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Michael McDonald

Michael McDonald

Michael is an assistant professor of finance and a frequent consultant to companies regarding capital structure decisions and investments. He holds a PhD in finance…

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How Virtual Reality Could Reshape The Energy Sector

Humans have a hard time with numbers. The truth is that our brains are much better at processing images and colors than they are at processing numbers. Give a human a relatively simple math problem like dividing two large numbers by one another and it can take them several minutes to work out the answer. By contrast, humans are great at understanding images and making inferences as compared to computers. Trivial tasks like identifying what a chair is are extraordinarily difficult for computers.

These truths are behind the recent effort by utility companies to start using virtual reality to help run their businesses more effectively. Utility companies rely on reams of data to manage their complex far flung network of substations, transmission lines, and power plants. Humans are not particularly good at managing this data, but computers are. In contrast, human judgement is required to figure out how to make judgement calls regarding issues like a circuit breaker that is nearing the end of its life. Putting the talents of computers and humans together, utility companies are examining how they can use virtual reality as part of their maintenance process.

The idea behind using virtual reality in the electrical grid is that it can help utility companies to better diagnose and identify problems in the utility’s systems. For instance, rather than sending a worker to a substation that may or may not have a problem that is leading to lost power, utilities could instead have the technician strap on a virtual reality headset and review the site remotely. Doing such inspections without physically leaving an area would enable the technician to review more substations and other areas of the grid more quickly. That in turn could lead to faster resolution of maintenance problems and less risk of unhappy customers. Related: Oil Prices Fall As Iraq Goes Rogue, Refuses To Scale Back Production

California utility PG&E is one company that is investing in virtual reality to help improve its operations. PG&E has more than 150,000 miles of transmission and distribution lines, meaning that virtual reality holds considerable promise to help improve maintenance efficiency. The technology still has a long way to go though. For one thing, while it sounds good in theory to just strap on a headset and review maintenance data, it’s an enormous challenge to go from reams of data to a visual set of images that humans can review and interpret. For another thing, problems with utility grids are often complex, which means that a computer has to be programmed to be able to interpret data and display potential areas of concern in a way that lets humans understand what the problem might be.

Virtual reality has turned an enormous corner in the last couple of years, thanks in large part to Palmer Luckey and the Occulus Rift. That hardware has the potential to upend many traditional tasks, especially when used in combination with drones and other autonomous vehicles tech. But the industry is still in its infancy and it will take time before VR companies learn to create truly useful applications. The VR projects being taken on by PG&E represent a step towards practical applications for VR in an industrial setting. The hard work on that front is just beginning though. Investors should keep an eye on this emerging sector and think about ways that it might improve the bottom line for various industries in the future.

By Michael McDonald of Oilprice.com

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