Generation gap

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Boom time for the generator sector as the Middle East region continues to outgrow its existing electricity distribution networks.

The Middle East is often described as one large construction site. Huge swathes of once inhospitable desert are being transformed into luxury residential developments, but as cities expand and new settlements spring up, electricity distribution networks are increasingly unable to stretch to reach these new customer bases. This has opened the way for generator suppliers to step in and plug the gap.

"A generator produces electricity where it is not available from the grid," says Fernando Calle, managing director of generator manufacturer Himoinsa Middle East. "At the moment in the Middle East the main demand is for temporary generators for construction sites rather than for standby generators."

Colin Cavé, general manager for RSS, which provides temporary power and cooling solutions, agrees: "We see the initial power requirement at the construction stage, but also backed onto that there is a requirement post-construction to run these new developments, hotels, warehouses and factories before the mains connection is made. With the explosion in development the local utilities are struggling to keep up with demand and, even if power is available at the power station, often the distribution link is still being built."

Consequently, business in the generator sector is booming, as Julian Ford, marketing and business director for rental firm Aggreko International explains: "In the past 2-3 years, we have seen annual demand growth of around 50% and if we had more equipment we could rent it.

It is across the Middle East, not exclusive to Dubai: in Abu Dhabi there is the Yas Island development, there are the northern emirates and Qatar is a real hive of activity with the Dolphin gas project and in Saudi with pumping oil and refining chemicals, there is a lot of shipping work too."

The length of hire ranges considerably, from a couple of weeks to several years. "A lot of the requirements start as a 1-3 month hire," says Cavé.

"But often customers or companies are reliant on the utilities coming in and connecting them and that can be an unknown time period," he adds.

Rental vs purchase

So at what point does it become more cost-effective to purchase a generator outright?

"The issue is it is going to cost x amount to buy a generator and so much to rent it, so in just a few weeks or months it seems worth buying it," comments Ford.

"But what people overlook is that when you rent a generator you also get all the spare parts, the fuel tanks, cables, fuel lines and transformers.

"We rent the complete system and people overlook the fact that just buying the generator doesn't get anything for you, you then have to look after it, to maintain it, you have to operate it and put the cables in and do the distribution systems. We tend to say anything over about three years and then you should look at a permanent solution."

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