The rising popularity of short-term power supply contracts means the start of robust sales growth in the genset rental market, according to Frost & Sullivan’s analysis* of the European sector.
Power rental solutions offer a cost-effective method of utilising power while avoiding capital outlay, equipment obsolescence, maintenance costs and manpower overheads. Growth has been evident across all sectors, but the construction, industrial and events sectors clearly emerge as the most lucrative applications, responsible for a combined share upwards of 65.5 per cent of the total market in 2000, worth over $360 million and expected to rise to around $550 million in 2007.
Growing corporate trends towards short-term return strategies and fears of an economic meltdown have augmented the appeal and viability of equipment rental.
Other key elements driving the engine of the power generation rental market’s steady growth include ramped-up investment across key end-user applications and a growing awareness of the benefits associated with power rentals.
Over the unit’s lifetime, up to ten times the initial investment can be recouped. Nonetheless, the market is becoming overcrowded, and as competition grows fiercer, price levels and profit margin will decrease. But these weaknesses are offset by the dominant positive drivers energising sales in the overall market.
Leading market participants will consolidate their positions on the back of intensified merger and acquisition activity over the next few years. The study concludes: ‘The market will consolidate significantly over the next few years and the main thrust of corporate victims will be those serving and limiting themselves to ‘low end’ sectors.’
*Analysis of the European Power Generation Rental Market. January 2002, price: ยค5000.
