Generators have long played a vital part in the development of the construction industry. Companies have used them to provide electricity for anything from a 100 storey tower to an industrial yard for decades.
With that in mind, it’s easy to draw a parallel between the growth of the generator industry and the growth of infrastructure and construction activity throughout the GCC.
While Dubai and the UAE have led the way in this regard for a long time the slowdown in the Emirates means that all eyes are now turning towards Saudi Arabia and Qatar.
These two Gulf countries are expected to be the next focus markets for growth in the regional generator industry.
One sector of that industry certain to benefit are the rental power companies who lease out generators to construction sites and utility companies in the region.
According to Shrikant Pataskar, general manager of the Dubai office of Kirloskar, an Indian generator manufacturer, the increased demand from Saudi Arabia and Qatar is likely to see the market grow by at least 20% over the coming year.
“We also expect the re-export market to pick up from Dubai, as users in the neighbouring region would prefer to purchase as per requirement, rather than carrying a large inventory,” he adds.
Furthermore, with the recent political uncertainty in the Middle East and North Africa, coupled with the European debt crisis, the rental market is expected to flourish as companies grow reluctant to invest in bigger units and would prefer to rent them out.
“Because of the worldwide credit crunch, the lead time on generators is now, certainly on the larger ones, anywhere from 14 to 18 weeks. As a consequence, a lot of contractors will require them.
Even though there is a sort of purchase mentality because of their longevity, there will be a four or five month high while these guys are waiting for equipment to come in,” says Jeff Hollingsworth, CEO of Prime Power, a Qatari rental power company, who also expects demand to pick up very quickly.
“On top of that, we expect a lot more European companies to come in to Qatar because of the scale of the projects, and they’ll tend to have a rental mentality because they’re not too sure of the market here and they prefer to have somebody else do the service, so that they only have to worry about turning the lights and computers on, and so on.”
“We expect that as we move further along, the client base mentality will be opposed to purchasing. This tends to be the norm in the Arab world, and we’ll benefit from that, to be honest,” Hollingsworth says, highlighting an uncomfortable truth.
However, while this demand is all well and good, concerns have been voiced over the environmental efficiency and sustainability of these generators.
Given the predominant usage of diesel powered generators on high energy consumption projects, it is understandable that fears have been raised as to their environmental impact.
As a result, manufacturers and suppliers have made a concerted effort to ensure that their products stay eco-friendly and ensure the minimal wastage of energy.
“Alternative sources of power are still not feasible at construction sites because of economic, as well as logistical, reasons. However, we expect the trend to change in the future as the technology advances,” says Pataskar.
“Therefore, it is encouraging to see that the UAE is focusing on alternative sources of energy, especially solar power. Kirloskar Middle East is well prepared to participate in Solar Photovoltaic and Concentrated Solar Power projects in the UAE. We have the technology available with us, and are in the process of making local tie ups for project execution,” he adds.
This is something that Jeff Hollingsworth’s company is already involved in, and he says that the Qatari company has already working in conjunction with its suppliers to test out new, more energy efficient and alternatively powered generators.
“This is something that the Qatar Foundation (a client) has highlighted. But at Prime Power, almost all our engines, except for two that are Tier 3, are Tier 4, which means, in terms of emissions and sound they are at the top. Tier 4 doesn’t come out in Europe until 2014, so we’re already one step ahead of them,” he says.
“One thing that we’re also doing is in our new yard, which is currently under construction. We’re using gas generators and solar to power the whole development and reduce our carbon footprint.”
“It’s definitely something that’s near the top of our own agenda on emissions and hence why we’ve agreed to be a guinea pig of sorts with our suppliers, for their new engines. Fortunately, that’s given us a much higher standard than most on the emissions side,” Hollingsworth explains.
Part of this search for alternatively powered generators has lead companies to investigate the merits of hybrid generators. Dubai based Rental Services and Solutions is one such company that is seriously investigating the technology.
“In 2011, we finished the design for hybrid generators,” says Robert Bagatsing, general marketing manager, RSS.
“This is a combination of solar photovoltaic panels, wind, battery and an engine. It can be deployed in several remote areas, especially in the telecommunications sector, where you have several towers and they are approximately five to ten kilometres away and located in remote areas,” he adds.
Furthermore, he says that RSS would look at launching their own design of the technology by 2013 or 2014, with models already being designed and tested over the course of the current year.
“On top of that, all our existing generators, they all have Cummins engines, one of the most cost effective and cost efficient diesel fuel engines running in the market right now. So we’re working closely, hand in hand, with our vendors and suppliers , giving the design a chance to accomplish (its aims), in order for us to have a much better and more efficient generator, in terms of fuel,” he says.
This approach to energy efficiency and conservation has not gone un-noticed, and clients have indicated that Prime Power and RSS’s ideals have played a part in their decision to hire them for some of the most iconic projects in the Middle East, including the Burj Khalifa, Meydan Racecourse and New Doha International Airport.
“These are all winnings based on the cost efficiency of the generators,” Bagatsing says, “We won all these iconic projects based on (our generators) consumption of fuel.” He adds that RSS intends to target the Abu Dhabi market now, using the same strategy.
“Clients are aware, and they are being educated (about energy efficiency) at the moment, but it’s not set in stone just yet,” says Jeff Hollingsworth, “But we know it’s coming and we’ve bought our equipment accordingly, on that basis,” he adds.
In order for the energy efficient generators to succeed, Bagatsing says that there needs to be greater coordination between the government sector, the private sector and the non-governmental organisations to ensure that there is a cohesive forward movement when it comes to implementing energy efficiency on generators and other power projects.
“We’re talking about legislation in the government and private-public partnerships between the public and private sector. We need substantial agreements between all parties, we need support from non-governmental organisations, those who are willing to provide the knowledge and pave the way forwards, so that people can put their acts together.”
However, all three admit this lack of coordination benefits the rental industry in the long term as the longer it takes and the more difficult it becomes for a construction company to purchase a high capacity generator, the more likely it is to rent a generator from them.
“People do know that if they call us, they can give us a full list of equipment that is required and if we can’t resource the equipment then we know where else to get it in the Middle East, or even further afield, in Europe,” says Hollingsworth.
“This is the reality. Whenever they (construction companies) cannot move forwards, it is an opportunity for the rental business companies. Because there are billions of dollars at stake, it requires a lot of assessment. There are governments involved, private companies, banks, lending institutions, they’re all involved,” Bagatsing says.
“So we take this opportunity, not only on the revenue side, but also to provide electricity to a community or a country, we bridge the gap between the end user and the power generation provider. We act as an extension, to solve their problems,” he asserts, convinced of the positive impact rental power companys will have on the region.