Q&A: New tech and data hold the key to unlocking improved infrastructure

This interview first appeared in Raconteur’s ‘Future of Infrastructure Report’ published in The Times, 21 March 2019.

Macquarie Infrastructure and Real Assets’ Leigh Harrison, Head of Europe, Middle East and Africa, and Peter Durante, Global Technology and Innovation Lead, share insights into the role of investment in infrastructure

How will data analysis technologies impact infrastructure investments in the future? What problems are they solving today and what potential do they have?

Leigh Harrison: We’re already seeing data collection and analysis having a growing and positive impact on the infrastructure assets in which we invest. More data is being collected, particularly as these assets become increasingly interconnected. Management teams and investors are using that data to improve the quality and efficiency of operations.

For example, as part of the transport revolution, cars and other road infrastructure will become increasingly connected. We expect this will generate a host of useful data, which then helps to improve scheduling of maintenance on assets such as roads so problems are identified and fixed before they occur.

This has the potential to improve the operational performance of infrastructure to the benefit of end-users and investors, whilst also driving improvements in health and safety outcomes for employees. Meanwhile, the move towards greater data gathering and analysis also is likely to increase the need for investment in new infrastructure that can collect and monitor it all.

"As part of the transport revolution, cars and other road infrastructure will become increasingly connected."
 

What other opportunities will the transport revolution bring?

Peter Durante: The electrification and automation of vehicles will require a significant investment in infrastructure – such as the installation of charging points and upgrades to the local electricity grid. Some estimates suggest that electrifying passenger cars and other vehicles may increase the electricity demand of a country by 10% to 30%1 . This is likely to require greater investment – particularly in renewable energy production.

Fortunately, that creates a virtuous circle because electric vehicles have a greater incentive to use that clean, efficient electricity as it becomes more cost-effective.

In our view, the growth of the electric vehicle market is also driving down the price of battery storage, further increasing the potential share of electricity that can come from green energy sources.

What role will data have in household energy usage and what opportunities will that create for investors?

Leigh Harrison:The data revolution is already playing a role in household energy through technologies such as smart meters. By providing enhanced visibility over energy prices, smart meters can help consumers make more informed decisions around their usage – for example shifting electricity demand to times when prices or emissions are lower.

Smart meter businesses in some countries are highly desirable. For example, in Germany there are some large metering businesses that are part of that ecosystem. But it does depend on the country, the regulatory environment and the nature of those businesses.

How can infrastructure companies use sensors and the “internet of things” to boost their value?

Peter Durante: We manage a number of assets that integrate these technologies. Sensors and internet of things applications can, for example, assess in real-time the health and performance of infrastructure. Instead of sending a crew of technicians to climb a wind turbine or dig up a pipe buried underground, you can now use sensors to more reliably inform you about the condition of materials and what is impacting their performance.

Sensors also have a wide range of applications beyond maintenance – monitoring everything from physical data, to transactions and even movement. For example, sensors are being used to track footfall, traffic and flow through an airport. They can also be used on bridges and roads, allowing operators to switch lanes and make them bi-directional, depending on the time of day and traffic patterns.

Leigh Harrison: We are seeing infrastructure managers increasingly using technologies like this to enhance performance. In addition to the efficiencies they should generate for operators, they can also improve outcomes for communities as assets are less likely to break down unexpectedly and require repair.

Ultimately, we think the end-user is the winner.

What effect will the use of drones have on infrastructure investments?

Leigh Harrison: We are seeing more companies using drones today and we expect that to continue. They can be very effective as a means of reducing the labour time and the cost of certain activities, such as maintenance and inspection.

Drones can also make some activities safer, reducing the need to physically inspect assets like telecommunications towers and large offshore wind farms. A drone can be a far safer way of doing the same inspection, and so can be more efficient and better for employees.

Peter Durante: Drones can also allow for more regular inspection, because the cost is driven down. The more you inspect something, the quicker you can identify and fix a problem before it happens.

They are also generating a lot of new data - we see integration and analysis of this data is key. We are starting to see providers’ back-end platforms improve to allow this technology to become more useful across lots of different industries, ranging from energy, to agriculture and transport.

How will data interact with research and development (R&D) operations in infrastructure?

Leigh Harrison: We believe that data collection and analysis is making technology better, both in operation and during the R&D phase.

By helping researchers better understand how technology operates, data can be used to fix design faults. This is reducing the long-term cost of technologies, from solar photovoltaic cells to battery storage.

We see this as an exciting trend and it gives us confidence that the infrastructure sector can help make economies more sustainable.

"These technologies are already making infrastructure assets much more efficient for end-users, safer for employees and better for the environment."
 

What are the challenges for the infrastructure sector in collecting and using all this data?

Leigh Harrison: Traditionally, these types of businesses have not focused on the collection or analysis of data. We are starting to see that change, however we believe data collection is only the starting point.

As the amount of data grows, we expect infrastructure operators will need to invest in their analysis capability. Using machine learning and smart algorithms, insights from data can be better understood and integrated into decisions that improve the performance of assets.

Peter Durante: It is also about improving the user experience. People generally expect technology will deliver improved services and operations over time. We see that in the infrastructure sector too – for example, in contactless payments for public transport, automated payment for tolls and electronic boarding passes on phones. These improvements to the way we interact with infrastructure are underpinned by data.

Leigh Harrison: We also need to remain vigilant to cybersecurity risks.

These assets are relied on by the communities in which they operate and can often be strategically important nationally too. Therefore, cybersecurity vigilance needs to remain at the forefront of infrastructure management.

Overall, we believe these technologies are already making infrastructure assets much more efficient for end-users, safer for employees and better for the environment.

As they advance further and become even more embedded in the infrastructure we rely on every day, we’re excited to see the increasingly positive impact they’ll make for communities and economies around the world.