BY BAMIDELE FAMOOFO
A new analysis by Verify Markets shows the African Power Rental Market is expected to grow at a compound annual growth rate of over 8.0 percent from 2021 to 2028. Total market value in 2021 was $1.06billion.
Nigeria, largest economy in the continent, is expected to take the lead with a projected growth rate of 10 percent, driven by lack of electricity infrastructure and increasing demand from a rapidly expanding industrial segment.
The growth will primarily be driven by low electrification, high population growth, and increasing investments in infrastructure projects in the construction, mining, and tourism industries in Egypt, South Africa, and Nigeria.
Higher commodity prices are also fueling investment in the mining and oil & gas sectors, driving the demand for power rental in the region.
The six countries analyzed in the report are Algeria, Angola, Egypt, Ghana, Nigeria, and South Africa.
The South African market was the largest in terms of revenue in 2021, representing around 30.0 percent of the African market.
South Africa has suffered from incessant power cuts, with power utility Eskom unable to provide the electricity its growing population requires. Accordingly, power rental companies have an opportunity to provide grid stability through rental solutions.
“International power rental companies are concentrating their efforts in compelling local end users about the benefits of renting versus buying generators. International market players have stated that national companies, especially in the oil and gas sectors, are more prone to either buy generators or to rent from local rental companies,” stated Georgina Carraway, Research Manager with Verify Markets.
Despite the market potential, power rental companies are under threat from cleaner, more environmentally friendly technologies. Increasing renewable energy capacity is projected to affect the power rental market negatively as more rural communities and remote areas are expected to replace their energy consumption from diesel generators for new centralized generation renewable energy facilities.
Nevertheless, this is not expected to hinder growth in the short- to medium-term. The relatively low cost of generators, in addition to its greater power generation capacity, will ensure that this remains the first choice for most end users.
The continuous and prime power segments account for the biggest portion of the market, owing to increasing load shedding, the unreliability of the power grid, and the lack of electricity infrastructure. Sectors like mining, oil & gas, and construction require a continuous supply of power since they are far from the electric grid. Prime power rental is demanded by facilities that require a primary power source apart from the utility grid; such as oil & gas, military, agricultural, and water and wastewater treatment facilities, among others.
