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Analysis of the Large-scale Power Rental Market in Sub-Saharan Africa

  • August 2014
  • 73 pages
  • Frost & Sullivan
Report ID: 2314490

Summary

Table of Contents

A Promising Economic Outlook is Set to Fuel Projects in Nigeria and Kenya

Sub-Saharan Africa offers many opportunities for the large-scale power rental market (greater than 1 MW). Power infrastructure in the region is ageing, but is also largely underdeveloped due to decades of underinvestment. This is reflected in a low electrification rate, which is only around 31.8% for the entire region. Research was carried out by leveraging Frost & Sullivan's in-house market knowledge and expertise, reviewing publicly available secondary data sources, and conducting interviews with key market players. The research service examines the overall market, with a focus on Kenya and Nigeria. The base year is 2013; the forecast period is from 2014 to 2019.

Key Findings
-Sub-Saharan Africa as a whole offers many opportunities for the large-scale power rental market (greater than MW).
-Power infrastructure in the region is ageing, but is also largely underdeveloped due to decades of underinvestment. This is reflected in a low electrification rate, which is only around% for the entire region.
-Sub-Saharan Africa has a total installed power generation capacity estimated at 68,000 MW, with South Africa accounting for approximately MW. The balance is divided among countries.
-Several countries in the region depend on hydro power; output varies widely, creating large power supply deficits during droughts. Consequently, the region still suffers from recurrent power outages, which is a strong impediment to economic growth and development.
-Large infrastructure programmes are being developed in the region to sustain socioeconomic growth, particularly in the power industry. However, implementation takes time and many power projects are facing delays.
-This has created many opportunities for rental power service providers that can offer fast-tracked turnkey power solutions.
-In 2013, large-scale power rental market revenue for the entire African continent was estimated at $ million, with an installed capacity base of MW. The installed capacity base is forecasted to grow to MW by 2019, rising concurrently with the continent’s gross domestic product (GDP). Revenue is expected to increase to $ million by 2019.
-Frost & Sullivan’s research shows that many companies in Sub-Saharan Africa operating in the mining, oil and gas, and construction industries still prefer to buy rather than rent standby power equipment.
-Nigeria offers large power rental market potential. Countries such as Kenya are actively implementing measures to decrease their reliance on emergency power due to high operating costs caused by spiralling gas and diesel costs.
-Power utilities have been by far the largest end user targeted by incumbent market participants. Typical contracts would be for to MW for a period of to months— often extended.
-For companies offering power rental services, a local presence is essential to seize opportunities by responding quickly to urgent situations. Competitive prices are necessary to increase market share.

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