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The global power rental market size was valued at USD 8.85 billion in 2020 and is projected to grow from USD 9.78 billion in 2021 to USD 16.70 billion in 2028, exhibiting a CAGR of 7.9% from the 2021 to 2028. The global impact of COVID-19 has been unprecedented and staggering, with power rental equipment and services witnessing a negative demand shock across all regions amid the pandemic. Based on our analysis, the global market exhibited a decline of 12.9% in 2020. The sudden rise in CAGR is attributable to this market’s demand and growth returning to pre-pandemic levels once the pandemic is over.
Power rental, also known as power on hire, comes with numerous advantages over-purchased power equipment. Rental generators are effective over the purchased generators as they provide flexibility in the power rating required, carry negligible maintenance and installation costs, are readily available on short notice, and have lower initial costs, among other features. Manufacturers generally prefer hiring generators in case of the maintenance of the existing power supply system, lack of availability of grid infrastructure, and temporary power requirements. Rental power is a popular concept for events that are organized across different parts of the world.
Power on hire is generally preferred in areas with low grid infrastructure, which includes islands present in the Asia Pacific and Latin America regions. The mining industry is among the key consumers of rental power. Since mining sites are not connected to the grid supply, they derive power from the temporarily hired generator sets for a specific time. Manufacturing industries have a moderate demand for rental generators in case of the maintenance of the existing power supply system, such as purchased generator sets, or when there is a need for extra power in case of peak load demand, or when there is an outage for a short period. The power rental market growth is thus highly dependent on industries with weak power supply from grids.
Demand for Power Generation Rental Solutions Has Declined Significantly amid the Covid-19 Pandemic
The market for power generation rental systems has been intermediately affected by the outbreak of this global health problem. Power generation rental solutions are widely integrated across different sectors to provide extra power to alleviate the chances of outages and maintain operations. Asia Pacific and the Middle East & Africa are among the major regions manufacturing and installing power generation systems owing to the immense investment potential in these regions. Furthermore, these regions have undergone various national level shutdowns of industrial, residential, and commercial operations to contain the spread of this viral infection. According to the International Energy Agency (IEA), global energy demand is set to drop by 5% in 2020, energy-related CO2 emissions by 7%, and energy investment by 18%.
As the global pandemic outbreak has affected all the countries across the world, governments and organizations have introduced significant plans to cope with the ‘new normal’ in the post-COVID-19 world. For instance, on June 03, 2020, the Qatar government announced its partnership with Microsoft to implement modern workplace solutions such as Microsoft Teams to enhance productivity by empowering its workforce remotely. The move will foster communication and collaboration amongst government entities to ensure uninterrupted delivery of services to businesses and citizens.
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Increasing Investments in Asia Pacific for Power Generation to Favor Growth
China, India, and South Korea have emerged as major investment hubs of power plant companies across the Asia Pacific region. Continuous focus towards manufacturing, tourism, and the setting up of key offices by various MNCs has led to a significant increase in construction and commercial sectors in the Asia Pacific region. Among these, China accounts for 28% of the world’s electricity generation and its electricity demand is continuously growing. Also, in March 2021, the Government of India allowed 100% Foreign Direct Investment (FDI) in the mining sector and the exploration of metal and non-metal ores under the automatic route, which will propel growth in the sector. This factor is likely to drive the demand for power rental services and equipment during the forecast period.
Rising Need for Electrification and Continuous Power Supply Worldwide to Boost Market Growth
Increasing faults in transmission & distribution lines, failure in power generation equipment, abrupt grid problems, natural calamities, and several other factors are frequently affecting the power supply across the globe. Various public and private authorities are readily adopting measures to reduce the duration of power cuts to enable customers to continue with their operations.gen
Unexpected power outages have significantly increased consumers’ demand for reliable backup power sources in industrial and commercial sectors, propelling the adoption of power rental equipment. For instance, on October 12, 2020, Mumbai, India’s financial capital, faced a power blackout due to multiple trippings of lines supplying power to Mumbai and nearby areas.
High Demand for Continuous Power Supply from the Mining Sector to Drive Market Growth
Rental generator sets are mostly used for supplying power in areas with very low grid connectivity. Mining activities are among the key consumers of the energy from generators as most of the mining activities are carried out in areas located on the outskirts of cities or towns where the power supply through the grid is not available. Mining activities are not long-lasting and are for a temporary period and so, the players involved in the mining industry prefer rental power to meet their daily energy demand. Mining activities generally require higher power rating generator sets to conduct heavy digging operations. Therefore, the market potential for generator sets of ratings above 750 KVA is high in the mining industry. The factors mentioned above are anticipated to accelerate the demand for power generation rental solutions.
Stringent Environmental Regulations Pertaining to Emission Reduction and Noise Control Likely to Hamper Market Growth
The regions of North America, Europe, and Asia Pacific have all enacted stringent legislation to restrict carbon emissions from power generation. To minimize noise pollution caused by diesel generator operations, such regulations often define the allowable diesel generator noise levels. Several environmental bodies, including the European Union’s (EU) European Environment Agency and the United States’s Environmental Protection Agency (EPA), have placed strict regulations on diesel power generators.
Another critical factor impeding the adoption of diesel generators is Energy Service Providers' conversion to greener alternatives (ESCOs). As compared to other types of generators, diesel generators generate higher decibels of noise. As a result, several government agencies have established noise-control laws and regulations.
Above 750 kVA Segment Accounted for the Largest Market Share
Based on power rating, the market is segmented into below 75 kVA, 75-375 kVA, 375-750 kVA, and above 750 kVA. Among these, the above 750 kVA segment dominated the power rental market share in 2020. It is expected to retain its lead over the forecast period, owing to the critical need for emergency power in heavy-duty applications.
The demand for 75-375 kVA generators is also rising across the globe as a result of the growing setup of small industrial facilities and increasing construction activities, which are expected to propel the segment outlook.
Several factors such as improved fuel efficiency optimization, easy maintenance, low operational expense, reliable functions, and others, will allow the below 75 kVA segment to see promising development.
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Diesel Segment to Grow at a High Pace
Based on fuel type, the market is classified into diesel, gas, and others. The diesel generators segment is anticipated to lead the market during the forecast period. Diesel generators are widely preferred by key players involved in the mining, oil and gas, and manufacturing sectors. The surplus availability and economical pricing of the diesel fuel are among the key factors for the high demand for diesel generator sets for meeting temporary power demand. Additionally, regions such as Latin America, Asia Pacific, and the Middle East and Africa have a weak infrastructure for gas and liquefied petroleum gas pipelines, which add to the growth in the demand for diesel generators in these regions. However, regions such as Europe and North America are focused on reducing carbon emissions and are thus strengthening regulations related to the use of diesel. This is expected to retard the global diesel generator rental market growth marginally over the forecast period.
Gas generators, on the other hand, have environment-friendly characteristics and are used mostly in Europe and North America where there is good infrastructure for gas pipelines. The market potential of gas generators is expected to grow marginally over the forecast period owing to the increasingly strict regulations and environmental policies in different regions.
Continuous Load Segment to Hold Highest Position
Based on application, the market can be majorly divided into the continuous load, peak load, and standby load.
The continuous load segment is projected to account for the highest share in the market owing to growing developments across regions that are inaccessible to the grid and are demanding constant power for an unlimited number of hours. Continuous load generators are used as a primary power source, not only as a backup or standby power source.
Peak shaving load is another important market segment, as the demand for components for load operations is growing. Due to rapidly changing infrastructures in various verticals, especially to boost tourism activities, which require 24/7 power accessibility, the standby load segment is expected to develop at a rapid rate.
Mining Segment to Hold the Highest Position
Based on end-user, the market is segregated into mining, construction, utility, event, manufacturing, oil & gas, and others.
The mining segment is one of the major segments of the market. The mining sector is rapidly growing across the globe, owing to the increasing production and export of different minerals & metals to serve the production of different goods.
The construction industry is gaining traction across developing countries such as China, India, Saudi Arabia, and Kuwait, among others, owing to a large number of upcoming infrastructure development projects. The players involved in the construction industry generally prefer rental power to minimize the transportation and installation costs of generators. Construction activities include the construction of commercial spaces, residential buildings, flyovers, and roads, among others. Different countries are focused on developing infrastructure to provide more facilities to the local people. The growth in infrastructure development is expected to boost the growth of the construction industry, which in turn is anticipated to provide lucrative opportunities for the growth of the market in the coming years.
Power rental solutions have high demand in the oil and gas industry for upstream, midstream, and downstream operations. The key market players in the oil and natural gas industry are focused on the exploration of new oil wells in order to increase production capacities. Generally, the extraction of oil from the wells is dependent on crude oil prices in the market. Owing to this, oil wells can remain sealed for a specific time. Oil producers thus prefer rental power to run the upstream operations owing to the irregular operational structure of wells, which is dependent on fluctuating crude oil prices. The oil and gas producers also prefer rental power for midstream activities, which do not have any power supply from the grid.
Asia Pacific Power Rental Market Size, 2020 (USD Billion)
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The market has been analyzed across five key regions comprising North America, Asia Pacific, the Middle East & Africa, Europe, and Latin America. Asia Pacific was estimated to hold the largest market share worth USD 2.20 billion in 2020. Currently, in Asia Pacific, China holds a significant market share by value in the global market. China is among the key countries for mining activities. China was also reported to hold more than a 20% share in the global mining industry in the year 2018. The manufacturing sector in China is also growing at an appreciable rate mainly driven by abundant raw material availability and economic labor costs. Owing to these factors, the demand for rental power is anticipated to remain high and the market in China is expected to hold a lion’s share in the global market.
The Middle East & Africa is among the fastest-developing regions for rental power solutions. Construction activities and the oil & natural gas industry are growing at steady rates in the region. In 2018, the region accounted for a significant global market share mainly driven by the demand from mining, construction, and oil & gas industries. The lack of availability of proper grid structure, increasing mining activities in Africa, and the high demand for rental power from off-grid oil and gas wells are among the key drivers for the growth of the market in the region.
Latin America is a high-potential region that is likely to expand at a higher CAGR as compared to other regions. The Latin America region is among the key producers of lithium and graphite, driven by mining activities in Brazil, Argentina, and Chile. The grid infrastructure in Latin America has not reached remote places such as the Caribbean Islands, where power rental is still the major source of power. Owing to such conditions, the market is expected to gain traction in the Latin America region.
Aggreko to Expand Its Product Line and Utilize Its Channels to Market New Products
The market is influenced by major participants across the globe. Major players such as Aggreko, Caterpillar, Cummins, Inc., Atlas Copco, and Kohler Power constitute around one-fourth of the market and the remaining market is dominated by a large number of regional and local players. Aggreko is established as one of the leading players and operates under different verticals in the power rental industry. The company offers a wide range of generator sets with different power ratings and has a global footprint with around 10,000 MW of power on hire in the year 2020. In December 2018, for instance, Aggreko was awarded a contract for providing rental power services to the 2020 Tokyo Paralympic and Olympic games. The contract is estimated to be worth around US$ 200 Million.
An Infographic Representation of Power Rental Market
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The global power rental market research report presents a comprehensive assessment of the industry by offering valuable insights, facts, industry-related information, and historical data. Several methodologies and approaches have been adopted to make meaningful assumptions and views to formulate the report. Furthermore, the report covers a detailed analysis and information as per market segments including power ratings, fuel types, applications, end-users, and regions, helping our readers to get a comprehensive overview of the global industry.
Value (USD Billion)
By Power Rating; By Fuel Type; By Application; By End-user; and By Region
By Power Rating
By Fuel Type
Fortune Business Insights says that the global power rental market size was USD 8.85 billion in 2020 and is projected to reach USD 16.70 billion by 2028.
In 2020, the Asia Pacific power rental market value stood at USD 2.20 billion.
Registering a CAGR of 7.9%, the power rental market will exhibit moderate growth during the forecast period (2021-2028).
The diesel generator segment is anticipated to hold a significant market share during the forecast period.
The rising focus on the exploration of new mining projects is the major factor driving market growth.
Aggreko, Caterpillar, Cummins, Inc., Atlas Copco, and Kohler, among others, are the key players operating across the market.
Asia Pacific dominated the market in terms of share in 2020.