Power rental market in Southeast Asia to post a CAGR of close to 11% by 2020, according to Technavio.
The research study covers the present scenario and growth prospects of the power rental market in Southeast Asia for 2016-2020. A detailed study of the product type (diesel, gas, and hybrid generators) and the revenue and growth patterns of the market are covered in this report. The report also discusses the key end-users of the market, including oil and gas, construction, utilities, industrial, and others.
Technavio energy research analysts highlight the following three factors that are contributing to the growth of the power rental market in Southeast Asia:
- Need for continuous power supply
- Increase in infrastructure activities
- Increased demand from utilities and industrial sectors
Need for continuous power supply
Rapid development and increased investments in various businesses due to favorable foreign direct investment (FDI) has increased power consumption by 2.5 times in the past 20 years in Southeast Asia. According to the IEA’s World Energy Outlook 2015 for Southeast Asia, the region’s electricity demand is likely to triple by 2040, for which an additional power generation capacity of 400 gigawatts (GW) is required. Utilities are unable to meet the rising electricity consumption due to poor T&D and low power production. This has increased power outages, driving the need for rental power in the region.
For instance, in 2013, 14 provinces in Thailand experienced blackouts because the required power was 2,500 megawatt (MW) while the local power plants were capable of producing only 2,000 MW. The remaining power deficit was purchased from other sources such as private players and neighboring countries. Such instances surged the need for emergency power supply, thus fueling the need for power rentals in the region.
Vishu Rai, a lead analyst from Technavio, specializing in research on power, says, “Indonesia, the largest country in the region, had an 80% electrification rate at the end of 2013. This, along with poor grid connectivity in remote areas, has also increased the need for temporary power supply in the region.”
Increase in infrastructure activities
Southeast Asian countries have a steady economic growth rate between 2% and 8%. Governments across these countries are aiming to achieve economic sustenance through industrial development. In order to attract investors to set up bases in these countries, basic infrastructure facilities such as roads, railways, water, and power supply play a crucial role. Therefore, many countries in the region are increasing their annual infrastructure spending.
Though governments of various countries in this region are investing in building new power plants as long-term power sources, shortage of power supply in the region is restricting power companies to meet the immediate demand. “The surge in residential and commercial infrastructure developments have resulted in peak-hour supply constraints. These factors have compelled power companies to rely on temporary power generation sources such as rentals to cater to the growing demand,” adds Vishu.
Increased demand for power rental from utilities and industrial sectors
The need for temporary power supply across utilities and industrial sectors is increasing due to the supply-demand gap for electricity. Many industries require constant power supply to achieve optimum operational capacity and avoid financial losses due to outages.
Some industries in Southeast Asia are located in remote locations that are not yet connected to the grid and have poor T&D infrastructure. For instance, the Philippines is an archipelago that constitutes over 7,000 islands with a population of over 100 million. The power supply shortages have encouraged the government to take short-term initiatives such as leasing additional power from different islands and using diesel generators for additional capacity.
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