The experts tell UME why temporary power solutions are in demand
As a service provider to industries such as construction and oil and gas, you might expect recent economic times to have been difficult for those supplying generators. If the money available for projects falls, demand for projects’ power generators surely should also decline correspondingly. However there is one resounding conclusion that springs immediately from talking to our experts at RSS and Aggreko - these are good times for those involved in supplying temporary power.
Robert Bagatsing, RSS group marketing manager, explains. “The demand in rental power is still on the rise even in the economic downturn. Construction, contracting, heavy industries – sectors that were purchasing generators for their projects – have now opted for rental power solutions. Hiring a temporary generator will allow these companies to safeguard their cash flow.”
At the same time, resilient growth in the region has spurred on infrastructure projects which often require temporary power in remote locations. Naturally this draws firms in the direction of generators. Aggreko managing director Phil Burns suggests that these companies are seeking increased flexibility, and need to keep costs down.
“With a greater emphasis on keeping capital available, the option of renting as opposed to purchasing equipment is likely to remain an attractive one for the Middle East utility sector for the foreseeable future. Rental power provides benefits such as lowered capital expenditure, flexibility, risk management and ‘fast track’ solutions for planned projects and emergency power.”
Another facet of this increased demand is that private power companies will continue to struggle to fund their permanent power projects in the current economic climate. RSS is forecasting a 30% increase in rental power demand until 2015 as a result of electricity demand outstripping the available supply. The resultant shortfall needs to be made up through temporary power and will drive generator demand higher and higher.
So if the demand is still there, where is it coming from? Aggreko has been providing generators to the Middle East market for 20 years, and provides everything from single standalone power supply packages through to 100 MW power stations to supplement grid supply. Burns identifies a range of applications – supplementing power generation, temporary power, load banks and cooling towers – that are proving most popular in the Middle East Utilities sector.
“Aggreko’s specialist equipment and skilled teams enable the company to deliver support for planned and un-planned outages, and services include the development of contingency plans, installation of synchronized generators, provision of standby power and rapid response to network emergencies,” he says.
Over at RSS, Bagatsing identifies three basic scenarios where his company would provide rental generator units to the utilities sector. At the top end, this can be through the provision of temporary independent power projects consisting of multiple diesel power generators, transformers, fuel tanks and switchgears, with a typical capacity of between 10 MW and 300 MW.
Smaller in size, the company also provides local temporary power for construction projects, typically of between 5 MW and 20MW in size, and demanded by engineering firms, contractors and real estate developers. RSS has also provided power to individual companies that have not yet been connected to the grid. Generally this is in a situation where capacity exists but the distribution infrastructure is not ready, but can also be utilised during peak seasonal demand where additional power generation is required.
Meeting this demand, the products in development perhaps unsurprisingly have a sustainable, environmentally-friendly focus. Bagatsing says that RSS is endeavouring to improve the carbon footprint of all of their products, through initiatives such as the development of hybrid and tribrid power generators.
“This new rental power package is a combination of fuel, battery, PV solar technology and wind. These will significantly reduce fuel consumption, have a smaller carbon footprint, and will save the clients thousands of dollars. They are specifically designed for telecommunications companies, military sites, camp sites or any remote area that requires temporary power generation”, he says.
Another trend for generators, says Burns, is the growing importance of streamlining the operations of the business, which is rather complex by nature. His company has consequently aimed to offer all in one packages, manufacturing the generator and then being responsible for deployment, installation and servicing.
“Aggreko takes care of the full lifecycle of its equipment, making us unique in our ability to fine tune processes that translate into cost and time-saving results for the client. Technology naturally plays a key role in facilitating the smooth running of operations and we’ve developed a set of customised solutions that work seamlessly, ensuring project deliverables are met with precision and efficiency.”
Bagatsing says that smart grids technology is also likely to have a major impact on future temporary power plant projects. “I think that utility companies who utilise rental power generation will demand a state-of-the-art intelligent electronic tool to properly control and monitor the efficiency of each temporary power plant. There are a number of innovations in the latest remote meter reading or utility centric smart grid technology which are being introduced in the western world. I believe the Middle East is catching up,” he adds.
Looking ahead, Burns suggests that the UAE remains a promising growth market, with the oil and gas sector still continuing to perform strongly. The country also plays host to numerous large events – such as Dubai’s Rugby Sevens and the FINA World Cup – which present a particular prospect for the industry. Elsewhere, our experts both agree that Qatar and Saudi Arabia are expected to remain strong for some time as a result of the high levels of infrastructure spending.
“Saudi Arabia and Qatar will dominate the GCC, whilst Libya will dominate the North African market in the next few years. Around 60% of Saudi Arabia’s electricity consumption is being consumed by cooling, and demand is still rising whilst power plants and distribution networks are still on the planning stages. On the other hand, the reconstruction of Libya’s power infrastructure requires urgency due to high demand in oil and gas production, and in commercial and residential usage,” Bagatsing says.
So prospects seem to be pretty rosy for the generator sector right now. Large-scale infrastructure investment around the GCC and beyond means that temporary power solutions will remain in high demand whilst new output is developed and connected to the grid. Ultimately the lights need to stay on, and generator firms can make sure that they do.
“The demand to increase power generation through nuclear, renewable and coal will take years to build. Then, in addition to the power plants, the distribution infrastructure will also take years to develop. Present demand requires immediate solutions and this is what we are offering – to bridge the gap between the demand and the supply. We provide fast, interim solutions to utility companies by providing rental power generation at a moment’s notice,” Bagatsing concludes.