Power Rental Markets In Eastern Europe And Africa To Offer Significant Long-Term Growth Potential
London, UK: The increasing need for power coupled with rising customer awareness of the benefits of power rentals bodes well for participants in Europe, Middle East and Africa (EMEA) power rentals market. Demand from western Europe and the Middle East is set to boost revenues over the short term, while the as yet untapped markets in eastern Europe and Africa offer more long-term growth potential with a total market size of $993.8 million forecast in 2011.
A projected increase in demand for power from countries in Eastern Europe, the Middle East and Africa is expected to spur market expansion. Escalating demand for power, particularly in regions with poor or even unreliable grid connections is likely to create an opportunity for power rentals to emerge as a viable option to meet end-user requirements.
"Lack of a reliable power transmission network in parts of Middle East and Africa is one of the biggest factors promoting the development of power rentals industry in those areas," notes Frost & Sullivan (http://energy.frost.com) Research Analyst Rajat Kumar. "In the absence of a sound transmission network, the power needs would be met by rented power."
A positive outlook for construction and industrial sectors across EMEA also spells good news for market participants since these sectors have typically been the largest end users of rented power. At the same time, heightened activity in mining and oil exploration sectors across the Middle East and Africa is likely to increase demand for power rentals from these regions.
In 2004, the construction, industrial and utilities sectors together accounted for nearly 60 per cent of revenues in the $663.3 million EMEA power rentals market with events, oil/gas sector and services also making noteworthy contributions. While most of the units were used for continuous power applications in the construction sector, much of the demand for peak load applications came from the industrial and utilities sector, while the majority of standby application demand originated from the services and technology sectors.
Driven by demand from the construction sector, rentals of low power output range (below 300 kW) units, principally the less than 100 kW range, generated over 60 per cent of the total power rental revenues in 2004. While the low power output range is expected to continue accounting for a majority of total revenues over the long term, demand for medium and high power output rentals is likely to experience slight increases due to the development of markets in eastern Europe and Africa and rising power demand in sectors such as utility and industrial.
With the largest market in western European heading towards maturity, leading market participants in the region have to focus on niche applications and on regions with better prospects. Even as many companies are expected to start developing and expanding their distribution networks in eastern Europe and Africa, a key pre-requisite will be to raise awareness levels about the benefits of power rentals in these regions.
At the same time, large companies, particularly in established markets, are beginning to realise that sustained profitability will depend on diversifying into the associate equipment and the value-added services market.
To maintain growth, many leading companies are attempting to position themselves as turnkey solution providers for meeting their clients' demand for temporary power. "With the rise in competitiveness and the fall in prices, companies would find it difficult to grow by being just an equipment supplier," says Mr. Kumar. "Companies have to work with their clients and manage rental contracts like projects in order to ensure customer loyalty and boost their profitability."
While the EMEA power rentals marketplace is currently populated with over five hundred companies, market concentration is high – Aggreko plc, Caterpillar and GE Energy Rentals control over 60 per cent of market revenues. As competition intensifies, the market is likely to witness consolidation in Western Europe and the Middle East.
As the exciting growth potential of power rental markets in Eastern Europe and Africa beckons both established as well as new entrants, competition is set to intensify. Success will hinge on ensuring competitive pricing and reliable equipment. Rapid response times, the ability to offer customised solutions, the provision of sector specific products and engineering support will also be crucial determinants of competitive success.
If you are interested in a summary of this research service providing an introduction to the Power Rental Markets in the EMEA Region, please send an email to Magdalena Oberland, Corporate Communications at magdalena.oberland@frost.com with the following information: full name, company name, title, country, contact telephone number, email and source of information. Upon receipt of the above information, an overview will be emailed to you.
Source: Frost & Sullivan