TECHNOLOGY ENTREPRENEURSHIP COURSE OPPORTUNITY ANALYSIS PROJECT FINAL VERSION

Smart UAVs for the Energy Sector Innovative Aeronautics Team November 2012

Why UAVs for the Energy Domain?

Civil UAVs are: Autonomous, fully operational unmanned aerial vehicles used for civilian uses The most dynamically growing sector of the aerospace and defense industry An exceptional chance for a business venture with outstanding profitability prospects Key advantages: Vastly reduced costs Enhanced operational capabilities Safety of personnel & public Environmentally friendly vehicles

Initial Hypothesis
Where we focus? On deploying smart UAVs for the Energy Sector and in particular for:

Gas & Oil Industries Power Grid Companies

Which activities? Power lines inspections Gas & Oil pipelines imaging and monitoring

Initial Project Vision

What about our project goals?
Offer B2B UAV services for the energy sector

Execute missions according to customer specifications

utilizing company-owned UAVs and personnel necessary for mission deployment, data acquisition and processing
Provide company-owned UAVs according to customer

specifications with/without the support personnel necessary for mission deployment, data acquisition and processing

Customer Segments
Which market we target?
Large energy producers, power grid management companies, natural gas & oil networks

Which companies we asked?

Answer: All the key players of greek energy

market:
1. Hellenic Electricity Transmission System Operator S.A. 2. DEPA (Greek Natural Gas Monopoly) 3. Hellenic Petroleum 4. Public Power Corporation of Greece (biggest greek electric power company)

Face-to-Face Interviews What did we want to know?

General Questions to Industries Management Level

Would you invest to UAV solutions for your needs? If yes, what are your costs for your current solutions? Could you make a gross estimation of what you would be willing to pay for each service? What suggestions would make you more attracted to our services? If you do not want to buy our services can you describe us the reasons? Which risk factors you would recognize in such an investment? Give any other comments you want for our services

Technical Questions to Industries R&D and Technical Departments

Could you analyze the areas in your industry where you think UAVs could provide solutions?

Face-to-Face Interviews What did we learn? - Lesson categories

We can distinguish the lessons arisen from the face-to-face

interviews into three categories:

Potential interest for UAV solution to various fields from energy industries; The exact application fields & technical aspects where industries are willing to apply UAV solutions How our business prototype should be modified technically in order to fit the needs of the energy sector

Face-to-Face Interviews What did we learn? Energy Sector Interest

All industries mentioned that they have little to medium experience on

potential UAV application in the field

At the same time all the companies expressed high interest on UAV

solution, provided they will offer ALL the following advantages:

Minimization of human factor (lower labor costs) Minimization of accident risks Easy access to remote and dangerous areas Fast response and diagnosis of critical conditions Lower maintenance and monitoring cost on the midterm.

Face-to-Face Interviews What did we learn? UAV Application areas

Application Fields suggested by Power Grid companies:
Daily & Emergency failure inspection Power engineering dynamic monitoring & visual tracking of designated

features (power lines, poles, etc.)

Thermographic inspection of electrical connections in the grid
Identification of pylon and insulator corrosion, arcing and hot spots

Application Fields suggested by Oil & Gas companies:

Detection of gas emission escapes/oil leakages from the pipelines
Monitoring of construction & excavation works, laying of cables etc Monitoring of repairing activities, assembling machinery, laying drainage

cables
Discoloring of vegetation above pipelines Monitoring of temporary deposition of materials and agricultural products

around the pipelines

Face-to-Face Interviews What did we learn? Prototype Modifications (1)

Based on the feedback from the interviews we realized that one the main

problems when using inspection vehicles is the duration of their power supply. The longer the craft can stay operational the more lines/pipelines can be inspected. Current battery technology does not permit long durations of flight for small electrically driven UAVs.
Which solution is making our prototype suitable for the Energy Sector?
A novel approach that derives added value through the combination of

the advantages of two established types of UAVs: autonomous blimps quadrocopters which can be refueled on air by the blimps

Face-to-Face Interviews What did we learn? Prototype Modifications (2)

Why we modified our prototype by considering an air-to-air refuelling

system? Addresses the main shortcomings of autonomous blimps and quadrocopters as well, thus resulting in a holistic approach and efficient solution for most types of energy UAV applications. Provides high autonomy and mission range with lower cost.
Is the air-to-air UAV-Blimp refuelling system technically possible :
Answer: Yes. It is possible. In fact, it is a state-of-the-art technical

approach which has been studied and applied with success

Product Prototype (1)

UAV Blimp
Technical Characteristics
Maximum Velocity 30m/s Optimum Velocity 10-15m/s Mission Range 9hr/400km Payload 5-7kg. Operational Altitude 300m Zero Emissions/Noise; Low Observability Autonomous Operation/Mission-Deployment

UAV Blimp
Superior

Advantages
increased payload and range quiet and obstructive (for the public)

operation
stationary surveillance capability
low cost to manufacture and maintain

technology Custom-made solution Lower Price

Product Prototype (2)

Quadrocopter Advantages
exceptional agility

small size thus micro-level surveillance

capability
very low cost to manufacture and maintain

Product Prototype (3)

The proposed scheme foresees the deployment of an autonomous blimp, equipped with mission-specific sensors (ranging from conventional cameras to IR and LiDARs) which also operates as a flying carrier and refueling station for small quadrocopters.

In that manner, aerial surveillance in macroand micro-level can be attained simultaneously, thus optimally satisfying the requirements for most energy missions. Effectively all aerial surveillance applications (3d mapping, predictive maintenance for energy grids, corridor mapping, public safety, remorse sensing, etc, necessary for the application fields) can be executed in a most efficient manner.

Product Prototype (4) Timeline for the Commercial Product

Day Zero Day Zero +18months

Software Development Flight Testing Autonomous Operation & HIL Business Plan

Iron-bird & UAV construction UAV shakedown Mission Testing Missions with prospective clients

Promotion Mission Execution UAV Production Further R&D Technical Consultancy

Fund raising

UAV goes live

Market Size Evaluation (1)

For an estimation of the market size we combined the official data of economic results for the year 2011 of the companies we visited with the explanations by the companies about specific costs for the fields where UAVs can provide solutions. The companies we visited represent the 90% of the energy sector in Greece. In total, labour, maintenance, inspection and fuel costs related to activities that could potentially be totally or partially substituted by UAVs count for a gross amount of 100 million Euros/per year concerning the Greek Market. The cost savings provided by our Prototype depend on the specific application. For comparison, we will present a concrete example that was analyzed in detail with

Public Power Corporation in Greece (http://www.dei.gr/Default.aspx?lang=2)

Market Size Evaluation (2) Case Study: Network Surveillance

Default Practice
Use of manned helicopter with pilot and measurements conducting crew Running costs, logistic costs, insurance, crew payment Security issues rather common Vertical vibrations often affect the quality of measured data Maximum of two 2hrs measuring sessions per day

UAV Mission
Use of UAV Airship deployed on site Ground station mission support 1-man support team on ground station Minimal running/logistic costs No security issues/ v. low insurance Excellent data measurements Between 6-9hrs single session deployment before refueling Mission costs 5k per day!

Overall charge ca. 30k per day!

Market Size Evaluation (3)

Is our Prototype focusing only on the Greek Market and only on the Energy Sector?:
The answer is NO. We particularly focus on the European Market because of legal and

economic similarities with the greek energy sector. But in general all the global energy field could be a potential market.
We discovered that all the basic functionalities of our prototype can apply to a large

number of civil applications

Applications
A.Government (law enforcement, border- & coastguard) B.Fire Fighting (forest fires, Search And Rescue) C.Energy Sector (oil and gas industry, electricity networks) D.Earth Observation and Remote Sensing (climate monitoring, mapping and surveying) E.Agriculture Forestry and Fisheries (environmental monitoring, crop dusting)
D 13% C 10%

E F 6% 1%

A 45%

B 25%

Market Size Evaluation (4)

The previous diagram proves that the energy sector consitute only the 10% of the potential application fields for civil UAVs. For this reason an estimation of the total global market for civil UAVs can arise only from literature and future projections. Teal Group Market Research* For years 2009-2019. world procurement raising from 4.4 $ bn annually to 8.7 $ bn For years 2009-2019. total expenditure >62 $ bn

* UAV Market Research, 2009

"A civil market for UAVs is beginning to emerge over the next decade, starting first with governmental organizations" World UAV Forecast, Teal Group, 2010

Market Size Evaluation (5)

(Units, Air Vehicles) 2010 2011 2012

2013 1705
213 19

2014 2,950
310 37

2015 2,837
364 56

2016 2,612
479 76

2017
3,308 435 80

2018
3,811 459 74

2019
3,761 497 56

Total
27,793 3,436 446

Mini-UAVs
Tactical UAVs Naval VTUAVs MALE UAVs HALE UAVs

2,432
180 10

2,532
258 22

1,845
241 16

95
7

51
11

59
6

63
11

84
14

76
15

70
16

84
18

76
20

63
18

721
136

UCAVs
Civil UAVs Total

1
237 2,962

4
228 3,106

1
278 2,446

260 2,271

253 3,648

6
278 3,632

5
306 3,564

12
327 4,264

16
333 4,789

15
398 4,748

60
2,898 35,430

(Value, $ Millions)
Mini-UAVs Tactical UAVs

2010
96.4 772.0

2011
126.9 1,164.5

2012
118.6 955.0

2013
185.2 627.5

2014
211.8 782.5

2015
215.1 720.5

2016
230.1 536.0

2017
286.2

2018
287.3

2019
286.2

Total
2,043.6

367.0 374.5
595.5 1,292.0
1,060.0 1,445.0 440.5 5,486.2

510.0 6,809.5
417.5 1,215.0
1,060.0 1,475.0 588.3 5,551.9

Navy VTUAVs MALE UAVs

HALE UAVs UCAVs Civil UAVs Total

55.0 973.0
830.0 15.0 156.0 2,897.4

158.0 1,423.0
810.0 150.0 180.0 3,947.4

114.0 1,207.0
995.0 85.0 301.8 3,776.4

158.0 1,058.0
1,195.0 100.0 305.3 3,629.0

298.5 1,212.0
1,225.0 125.0 361.0 4,215.8

528.0 1,188.0
1,185.0 545.0 525.3 4,906.9

564.0 1,030.0
1,210.0 675.0 485.5 4,730.6

560.5 1,337.0
1,060.0 1,685.0 447.3 5,751.5

3,449.0 11,935.0
10,630.0 6,300.0 3,790.8 44,892.9

Source: Teal Group UAV Market Research 2010

Environmental Monitoring A New Opportunity (1)

Amongst the additional applications where our prototype can be used, we recognized as the most relative the environmental monitoring. In particular, the combination of UAV Blimb & Quantrocopters could be used for :
Managing Federal lands. Monitoring environmental conditions and natural resources use. Analyzing dynamic earth processes. Supporting global and climate change investigations (carbon trade). Supporting law enforcement actions. Aiding search and rescue teams. Inventorying wildlife. Generating mapping, charting, and geodesy products. Conducting environmental impact assessments. Developing an archive of observations. Preventing, preparing for, responding to, and recovering from disasters.

Environmental Monitoring A New Opportunity (2)

To study this new possibility for our project we had a number of face-toface interviews with the following government institutions and nongovernment organizations:
Greek Ministry of Environment Greek Forest Administration Service WWF Hellas Greek Ministry of Agriculture Callisto Environmental Organization

Environmental Monitoring A New Opportunity (3)

What did the environmental institutions answered?

All the institutions considered our proposal appealing and thy were highly motivated to discuss technical details For some of the potentials of environmental monitoring there are no current alternative solutions They were unable to provide an estimation of current costs suggesting that this is a complex issue They were considering difficult the financing of such innovative projects.

In advance, the Ministry of Environment mentioned that:

It cannot provide an estimation of the total market since it concerns a totally new field The complete legal framework for civil UAVs is still under review

While at the same time it referred to the strong interest of European Union in funding such projects in collaboration with the private sector and public institutions In general, environmental monitoring using UAVs is a new field with high potential but difficulties to estimate the exact market size. Our interviews will continue towards this direction the coming weeks

Marketing Strategy
Based on our interviews with the energy industries we

realized that the best marketing approaches to make our services attractive would be by using the following promotion channels:
Aerospace Fairs Direct Marketing on the basis of existing references Specialized media Academic Conferences Journals to present our technical

aproach

Competition and Risk Analysis (1)

Main risks/advancements:
Very low probability of shift in political conditions regarding UAV

perception (e.g. legal frame that will allow air-traffic blend-in for fully autonomous UAVs already elaborated) Low probability of economical conditions affecting the emerging UAV market (massive cost reduction!) Very low probability of social disapproval for civil UAV technologies (significant advances in public benefit, advances in personnel safety, environmentally friendly technology, positive image) Very low probability of technology advances rendering UAV uses obsolete (instead, help to establish autonomous technologies in civil applications)

Competition and Risk Analysis (2)

Prospective Competitors
Specialized UAV companies: technical deficiencies, lack of

development, inferior starting point Big aerospace manufacturers: over-occupied with existing markets, focus on military applications for UAVs
Currently, only a very limited number of small companies are

focusing on UAV solution for the energy sector.

Our strongest advantage is the high autonomy provided by

our air-to-air refuelling system