Unlocking Potential: The Role of Power Rental Market in Meeting Rising Energy Demand

Unlocking Potential: The Role of Power Rental Market in Meeting Rising Energy Demand

The power rental market offers power generators and associated equipment for rental purposes to meet temporary or permanent power needs across various end-use industries such as construction, mining, oil & gas, events, and others. Power rental solutions provide reliable power supply, operational flexibility, low capital expenditure, and reduced environmental footprint. The growing construction activities and infrastructure development projects in emerging economies have increased the demand for power rental equipment.

The global power rental market is estimated to be valued at US$ 10.97 billion in 2024 and is expected to exhibit a CAGR of 5.8% over the forecast period 2024-2031, as highlighted in a new report published by Coherent Market Insights.

Market Opportunity:

Increasing construction and mining activities present a major market opportunity for the power rental market. Rapid urbanization and industrialization in developing regions are propelling various infrastructure development projects and commercial construction activities. For instance, large urban infrastructure projects such as highways, railways, ports, airports, and others require massive power backup, which is effectively provided through rental generators. Moreover, the mining industry utilizes a variety of heavy machinery and equipment that require reliable power supply on remote project sites. As construction and mining projects are often time-bound, rental power solutions provide cost-effective access to power without high upfront capital investment. This niche application area is expected to drive significant demand for power rental equipment over the forecast period.

Porter's Analysis

Threat of new entrants: Low capital requirements for equipment rental businesses have led to an increase in local and regional players. However, the market is dominated by few global players due to need for diverse fleet of equipment and widespread service locations.

Bargaining power of buyers: Buyers have high bargaining power given the availability of multiple vendors for rental equipment. This has led vendors to provide attractive pricing and rental options.

Bargaining power of suppliers: A few large global suppliers exist for diesel generators and other power rental equipment. However, the presence of several component and spare part manufacturers ensures competitive pricing pressure.

Threat of new substitutes: Adoption of renewable energy sources and energy storage systems pose a potential threat, though their scale has yet to match requirements of large industrial complexes and construction sites.

Competitive rivalry: Intense due to global players competing on the basis of pricing, product quality, fuel efficiency and service network coverage.

SWOT Analysis

Strengths: Established fleet of diesel generators and other equipment. Strong distribution network and brand recognition among industrial clients.

Weaknesses: Heavy reliance on diesel prices which fluctuate frequently. Need for large cash reserves to purchase new equipment to match demand fluctuations.

Opportunities: Rising infrastructure spending and investments in renewable energy projects across global markets. Acquisitions of local players to expand geographically.

Threats: Stricter emissions norms requiring investments in new fuel-efficient equipment. Changing industry trends with adoption of hybrid power solutions.

Key Takeaways

The global power rental market is expected to witness high growth driven by increasing investments in construction, manufacturing, and mining industries globally. The market size is projected to reach US$ 16.94 billion by 2031 registering a CAGR of 5.8% during the forecast period.

Regional analysis - North America accounts for the largest share in the global power rental market currently owing to ongoing projects in oil & gas and construction industries. Asia Pacific is identified as the fastest growing regional market with China, India, and Southeast Asian countries undertaking massive infrastructure developments.

Key players - Key players operating in the power rental market are Aggreko PLC, United Rentals, Inc., APR Energy, PLC, Caterpillar, Inc., Cummins, Inc., Hertz Equipment Rental Corporation, Generac Power Systems, and Rental Solutions & Services, LLC. These companies are focusing on expanding rental fleets and digital service capabilities to tap into broader revenue opportunities.