New Power Rental Opportunities Emerge with Increasing Popularity of Distributed Generation

To view original article click here.

The economic slump and cost reductions that are inhibiting capital expenditures on one hand are driving the power rentals industry on the other.

Although a non-core requirement, temporary power is essential and rentals offer companies the option of not investing in expensive back-up equipment.

New analysis from Frost & Sullivan (, North American Power Generation Rentals Markets, reveals that the industry generated revenues totaling $405.9 million in 2002. Total market revenues could reach $706.3 million in 2008.

“The fact that the North American market expanded exponentially during 1999-2001 means that the industry has served more customers than ever before,” says Frost & Sullivan Research Analyst K. Ravi. “Even though a lot of them might desist from renting generators in the short to medium term due to perceived needlessness, this is a potential end-user base that has experienced and understood the advantages of rentals in comparison with capital purchase.”

Increasing end-user awareness of rental benefits such as availability of extra capital for core activities, reduced equipment obsolescence, better inventory control, elimination of maintenance, warehousing and disposal costs, and greater cost control is driving demand in different segments.

Though market maturity and slow commercialization of new technologies are restraining factors, value added service offerings, quality service and quick response time can provide the key to customer retention.

“Pre- and post-rental services ranging from engineering assistance to maintenance support are emerging as a key distinguishing factor between competitors,” says Ravi. “Companies need to effectively communicate their business value proposition.”

Reliability concerns and waning capital investment are shifting end users toward the equipment rental concept. Demand is increasing from utility and industrial sectors besides the base market of construction and events.

“Broadening customer base and differentiating services now will enable vendors to gain market share,” adds Ravi.

Increasing homeland security initiatives and their need for back-up power are also creating opportunities. The rental market for non-diesel technologies is growing as emission restrictions increase.

Gas engines have demand in small and medium markets while gas turbines will aid top-end market growth.

“Economic recovery and greater consumer spending will prove the biggest shot in the arm for the rental industry,” says Ravi. “In the meantime, aggressive pricing, geographic expansion, extension of product and service offerings to low and premium market segments can ensure sturdy growth.”

North American Power Generation Rentals Market – Report: A307