of the world combined. And I do want us to have an electric grid, an energy system, that crosses borders. I think that would be a great benefit to us.”

As Clinton suggested, establishing a regional supergrid could generate numerous benefits, including improved operational efficiency, reduced costs, and the ability to harness renewable power on a bulk scale, thereby accelerating the decarbonization of the electric power system. Yet, as discussed in a recent Navigant Research report, many barriers to supergrid development remain, and a truly integrated hemispheric electricity market seems a distant dream. Even so, progress toward increasing integration within the United States and across North America is proceeding incrementally. California, consistently at the vanguard of energy innovation, offers an example.

California Market Expands, Eyes Mexico

California’s Energy Imbalance Market (EIM) began operating in fall of 2014, when the California Independent System Operator (CAISO) linked up with Oregon-based PacifiCorp to form a wholesale power market. Managed by CAISO, the EIM pools resources across participants’ territories, automatically balancing real-time electricity supply and demand and enabling utilities to access renewable energy generated across a wider geography. NV Energy of Las Vegas joined the EIM in December 2015, and both Arizona Public Service and Puget Sound Energy of Washington joined in October of this year. To date, the EIM has saved over $114 million and avoided over 140,000 metric tons of CO2 emissions.

With a 2-year track record of savings, the EIM is set to expand further. Portland General Electric and Idaho Power are both slated to join within the next 18 months, and the Sacramento Municipal Utility District (SMUD) announced its intent to join in late October. SMUD would be the first municipal utility to join and would likely be followed by several others.

With integration among Western utilities growing, CAISO is now pursuing expansion south of the border, recently announcing plans to explore extending the EIM to Mexican grid operator El Centro Nacional de Control de Energia (CENACE). CENACE’s Baja California Norte Grid already has two connections to the California grid, and its participation in the EIM is expected to enhance the overall economic and environmental benefits of the market while opening additional renewable generation to Mexico, which is targeting 35% of its electricity from renewables by 2024.

Full Integration a Long Way Off

Despite steady growth, the EIM represents only limited energy market integration. The EIM’s authority is restricted to balancing real-time supply and demand among participants and dispatching least-cost resources to meet load requirements every 5 minutes. CAISO is also pursuing a full-service day-ahead regional energy market that would require deeper market integration and, in theory, lead to more comprehensive benefits. The regional energy market would take the form of an expanded CAISO and would be designed to enable more efficient integration of renewable resources, improve regional transmission planning, and optimize use of all available generation and transmission capacity in the day-ahead market, further reducing consumer costs.

Under state legislation, CAISO is required to complete studies on the environmental and economic benefits of a regional energy market and to submit a proposal for CAISO expansion before the end of 2017. Final study results were released in July, but the proposal was delayed to allow more time to address concerns, including the risk that integrating with coal-heavy PacifiCorp could hurt California’s clean energy agenda. The proposal is now expected to reach the state legislature in January.

With potential EIM expansion into Mexico and a broader regional energy market plan in the works, California has cemented its role as a major driver of increasing energy market integration in the West. Yet the incremental nature and uncertain pace of integration suggest that the hemispheric electricity system Hillary Clinton alluded to is still a long way off.


California Legislative Session Closes with Climate Victory, but Questions Linger

— September 9, 2016

Smoke StacksAmbitious but controversial legislation strengthening California’s climate goals won approval in the final days of the state’s 2016 legislative session, which ended August 31. Senate Bill 32 (SB 32) calls for California to reduce greenhouse gas (GHG) emissions to 40% below 1990 levels by 2030, an aggressive extension of the current target to reduce GHG emissions to 1990 levels by 2020. Governor Jerry Brown lobbied heavily for the bill, and White House officials even placed calls to California lawmakers urging them to support the measure, which passed narrowly in an Assembly vote held August 23.

The new goal brings California in line with the European Union, which is already working to reduce emissions to 40% below 1990 levels by 2030. It also complements the renewable portfolio standard, increased last year, requiring the state to get 50% of its electricity from renewable resources by 2030.

At its core, SB 32 is an extension of Assembly Bill 32 (AB 32), the landmark law signed by Governor Arnold Schwarzenegger in 2006 that established California’s 2020 emissions reduction targets and laid the foundation for a suite of clean energy and climate programs implemented over the last decade, including the state’s cap and trade program. Yet, while SB 32 deepens the climate commitments established under AB 32, it comes at a time when the future of the cap and trade program is increasingly uncertain.

Cap and Trade Under Scrutiny

AB 32 authorized the California Air Resources Board (CARB) to develop regulations and market mechanisms to achieve the state’s GHG reduction targets. The cap and trade program that emerged places a cap on the total volume of emissions that can be released into the atmosphere and requires companies to purchase permits, or emissions allowances, for each metric ton of CO2 equivalent emitted. The state sells these allowances in auctions and funnels the revenue to other programs geared toward reducing emissions, such as the state’s high-speed rail initiative. The allowances can also be traded in the marketplace. Since its launch in 2012, cap and trade has become a centerpiece of California’s climate policy. However, the program faces challenges surrounding the legality of allowance auctions as well as CARB’s authority to continue operating the program beyond 2020.

The legality of auctions came under assault following a change in the definition of taxes that took effect after AB 32’s enactment. Proposition 26, passed in 2010, expanded the definition of taxes to encompass a variety of payments previously categorized as fees. This is significant because passing a tax in California requires a two-thirds voting majority in each chamber of the state legislature whereas passing a fee requires a simple majority. In November 2012, the California Chamber of Commerce filed a lawsuit alleging that the cap and trade auctions amount to an illegal tax, since the auction process was not approved with two-thirds voting majorities. The lawsuit is still moving through the courts.

Separately, questions have emerged regarding the state’s legal basis for continuing cap and trade beyond 2020. Although language in AB 32 authorizes the use of market-based mechanisms to reduce emissions through 2020, authority to continue implementing those mechanisms beyond 2020 is murkier. In attempt to address this ambiguity, CARB released a draft proposal in early August to continue operating the program beyond 2020. Without legislative support, such an extension would likely face legal challenges.

Given uncertainty over the program’s future, demand for allowances has plunged in recent auctions. Only one-third of available allowances were sold in the latest auction, a poor performance but a marked improvement over the previous auction in which a paltry 10% of allowances sold.

Looking Ahead

With legal and regulatory decisions outstanding, it is unclear whether cap and trade will remain a primary mechanism for pursuing the state’s emissions reductions targets. If the courts decide auctioning allowances under cap and trade constitutes a tax, California would either have to pass legislation supporting the program with a two-thirds vote, halt the program, or continue to implement the program without auctions, distributing allowances at no cost to be traded among market participants. Affirming CARB’s authority to continue implementing cap and trade beyond 2020 will be a separate task.

Although the future of cap and trade is thus unclear, one thing is certain: by passing SB 32, California has once again asserted its role as a leader in clean energy and climate policy, both within the United States and globally. If the state can stay on track to meet its ambitious 2030 targets, it will also help to pave the way for other states and nations to follow.


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