Do You Really Have to Buy?

Buy or Rent?

Here is a rundown of factors to consider before investing in a permanent, semi-permanent or long-term rental power plant.

There is a popular saying that goes: The best things in life are free. While this article is not going to contend with that, it will dare say that some things that one really needs come with a price. A hefty price, at times.

While owning a car, a home or professional engineering tools gives one a sense of pride and accomplishment, there may be cases when buying (could mean investing, in this article) is not always the most rational choice to make.

By the same token

The scenarios to consider when buying an industrial building, truck or large construction tools are no different from the factors affecting the choice of building or renting a power plant. A government or a utility company have to weigh the same aspects (duration, availability of resources, urgency and location) in deciding whether investing in a permanent power plant is cost beneficial vis-à-vis renting temporary power generation facilities.

Duration: Stakeholders need to ascertain the duration of the need. Case-in point: There are requirements that only last for weeks or months, at most. Say, the increased energy demand in summer or the need to power stadia during football matches: These are exceptional events that would only require supplementary power for a short amount of time. Imagine, how many millions of Dollars would a government or a utility company spend in building a permanent infrastructure that would only be sparingly used? In cases such as these, renting may be a sounder choice.

Availability of resources: Constructing power plants entail a large sum, which may oftentimes need to be loaned or agreed upon with institutional investors. If a government with limited funds needs to shell out a considerable amount of money, there is a possibility that the allocation for other services, such as education, agriculture or healthcare, will need to be restructured. Will it be wise to take a portion of the budget for elsewhere and put it in the construction of an electric power plant if the latter will not be extensively used?

Urgency: Completing a permanent power station needs years – some, even decades. Imagine: Factories need to ramp up production for peak seasons, like Christmas, Eid or Diwali. Will they need to wait for permanent energy facilities to be completed before they can take advantage of the increased market demand? What if their products are no longer in-demand after several years? In these cases, rental power plants could represent an immediate, cost-effective solution to seize business opportunities as they present themselves.

Location: When a permanent power plant has been built, it may be difficult, if not impossible, to uproot the facility and transfer it elsewhere should the location prove to be challenging under certain circumstances. Utility companies has to make sure that its expert engineers are able to access the location 24/7 and that spare parts are always available in times of emergency. They also have to guarantee that the chosen place can endure harsh conditions, as power plant closures can bring about disastrous consequences to cities, regions and even to a whole country.

 Horses for courses

The choice of either renting or to outright buying depends on the tendencies of the user. Foresight and rationality are always key in making informed and balanced decisions. There is opportunity cost in everything: One is always bound to absorb losses that accompany an option not selected. The challenge, then, is to calculate risks and maximize the benefits of one’s preference. 

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PRESS INQUIRIES

Robert Bagatsing

Marketing Manager

Altaaqa Global CAT Rental Power

Tel: +971 56 1749505

rbagatsing@altaaqaglobal.com