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APAC Power Rental Markets
Frost & Sullivan, Aug 2009, Pages: 144
Prime Power Applications in the Construction and Utilities Sectors Rev up Demand Levels in the APAC Power Rental Markets
The APAC power rental market is exhibiting strong potential for growth owing to the slump in ownership demand for generator sets and the rising demand for prime power applications from the utilities and construction sector. The lack of reliable power supply from the utility grid to the vast majority of islands present in the region has kept market prospects upbeat. In addition, rental power units are used for peak shaving power requirements during extreme climatic conditions. Easy availability as well as accessibility of the diesel power rental equipment enables end users to use rental power to meet their short-term requirements, significantly reducing capital expenditure. 'The trend of the market indicates sustained demand from countries such as Philippines, Indonesia, and Vietnam because of the inadequate power infrastructure as well as in Australia due to the poor viability of extending utility grid in remote areas,' notes the analyst of this research service. 'On the other hand, excellent utility grid coverage in countries such as Malaysia, Singapore, Thailand, Japan and South Korea has largely confined the use of power rental units to the construction and events and entertainment sectors.'
Increasing awareness among end users on meeting short-term power requirements by deploying cost effective power rental units is also spearheading the overall growth of the power rental market. The power sector in the APAC region is highly dynamic, and the demand for distributed power generation equipment, including power rental units varies accordingly. The mature market is highly price competitive and companies in this space must maintain an extensive fleet of rental equipment, a strong distribution network, high availability of spare parts, on-time delivery of equipment. Also, providing value added maintenance services is of utmost importance.
Economic Meltdown Slows Market Tempo
From the latter half of 2008, the effects of the economic downturn percolated into the Asian countries, impacting the construction and mining industries and slowing down the power rental market. As many major markets have been put on hold, it has become difficult for companies operating in this space to gain new contracts. 'The power rental industry is capital-intensive, with the distribution infrastructure and servicing of equipment requiring huge initial investment by the rental companies,' says the analyst. 'Intense competition in the market has led to falling rental rates, leading to very low profit margins for the industry participants.' Decreasing return on investment is a huge impediment, forcing existing participants to withhold their investment and expansion plans. Moreover, the stable utility grid and the preference for ownership of equipment rather than renting have restricted the penetration of power rental units. Another factor constraining the market is the presence of highly localized companies, which pose a challenge to key multinational rental companies.
To sustain in this highly competitive market, it is imperative for rental companies to offer excellent value added services. Rental companies that are well equipped to provide on-site maintenance, engineering consultancy, guaranteed performance, and prompt replacement of faulty equipment are in a better position to secure repeat business. In order to comply with emission regulations, rental companies must continuously upgrade and renew their rental fleet. Although the immediate prospects for the market look lacklustre, the overall industry scenario looks positive beyond 2010.
This Frost & Sullivan research service titled APAC Power Rental Markets provides a comprehensive study of the generator sets that are used for power generation with a thorough analysis of the key market trends, competitive scenario, end-user trends and revenue forecast of each country that impacts the industry. This Frost & Sullivan research service has identified three main regions – North Asia (Japan and South Korea), Southeast Asia (Malaysia, Indonesia, The Philippines, Singapore, Thailand and Vietnam) and ANZ (Australia and New Zealand) where an extensive fleet of diesel fired power rental units from 20 kW up to 3 MW capacity are used for diverse applications viz., base power, peak-shaving and stand-by application.
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