Rental power solutions basically meet the power requirements of consumers who need electricity at short notice and for short durations.
Rental power solutions can thus be used for continued operations in case of a failure of the main/existing power source, be it the grid or a captive power plant (CPP). These can also be used in unelectrified areas where the rented power solution is the only option for providing power continually for a required duration. Further, rental power can be used by industries to meet peak load demand for periods when power from the grid or CPPs is insufficient.
Rental power solutions can serve the purpose of both continual and non-continual usage for variable loads/power demands, particularly for industries running motors or other equipment that demand varying degrees of power during operation.
Rental power solutions range from stand-alone temporary power packages to multi-MW units that can operate on fuels such as natural gas, coal and diesel. Diesel generator (DG) set-based rental power solutions are the most commonly deployed solutions, particularly for construction projects across the residential, commercial and infrastructure (roads, bridges, metros, etc.) segments; industrial applications; and commercial/institutional enterprises like banks, shopping malls, events, exhibitions, residential societies, etc. DG sets entail a shorter installation time, enable quick start/stop, and have easy access to fuel.
By kVA rating, below 100 kVA rental DG sets accounted for more than 50 per cent of the overall market revenues in India. The growth of these gensets is being driven by lower costs and demand from sectors such as telecom and construction. In the coming years, the genset segment is expecting a higher growth, falling between 100.1 kVA and 750 kVA. This can be attributed to increasing construction activities and growing demand from the manufacturing sector and power utilities across the country.
Typically, rental power solution contracts include an initial security deposit and a monthly rental charge depending on the size of the power package. Buyers can negotiate long-term rental rates as these are relatively flexible, while short-term rates are generally high. The service provider does not supply fuel for the DG set and it has to be arranged by the customer/client. The installation and transportation of rental power solutions may or may not be provided by the service provider.
Global industry trends
On the supply side, the key stakeholders comprise a mix of privately owned specialist rental businesses, divisions of large plant hire companies or original equipment manufacturer dealerships. In developed markets, there has been an increase in the larger general rental companies moving into specialty sectors including power, heating and cooling in the past few years. The overall demand has been slower in recent years due to the global economic downturn, coupled with an oversupply situation.
According to estimates, the global power rental market is projected to grow at a CAGR of 7.89 per cent to reach $21.2 billion by 2023, against an estimated $14.5 billion in 2018.
One of the key growth drivers for the rental power market is expected to be the increasing demand for power. In addition to increased economic activity, the long-term growth in global population and urbanisation is expected to lead to upward pressure on power demand and a widening power gap in certain markets. Also, better commodity prices in the recent past have resulted in the rise in industrial activity in many key markets, translating into higher power demand. Further, ageing infrastructure in both the developed and emerging economies, and the retirement of technologies which are no longer deemed favourable, such as coal, are expected to see a rise in the construction of new power plants. However, with power infrastructure in developed markets requiring significant investments, manufacturers of rental power solutions expect to see lower capital investments in power in emerging markets. This will provide opportunities for them to meet the power needs of both utilities and customers.
With the likely increase in fluctuations in the grid power supply owing to high renewables penetration, utilities around the world will need to shift to distributed generation sources such as DG sets. Gas and solar-diesel hybrid technologies will thus be increasingly deployed by consumers to meet the new requirements. With digital capabilities and controls, rental power supply solution providers are coming up with offerings that can ensure stable and reliable power supply.
In sum, with growing power requirements, rental power solutions are likely to remain relevant to address the challenges of intermittency, reliability and sustainability, which are yet to be fully addressed by other conventional and renewable energy technologies.