Increasing power blackouts drive the power rental market in Africa

Trends & Insights

The power rental market in Africa is growing due to energy demand and increasing power blackouts, according to Verify Markets analysts. South Africa's electricity system is inadequate because of the small margin between peak demand and available electricity supply. In November 2013, Eskom, the South African public power utility company, requested its largest industrial customers to cut their electricity consumption by 10% during peak demand times to help curtail unexpected blackouts and scheduled power cuts.

The power cut problems were addressed in 2014, but South Africa has huge potential in terms of energy production from expected power plants over the next two to three years. “Power blackouts threaten South Africa's economy,” according to analyst Mansi Kapadia at Verify Markets. “In order to avoid these blackouts in South Africa and keep the economy running, governmental authorities have been seeking the help of leading power rental companies, like Aggreko (U.K.) and Altaaqa (U.A.E.), to provide temporary power solutions to industries.” Aggreko has signed a deal worth £133m to provide 122MW of power to Mozambique and Namibia in 2013 for two years. Aggreko provided the power from its plant at Ressano Garcia in Mozambique. It was shared between Mozambique's EDM power utility and NamPower in Namibia.

According to the analyst’s research at Verify Markets, the fuel used by the generator sets for power rental purpose is mostly diesel, owing to the rich oil reserves available in the region. Other fuels used in generator sets include gas and HFO (Heavy Fuel Oil). The unit size of the generator sets provided on a rental basis is usually more than 1 MW, due to massive power cuts. Industries like mining form the major end-users of the power rental market. This is followed by the construction sector, which is growing significantly in Africa. The utilities segment also a major contributor in the end-user industry for the power rental market in Africa.

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