Government initiatives such as Make in India, Atmanirbhar Bharat, the performance-linked incentive (PLI) scheme are expected to generate a high demand for backup power supply from the manufacturing industry. Apart from this, a high demand is likely to come from the building, construction and healthcare industries owing to immediate electricity requirement and high voltage for electrical equipment. The country is also expected to witness the construction and localisation of data centres driven by supportive government policies and data protection laws. These trends are expected to generate a significant demand for reliable power, thus driving growth of the rental genset market. In the current market environment, companies are facing financial constraints and are looking to lower their capital investments in backup power sources.
Key trends
Rental power caters to industries that need power for short durations and at a short notice. It can be used for continued operations in case of failure of the main/ existing power source. It can also be used to provide continuous power supply in unelectrified areas. Its other functions include meeting the peak load demand when power from the main source is inadequate, peak-lopping, grid support, and export to the power grid. Further, new offerings can help economise fuel, reduce the carbon footprint and noise levels, and improve plug- and -play connectivity to help users meet their varying temporary power requirements.
The rental diesel genset market in India is predicted to surpass $850 million by 2024. The factors driving this market in India are the thriving construction and transportation sectors and the rapid infrastructural developments.
The key market segments by end use include telecom, healthcare, oil and gas, electric utilities, offshore, manufacturing, construction, mining and marine. During the forecast period, the construction vertical is expected to hold the largest market share, which can be attributed to the growing construction activities (development of smart cities and infrastructure) across the country.
By application, the market can be classified as standby, peak load and continuous. Further, the segments based on ratings are below 100 kVA, 100.1-350 kVA, 350.1-750 kVA, 750.1-1,000 kVA and above 1,000 kVA. It is expected that by 2024, the 100.1-350 kVA ratings segment will dominate the market. They will have widespread use across a range of applications, and their low cost and ease of availability will make them an ideal choice.
The generator renting market is mostly regional or local, but of late, large construction, engineering and contracting firms have started offering their own equipment (such as generators) rental services. There are a few large rental entities that operate pan-India. These entities also have partnerships with large generator manufacturers and offer high quality rental services.
Globally, China holds a leading share in the global rental market due to the thrust on its mining and manufacturing sectors. By end use, globally, the mining industry has been one of the key consumers of rental power (as mining sites are mostly not connected to the grid supply). The rental diesel power market is expected to gain traction in Latin America, Asia Pacific, the Middle East and Africa owing to its economical price and the weak gas infrastructure in these regions. The diesel genset market is forecasted to be the fastest growing segment of the rental power market in terms of fuel type till 2025.
Challenges and the way forward
The global outbreak of Covid-19 forced most countries to go into complete lockdown. All non-essential activities were stopped, which adversely affected the rental power market. Production and supply chain delays also pose a short-term challenge as the end-user industries are not yet operating at full capacity.
In the future, the rising demand for uninterrupted power supply and rapid industrialisation will be the key factors driving the rental power market. There have been increasing instances of unreliable supply of power generated through small-scale grids. Further, there is limited access to the main transmission network. This has increased the demand for rental generators. In addition, there is a growing need for scalable rental equipment to solve issues related to voltage sags and swells, and power outages. Rental power systems also enable consumers to obtain equipment as per their requirement, which makes these a more cost-effective option.