Power Rental in Key African Markets

Electricity Crisis Spurs Uptake of Power Rental Equipment across Sub-Saharan Africa

The use of power rental equipment is becoming increasingly important in Sub-Saharan Africa because it helps alleviate the current electricity crisis affecting the region. Despite customers' preference for buying gensets rather than renting them, power rental companies that are able to provide rental services at a competitive price with robust after-sales support can expect to gain significant market share. Frost & Sullivan estimates that the power rental markets in Angola, Botswana, Egypt, Kenya, Nigeria, Mozambique, and South Africa together earned revenues of $79.3 million in 2007. A combination of limited generation capabilities, robust economic growth, driven by bullish metals, mining and construction sectors and more attractive payment models will support market expansion, notes the analyst of this research. In addition, a strong pipeline of infrastructure development projects will keep the market bullish over the long term. The power rental market is set to remain robust despite a lack of a rental culture in many African countries. The below 100KVA range, which accounted for 46 per cent of the total demand in 2007, is poised to continue as the most important power range. The power rental market is expected to grow at a compound annual growth rate (CAGR) of 9.5 per cent by 2014, translating to $164.2 million in revenues. Government or utilities are the biggest end-user segment, accounting for 64.5 per cent of the total demand. This trend is anticipated to continue in the foreseeable future as increased demand for housing, telecoms expansion and the boom in construction projects in countries such as South Africa and Egypt is set to persist.

Reliable Equipment and Ready Product Availability Critical to Competitive Success

One of the key reasons why companies have preferred to purchase, rather than hire gensets in the past has been the high cost of renting generator sets. This has been compounded by the continuous rise of fuel prices. This will need to be urgently addressed if market potential is to be maximised. Power rental companies will need to increase the number of machines available, adopt more flexible payment terms, develop strong relationships with key customers such as the public utilities and, more importantly, engage in educating customers about the potential benefits of power rentals. Several public utilities link the quality of equipment with brand awareness, which they correlate to the experience of the selected rental supplier in sub-Saharan African countries, says the analyst. As a result, supplying reliable equipment is critical to establishing long-term relationships with these key customers. In addition, ensuring product availability and reduced lead times will be increasingly important in order to achieve customer satisfaction. Supplier loyalty is likely to fade if product availability and reduced lead times is not guaranteed.

Market Sectors

Expert Frost & Sullivan analysts thoroughly examine the following market in this research:

By Geographic Region:

• Angola
• Botswana
• Egypt
• Kenya
• Nigeria
• Mozambique
• South Africa

By Customer Segments:

• Utilities/Government
• Industrial
• Construction
• Entertainment
• Telecoms

Technologies

The following technologies are covered in this research:

• 10 to 100 KVA
• 100 to 500 KVA
• 500 to 1000KVA
• 1000 to 2000KVA
• More than 2000KVA