Monday, September 7, 2015

Straight from the Shoulder: Insights on the Rental Power Market in the Middle East

Altaaqa Global CCO, Julian Ford, shared his insights on the outlook of the temporary power industry in the Middle East. He also discussed how generators running on gas and dual-fuel are gradually gaining ground. Highlights...

What has led to the rise in the power rental market in the Middle East and North Africa (MENA)?

First of all, it is important to note that the rental power industry in the Middle East, as with other regions in the world, goes in cycles, and is dependent on the prevailing market situation and activities. 

The buoyance of the rental power market in the MENA region is spurred by several factors.

  • Utility shortages, particularly in KSA, Kuwait and Iraq, especially during peak summer months 
  • The gradual recovery of the construction industry in UAE and Saudi Arabia
  • Sustained production of oil & gas and repair & maintenance of refineries and associated infrastructure
  • Absent or unreliable electricity connection in many areas in the region
  • Regional growth in population and upgrades in the standards of living
  • The availability of diesel, and the nascent increase in the supply of natural gas, particularly in African markets 
  • Large industrial customers companies turning to rental power to maintain the effectiveness/productivity of their operations in times of power interruptions or peak shaving
  • Looking forward, there will also be significant opportunities for infrastructure rebuilding and development in like Iraq, Libya and Syria

Which is the biggest genset market in the region? Recent reports suggest Saudi Arabia and Qatar are leading the way. What are the countries, you think, follow the list?

Saudi Arabia, Qatar and the UAE have been demonstrating high economic growth rates buoyed by industrial and commercial development. As such, these countries have consistently been the biggest market for gensets in the region, be it for rental or for sales. On the sales front, a recent report by Frost and Sullivan show that the genset market in the GCC is set to grow to as much as USD 950.4 million in 2018, largely due to intensive construction activities, prevention of transmission and distribution bottlenecks and determent of power shortages. Rental figures follow a similar trajectory.

It is interesting to note that certain markets, like the UAE, reflect encouraging genset sales figures because they are vital hubs for re-exporting generators to nearby markets.

A number of other Middle Eastern markets, like Yemen, Iraq and Syria, are currently going through a difficult period. As the governance of these countries become more stable in the coming years, we believe that they will represent excellent market opportunities for temporary power providers.

Between gas and diesel gensets, which has a better growth prospect and why? Upcoming trends in the genset market for the MENA region?

It is expected that the diesel genset market will continue to grow in the next several years, riding high on the wide availability of fuel, fuel safety and economy and ease of installment of diesel equipment.

We are noticing however the gradual expansion of the natural gas and dual-fuel genset markets, particularly where inexpensive natural gas is available. The growth of such markets are supported by the increase in unconventional gas resources and by stringent emission regulations in vigor in many countries around the world.

In the past, fuel availability and the costs of installing safe and reliable fuel delivery infrastructure have been limitations on the growth of the natural gas generator market. Today, however, gas is becoming increasingly available and gas generation technology progressively finds application in bigger and longer-duration projects.  The availability of dual-fuel generators (which significantly simplifies the transition from diesel-run to gas-run generators), is also helping to overcome these obstacles.

Side-bar: How do dual-fuel gensets work?
  • Operate on a blend of diesel and natural gas fuel
  • They start operating with diesel as the fuel
  • As gas becomes available, the technology blends the gas with the diesel, substituting natural gas for diesel.
  • When a sufficient supply of natural gas is available for stand-alone operations, then the existing power plant can be easily replaced with 100% gas-fuelled generators

      What are the preferred ranges that are most popular in the region and the industries that are catered to? 
      The amount of required power vary from industry to industry. For instance, construction projects may require a few hundred kVA during the building phase to a few MW during the commissioning stage. Refinery maintenance and rehabilitation of often requires several MW of power. The utility industry has the biggest demand, usually requiring power plants of tens or hundreds of MW to provide supplementary power to the grid. 

      For our part, we provide large-scale temporary power plants, focused on utility markets, extractive industries such as mining and oil and gas, large process industries and major construction infrastructure projects.  


      Altaaqa Global
      Tel: +971 56 1749505

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