Strat Aero plc, the AIM quoted international aerospace company focused on the Unmanned Aerial Vehicle sector, on Friday announced that it has been awarded a wind turbine inspection contract with Westar Energy, the largest electricity provider in the state of Kansas, USA. This is the Group’s first wind inspection and data analysis contract utilising its UAVs and proprietary software, and as a result it represents a significant milestone in Strat Aero’s positioning as a full service UAV provider to the commercial and military sectors. Under the terms of the contract, Strat Aero will initially inspect 53 turbines in two of five fields operated by Westar at a rate of six turbines per day. The initial value of the contract is US$26,000 but with a total of 312 turbines on site there is scope for the initial contract announced today to be extended to cover the remaining 259 turbines across Westar’s five fields, as well as others operated by Westar. The Directors view this initial contract with Westar as proof of concept, and intend to use it as a springboard to secure additional contracts with Westar and other major operators in the US. Work has already commenced with the team managing to inspect eight turbines per day using its UAVs, compared to the two turbines per day typically handled by manual-led techniques traditionally employed by operators. By enabling far less downtime and lost production, Strat Aero’s UAV based solution therefore offers major savings in terms of time and costs for turbine operators. In addition to the significant savings offered, the data gathered by the UAVs will be analysed and stored using Strat Aero’s proprietary Digital Data Management software (‘DDM’), which will be available to the customer at any time.
Beaufort Securities view: An important breakthrough! This agreement follows an extended trialing process and signals the Group’s first important contract in this potentially lucrative market. The scope and scale of the wind farm industry in the US is enormous and its champion, Westar Energy, is a preeminent player in this market, generating over 7,000 MW of electricity and serving nearly 700,000 customers in much of east and east-central Kansas. The initial phase of this relationship will see Strat overseeing the inspection of 53 turbines, which provides an ideal test model in which the efficiency, reliability and functionality of drones will be clearly demonstrated. As such, it places the Group in a strong position to roll out this service to cover Westar’s full portfolio of wind turbines across its five fields, in addition to providing a springboard into the larger wind turbine drone inspection market, of which industry consultant Navigant Research estimated will expand to a value of US$6 billion by 2024. Indeed, as Beaufort has previously pointed out when putting the future scale of this opportunity into perspective, the Unmanned Aerial Systems market is expected to grow exponentially over the next decade and beyond. In the US alone, for example, civilian, law enforcement and military applications in UASs are expected to be the most dynamic sector in the aerospace industry, with the overall market forecast to grow more than US$82.1bn between 2015 and 2025 (AUVSI Economic Report 2013), while the global airborne Intelligence, Surveillance and Reconnaissance (‘ISR’) market estimated to grow to US$19.23bn by 2023. Yet, to date, Strat Aero remains one of a very small handful of quoted direct investments dedicated to capturing this specific opportunity. Beaufort retains its Speculative Buy recommendation on Strat Aero.
Beaufort Securities acts as corporate broker to Strat Aero plc
