Power Rental Market | Contrive Datum Insights

Market Overview:

Executive Summary

The global power rental market size was projected to be US$ 9.8 billion in 2023. By the end of 2024, the industry is likely to reach a valuation of US$ 10.3 billion. During the forecast period, the global market for Power Rental Market is expected to garner a 5.6 % CAGR and reach a size US$ 16.15 billion by 2034.

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The global power rental market is anticipated to experience growth driven by the rapid expansion of the industrial sector and the increasing demand for continuous and reliable power supply. The power rental market provides operational power equipment and scalable components for installation in power stations. Moreover, it provides businesses with dependable, adaptable, and efficient solutions for managing temporary power outages. The power rental services focus on stabilizing utility power grids and supplying additional energy to industries and supporting communities. Therefore, it is widely used in the construction, mining, and oil & gas sectors.

Anticipated growth in the global power leasing market is expected to be fueled by the rapid expansion of the industrial sector and the increasing demand for a reliable power supply. Temporary rental of power plants or generators for providing energy to industrial facilities is known as power rental. It offers current power equipment in power plants along with a range of adaptable components. Moreover, it provides companies with the reliability, flexibility, quick response, and cost efficiency required to manage temporary power interruptions. The power rental services aim to support the utility power networks by providing extra energy to businesses and local communities. Due to this, it has a broad spectrum of uses in the building, mining, and oil & gas sectors.

The market growth is being driven by the increased demand for uninterrupted power supply and the rapid industrialization worldwide. Moreover, the rise in occurrences of inconsistent power supply from small-scale power grids and restricted entry to the primary transmission network has driven the need for rental generators in the utility and manufacturing sectors. Moreover, the increasing demand for scalable rental equipment capable of addressing issues related to voltage fluctuations and power interruptions significantly drives market growth on a global scale.

Furthermore, the increasing awareness of the advantages of outsourcing power rental systems is having a positive effect on market expansion. This can be attributed to the fact that power rental systems allow consumers to access equipment based on their needs in a cost-efficient way. Furthermore, the favorable government initiatives to expand metro and airport networks, along with the increase in construction of hotels and shopping malls, are driving the demand for power rental in both developed and emerging nations. The global market growth is expected to be driven by the increasing adoption of natural gas-based power generators and the growing deployment of renewables as an alternative power source to reduce carbon emissions.

On the flip side, the power rental market growth is likely to be hindered by the strict regulations on emission reduction for fossil fuel-powered equipment. Contrary to this, the emergence of digital technology solutions for operational improvement is anticipated to offer lucrative growth prospects for the power rental market expansion in the coming years.

Definition

The power rental market involves offering temporary or rental power solutions to fulfill the energy requirements of different sectors. Basically, it entails renting out power generation equipment like generators to businesses, events, industries, or regions dealing with temporary power shortages or needing extra power capacity. This market has become increasingly important because of the ever-changing energy demands and the occasional requirement for additional power during scheduled or unscheduled shutdowns.

Companies and sectors frequently rely on power rental services to guarantee a consistent and dependable power source, particularly when the current infrastructure is inadequate or being serviced. Power rental market covers a variety of uses such as construction sites, events, emergencies, remote locations, and industries with changing power needs. Power rental providers are essential for maintaining the operational continuity of businesses and events by providing a flexible and scalable solution.

Businesses are increasingly realizing the benefits of temporary power solutions over permanent installations, including cost-effectiveness, flexibility, and the ability to adapt to changing energy needs, leading to significant market growth. This dynamic and evolving sector involves a variety of players, including rental companies, equipment manufacturers, and service providers, all contributing to the overall resilience and efficiency of power infrastructure across diverse sectors and applications.

Market Dynamics:

Trend

Strategic Pathways to Anticipated Growth in the Power Rental Market

Expected market expansion can be attained by boosting investment in R&D and fostering technology partnerships among key market players. Professionals in the industry are focusing on mergers, partnerships, expansions, and acquisitions to maintain their market position. Leading companies in the global power rental market are encouraging people to use their products to meet the needs of a large population and achieve their goal of improving energy accessibility.

Rivals in this industry are broadening their transmission and distribution networks to meet this objective. Expect a rise in R&D investment in the near future, as companies focus on restructuring and striving for success in this field. Anticipating that the implementation of efficient development strategies and environmentally friendly technologies will open up opportunities for many market players.

Drivers

Surging demand for uninterrupted & reliable power supply

As per the International Energy Outlook 2021 from the Energy Information Administration (EIA), there is an anticipated annual average increase of 1.4% in global electricity demand until 2040. Anticipated growth is projected to mainly take place in non-OECD countries like China and India. Nevertheless, the short-term electricity demand in 2020 dropped by 5% due to the impact of COVID-19 and the resulting economic decline.

Between 2010 and 2018, there was a significant increase in global electricity production capacity, but the expansion of the T&D network did not match this growth, leading to reliability problems like power outages and surges. Less developed areas experience frequent blackouts and power interruptions, while more advanced regions deal with brownouts and voltage fluctuations.

 Extreme weather events like hurricanes, wildfires, ice storms, flooding, and heat waves are increasing in frequency and severity due to climate change. Inclement weather is causing power disruptions in China, India, Japan, the US, and Australia. As per the EIA data, electricity consumers in the United States faced more than 8 hours of power outages in 2020. During February 2021, a severe winter storm led to a significant electricity generation breakdown in Texas, leaving over 4.5 million customers without power. These power outages are driving the need for power backup solutions and reliable power supply to meet emergency requirements.

Restraints

Stringent government regulations associated with generators

Diesel generators are commonly utilized for various applications, especially in power ratings above 50 kW. When diesel is burned, it releases nitrogen oxides, carbon monoxide, and particulate matter. These emissions are released directly into the atmosphere, causing harm to the environment and those living in it. Various regulations have been introduced globally to minimize air and noise pollution caused by generator sets. Each country has developed its own regulations and policies to address the increasing environmental concerns related to air pollution. As an example, the UAE committed to reducing emissions and boosting the proportion of renewable energy in the energy mix to 24% by 2021, a significant increase from 0.2% in 2014. In 2005, Canada committed to a 30% decrease in greenhouse gas emissions by 2030. Environmental rules, regulations, and incentives differ from one country to another depending on the level of emissions from harmful gases like SOx, NOx, and CO2. Global regulations have been implemented to reduce emissions and meet environmental standards for diesel fuel.

In 2014, the US Environmental Protection Agency required that non-road diesel engines adhere to the ultra-low sulfur diesel (ULSD) standard. One of the key challenges for generator manufacturers is to lower emission levels without compromising performance. In 2016, Caterpillar introduced C175-16 IMO Tier-II and IMO Tier-III emissions certified gensets with diesel engines for the offshore industry to comply with emission regulations. Between 2017 and 2021, numerous manufacturers introduced new products that meet these strict standards. There are new regulations for genset manufacturers concerning approval processes and noise pollution. The primary objective of the new standards is to regulate air and noise pollution caused by DG sets. In order to reduce or minimize the noise generated by the components of diesel generators, manufacturers should offer an acoustic enclosure. This poses a significant challenge for the emerging and local companies in this market.

Opportunities

Integration of power rental equipment with renewable energy

Nations globally are working to reduce their carbon emissions, with numerous companies offering renewable and hybrid power rental solutions to support this goal. For example, Aggreko introduced a product named Y-Cube capable of storing up to 1 MW of equivalent electrical power. Similarly, Atlas Copco provides hybrid energy generation systems that can produce electricity using solar and diesel power, while also storing the energy for efficient resource utilization. Europe-based Bredenoord offers power rental solutions like the Mobile Solar Power Plant, Big Battery Box, and Mini-Sun Box. These solutions utilize solar energy and store it in batteries for future use.

Challenges

Environmental Impact and the Shift Towards Sustainable Practices in Power Rental

The power rental market has been experiencing significant growth and is essential for addressing temporary energy needs, despite facing some obstacles. One major issue concerns the environmental consequences of conventional power generation techniques. Many power rental solutions depend on diesel generators, which may lead to air pollution and greenhouse gas emissions. With the growing global focus on environmental sustainability, industries are facing mounting pressure to shift towards cleaner and more eco-friendly options. Tackling this issue requires making investments in and embracing more environmentally friendly technologies like hybrid or renewable energy solutions to reduce the environmental impact of power rental operations.

One of the key challenges for the power rental market is the uncertainty surrounding regulations and the changing compliance standards. The sector functions within a multifaceted regulatory environment, encompassing diverse emission standards, noise regulations, and permitting prerequisites in different geographical areas. Keeping up with and following these regulations can pose a significant challenge for power rental companies, necessitating ongoing monitoring and adjustment to maintain compliance. To successfully navigate the regulatory landscape, it is crucial to take a proactive stance, work closely with regulatory authorities, and invest in technologies that meet changing environmental and safety regulations.

Impact of COVID-19

Because of the swift transmission of COVID-19, numerous economic and industrial operations have been paused. Revenue in the power rental market experienced a decline in 2020 and 2021 due to global lockdowns, travel restrictions, remote work policies, and the postponement of large-scale events.

According to the International Energy Agency (IEA), in 2020, there was a 5% decrease in the world's energy demand, a 7% decrease in energy-related CO2 emissions, and an 18% decrease in energy investment. Nevertheless, the sector is expected to show robust performance in the coming years due to the lifting of lockdowns, the gradual increase in manufacturing activities, and the growth of other energy-intensive industries.

Segmentation Analysis:

Segmentations

By Power Rating

The power rental market is divided according to power ratings to meet various energy requirements in different industries and applications. In the category for power capacities below 75 kVA, we come across applications that necessitate lower power outputs, like small events, residential backup power, and certain construction sites.

Ascending the power spectrum, the range of "75-375 kVA" offers a harmonious blend of power capacity and portability, making it ideal for various applications such as construction projects, manufacturing facilities, and medium-scale events. This category is designed for significant power needs, typically seen in large industrial facilities, data centers, and critical infrastructure. This range provides a boost in power output while still being versatile enough to meet the changing energy needs of intricate operations. At last, the segment catering to power needs above 750 kVA addresses the requirements of large-scale industrial processes, major events, and critical infrastructure projects.

• Below 75 kVA
• 75-375 kVA
• 375-750 kVA
• Above 750 Kva

By Application

The continuous load segment dominated the global power rental market in 2022, in terms of revenue and is estimated to sustain its dominance during the forecast period. Due to expanding advancements throughout the world that are inaccessible to the grid and require steady power for an endless number of hours, the continuous load segment is expected to account the largest proportion of the market. The continuous load generators are utilized not just as a backup power source, but also as a primary power source.

On the other hand, the peak load is estimated to be the most opportunistic segment during the forecast period. This is attributed to the constantly changing infrastructures in several verticals, particularly to promote tourism activities, which require 24/7 power access.

• Continuous Load
• Standby Load
• Peak Load

By Fuel Type

In 2022, the diesel segment contributed to 81% of the total revenue share based on the fuel type. Major players in the oil and gas, mining, and other manufacturing industries are all supportive of the segment's growth. The rise in demand for diesel generators for supplying temporary power needs is driven by the abundant availability and affordability of diesel fuel. The gas segment is expected to be the most promising segment in the upcoming period. With the strict regulations and environmental policies in place across different regions, the market for gas generators is expected to experience gradual growth in the coming years.

• Diesel
• Gas
• Others

By End-user

In 2020, the mining segment was the leading player in the global power rental market in revenue terms. The mining sector is rapidly growing globally due to the rise in production and export of different minerals and metals for the manufacturing of various products.

Conversely, the construction sector is projected to be the most promising segment in the upcoming period. Construction industry professionals often opt for rental power to reduce expenses on generator installation and transportation. Commercial spaces, residential buildings, and roadways are all typical examples of construction projects.

• Mining
• Construction
• Manufacturing
• Utility
• Events
• Oil & Gas
• Others

Regional Insights:

Geography Chapter

North America's Dominance in the Global Power Rental Market

In 2022, North America was at the forefront of the global power rental market and is projected to experience a 6.4% CAGR throughout the forecast period. The rise in electricity demand and obstacles in the power sector, like federal carbon policies and energy targets, are driving the growth of the global power rental market in this area. In the near future, the power rental market in the Asia Pacific region is anticipated to be driven by emerging economies like India and China. Moreover, sectors like construction, events, oil and gas, mining, manufacturing, and shipping have a significant need for rental electricity to ensure uninterrupted operations.

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It is projected that the North American region, which previously dominated the global market for power rentals, will maintain its position throughout the projection period. The markets in North America, specifically the US and Canada, are experiencing rapid growth. According to projections by the International Monetary Fund, the North American GDP is expected to increase by around 5% in 2022. The IMF. Moreover, the swift expansion of commercial establishments such as hotels, malls, and retail stores has increased the need for reliable electricity and enhanced the utilization of power rentals.

Asia-Pacific Power Rental Market is a Surging Growth and Strategic Advantages

The Asia-Pacific power rental market reached USD 4.8 billion in 2021 and is projected to experience substantial growth with a significant CAGR during the research period. This is due to the increasing industrialization and infrastructure development, as well as the expansion in the construction and telecommunication sector across the region. Furthermore, the power rental market in China dominated the market share, while the market in India experienced the highest growth rate in the Asia-Pacific region

During the projected period, Asia-Pacific is expected to be the most favourable segment. Countries such as Thailand and Indonesia are making substantial progress in developing their economic infrastructure. The industry's growth will be significantly accelerated by the region's widespread adoption of Industrial Revolution 4.0 and increasing digitalization.

Company Landscape

The market is impacted by significant players worldwide. Key industry leaders like Aggreko, Caterpillar, Cummins, Inc., Atlas Copco, and Kohler Power make up approximately 25% of the market, with the rest being controlled by numerous regional and local competitors. Aggreko is recognized as a key player in the power rental industry, operating across various verticals. The company provides a variety of generator sets with various power ratings and has a worldwide presence with approximately 10,000 MW of power on hire in 2020. For example, in December 2018, Aggreko secured a contract to supply rental power services for the 2020 Tokyo Paralympic and Olympic games. The contract is valued at approximately US$ 200 Million. 

Recent Market Developments

• June 2021: Aggreko Plc depot in Moerddijk, Netherlands the first hydrogen power generation units for use in temporary power applications.
• March 2022: With the addition of Power Bank battery systems to its rental fleet, United Rentals stated that it will provide its customers with a zero-emission power option. Through its partnership with the company POWR2 Energy Solutions, United Rental offers clients in North America an investment in environmentally friendly workplace solutions. A small power storage system called POWERBANK works with diesel engines to reduce runtime, pollution, traffic, and fuel waste. High-density lithium-ion batteries inverters, and load-sensing electronics are used in the system. The United Rentals POWERBANK type has a storage capacity of 60 KW to 120 KW hours and a power output range of 40 KW to 60 KW

Company Profile

For almost a century, the company has been assisting clients in constructing a more sustainable world and is dedicated to promoting a low-carbon future. Our global dealer network supports our innovative products and services, delivering exceptional value to help customers achieve success.

In 2023, Caterpillar Inc. reported sales and revenues of $67.1 billion, solidifying its position as the top manufacturer of construction and mining equipment, off-highway diesel and natural gas engines, industrial gas turbines, and diesel-electric locomotives.

Caterpillar operates on every continent through three main segments: Construction Industries, Resource Industries, and Energy & Transportation. They also offer financing and related services through the Financial Products segment.

Conclusion:

The power rental market is crucial for addressing the ever-changing energy demands worldwide. With North America's dominance in 2022 and the promising growth projections for the Asia-Pacific region, the market showcases its adaptability to various industrial, commercial, and infrastructural demands. Segmenting based on power ratings, from less than 75 kVA to over 750 kVA, highlights the industry's dedication to offering customized solutions for different applications.

North America is projected to continue dominating the global power rental market due to rising electricity demand and power sector challenges. The market's reaction to federal carbon policies and the pursuit of energy targets demonstrates its influence on promoting sustainable energy practices. In 2021, the Asia-Pacific power rental market showed strong performance, especially in China and India, showcasing the significant impact of industrialization, infrastructure development, and growth in construction and telecommunication sectors on the region.

Some various commercial adaptations in the Power Rental Market:

• On January 14, 2024, United Rentals introduced Hipower solar power generators to their rental equipment fleet. These solar-powered generators provide microgrid battery power in a portable way.
• In October 2022, Amazon requested approval from Ireland's Environmental Protection Agency (EPA) to install 105 diesel generators at its new data centre in Dublin. The application was for an emissions license, as these generators are projected to collectively generate 674MW of power. Such licenses are necessary for industrial emissions when the power output is over 50MW.

In the future, the power rental market is set for further growth, with the Asia-Pacific region expected to play a crucial role in driving this expansion. Highlighting economic infrastructure development, along with the integration of Industry 4.0 and digitalization, establishes the region as a key centre for industry progress. Amidst the challenges of varying energy needs and the pursuit of sustainable options, the power rental market stands out as a crucial and adaptable player. It provides temporary power solutions that enhance the resilience and effectiveness of various industries. The market's path highlights its crucial function in maintaining continuous power supply, aiding essential operations, and managing the challenges of the contemporary energy environment.

Scope of the report:

By Power Rating

• Below 75 kVA
• 75-375 kVA
• 375-750 kVA
• Above 750 Kva

By Fuel Type

• Diesel
• Gas
• Others

By Application

• Continuous Load
• Standby Load
• Peak Load

By End-user

• Mining
• Construction
• Manufacturing
• Utility
• Events
• Oil & Gas
• Others

By key players

• Caterpillar Inc. (United States)
• Cummins Inc. (United States)
• Aggreko (United Kingdom)
• Atlas Copco (Sweden)
• Kohler-SDMO (France)
• Shenton Group (United Kingdom)
• NIDS GROUP (India)
• Jassim Transport & Stevedoring Co. K.S.C.C. (Kuwait)
• Pump Power Rental (United Kingdom)
• United Rentals (United States)
• Sudhir Power Ltd. (India)
• Modern Hiring Service (India)