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Thu 17 Feb 2011 12:00 AM

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Power source

The temporary power market is adapting to new market challenges and increasing customer focus on energy efficiency and technology trends.

Power source
RSS has supplied iconic Dubai projects such as Meydan Racecourse and and Dubai Metro.

Electricity demand in the Middle East
is on an accelerating upward curve, peaking during the hot summer months when total
demand comes perilously close to outstripping generation capacity. “Summer is a
demanding time. As the temperature soars, so of course does the use of electricity.
 We regularly work with utility companies
in order to ensure that sufficient power is readily available and supplied consistently
throughout the season,” says Aggreko MD Phil Burns.

An example of Aggreko’s proactive approach to helping utilities
cope with the summer peak demand has been its project to supply the Saudi Electricity
Company (SEC) with 100MW of temporary power. Under the scope of the contract, Aggreko
supplied power to six sites in the Qassim region, north of the capital Riyadh, with 80MW being supplied
at 13.8kV and 20MW at 33kV to suit the requirements of the local substations. The
company has also supplied the Oman Power and Water Procurement Company (OPWP) with
117MW across five sites during the three months of the peak summer period.

Another benefit of this situation has been that supplementing
generation capacity due to outages as a result of the peak load, especially in the
northern emirates. For example, Rental Solutions & Services (RSS) has supplied
additional power to the Hail power plant in Saudi Arabia, staving off potential
power cuts. “There are power outages in the Gulf region every summer, particularly
in the UAE, Saudi Arabia, Oman, Qatar
and Kuwait.
Moreover, MENA in general is experiencing power outages all year round. This is
particularly true in Iraq, Yemen, Afghanistan,
Syria, Jordan, Egypt
and Algeria
due to the lack of power infrastructure,” says RSS GM: power projects Peter den

Of course, utilities are not the only sectors making use of temporary
power. “There are three major sectors that propel the rental power business in the
region: utilities, construction and oil and gas,” says den Boogert. The construction
sector has taken a beating during the economic downturn, even if strong declines
in some places were offset by government investment programmes in countries such
as Saudi Arabia.
“Before the recession, the construction industry was our second-largest sector in
the Middle East. Difficult economic times meant
we had to move away from this market, as many projects came to a standstill and
were cancelled,” says Burns.


Aggreko is not the only company that has felt the impact of the
global financial crisis. Cummins GM Wassim Abou Shaar concurs that the impact was,
indeed, marked, as construction accounted for a sizeable chunk of its overall revenue.
“Our sales went down by 30% year-on-year in 2009,” says Abou Shaar. “But now we
are catching up quickly.”

“The construction industry in the Middle
East is definitely seeing an upturn,” confirms Burns. “Of course, with
Qatar having staged a successful
bid for the 2022 FIFA World Cup, we anticipate a busy few years in Qatar as it begins
construction on the many stadia and hotels needed to host the event.”

“I hope that the evolution of gensets and engines over the last
decade continues on the same scale during the next 12 years leading up to the World
Cup, so we are able to offer achievable solutions to Qatar,” says den Boogert.”
Apart from the genset side, a couple like RSS is also able to offer its cooling
expertise. “We have the ideas, we have the assets and we have the experience to
assist with the air-con for these large types of outdoor events.”

The prevailing economic situation has not been entirely bad for
rental companies, points out Burns. “Rental power became a popular option for companies
in all industries during the downturn, as companies tried to prevent large capex.”
Another consequence of this trend has seen rental companies pushing ever further
afield, with Cummins for example focusing on US military installations in Iraq. Based in the
harsh desert climate of Iraq
and Afghanistan
without access to a reliable grid, US and coalition forces have a huge demand for
small-scale power plants and machine engines. “We cater for almost the entire Middle
East market from our headquarters in Dubai, so if
the market slows down a little in the UAE, for instance, we can pick up the slack
in Afghanistan and Iraq,” notes Abou

“The region is very important to us,” affirms den Boogert. “2011
will be focused mainly on moving further afield. We are keeping the door open for
countries like Afghanistan.
Iraq and Yemen, which are
in dire need of power infrastructure. We are also looking into Africa and South America.”

RSS is one of the newest rental companies in the sector, having
set up shop in the Dubai
in 2007. “The inspiration behind the company was people involved with the manufacture
of cooling equipment, who hit on the idea of chiller rentals. The idea behind this
was that, with chillers having to run off motors, gensets would have to be supplied
as well,” explains den Boogert. Thus RSS progressed from cooling to gensets and
then ultimately temporary power supply, with den Boogert newly-appointed to oversee
the growth and development of this fledgling division.

“An ancillary focus of power is, of course, water. We are able
to pack a reverse osmosis installation into a container for easy transport and install
it on-site for water provision.” An overarching focus is what den Boogert terms
‘consultancy services engineering’. “The good thing about such an expanded focus
is that if you have to maintain overall customer assets, then you can bring in your
assets as well for emergencies.

24/7 business

“Rental is a 24/7 business; it is fulfilling customer needs in
a very short period of time,” says den Boogert. Another key differentiator is that
the company retains the assets after the rental period is over. This might seem
like stating the obvious, but it is a major focal point that underlines every aspect
of the business. “Our sales managers get the assets back after the rental period,
whereas when a dealer closes a sale, the transaction, project and process is finished.
So we have a 24/7 model, which is appreciated by a lot of our customers, as we can
deliver services on a continual basis. This is not an exceptional undertaking for
us; it is an ordinary requirement. That aspect of the business is becoming ever
more interesting,” says den Boogert.

In terms of major cooling projects, RSS supplied all the temporary
air-con needs for the Dubai Metro Red line, and will be doing the same for the Green
line. “I prefer the term semi-permanent rather than temporary solutions. It is a
lot like Portacabins in that everybody requires them for a couple of months, and
then if you look back, they stay for years and years and essentially become part
of the infrastructure.”

This segues neatly into the topic of independent power plant
(IPP), as opposed to temporary solutions, which den Boogert explains is integrated
with a substation-like structure. “These power plants, consisting of generators,
fuel tanks, cables and a transformer are very sophisticated pieces of equipment
that can be considered as substations, as they have all the main features integrated
into them, including safety and security. We can guarantee the same parameters as
an installed substation. All we need for the transformers is a power grid somewhere
that we can connect directly into.”

These IPPs are transported directly to site in 20 to 40 foot
long containers. “That is the good part about them, as they can be installed in
a very short space of time,” says den Boogert. “What this is essentially is distributed
generation, bringing the power generation closer to the end customer, which is the
main problem today, particularly in the remote areas of the Middle
East. Even in other areas like Asia, Africa, South America and even
Europe, growth has been higher than expected, both
in population and power consumption, meaning that the infrastructure has not coped
with the demands being placed on it.”


A big culprit in the Middle East
has been the large-scale application of air-con to maintain Western-style comfort
levels. “Today the power peaks are in the summer due to air-con being freely available
to the masses. If you look at the proportion of air-con to infrastructure in a place
like Bangladesh,
it is clearly not sustainable,” argues den Boogert. “I believe that distributed
generation is the best solution to these types of problems, even here in Dubai,
where the high voltage corridors were standalone areas three to four years ago,
but have now been almost totally encroached upon by urban and industrial development.”
Distributed generation is the way to go, maintains den Boogert. “It comprises small,
relatively small power units that comply with the highest emission, sound and grid
safety requirements. Prior to joining RSS I had my own consultancy. What I have
seen in the last five years is a brutal increase in the demand for power.

Five years ago a 30MW to 40MW power plant was enormous; our temporary
IPPs are contracted in the range of 250MW. This is becoming more and more the issue.
There are countries, both in Asia and South America,
where the use of temporary power plants are increasing, but also the scale of power
demand is increasing dramatically.”

This has resulted in the rental sector adopting new business
models, with RSS leading the way in being proactive in terms of both customer requirements
and overall market trends. “You do not talk anymore about renting generators and
transformers; now you are talking about generating power for utilities. You get
into another ball game entirely.” Den Boogert, formerly of Europe, has been with
RSS in Dubai since

“We are installing and purchasing our assets with this new phenomenon
in the market in mind, this upscale, in order to give us the capability to sell
kWh rather than renting purely what we call ‘iron’ into the market. This also brings
another type of organisation with it than before. Our people pretty much become
operators of large power plants rather than technicians to maintain and install
generators.” A major outcome of this approach is a dramatic reduction in overall
costs for customers.

“It is becoming ever more critical not to overlook costs, not
only our internal costs, but also the cost to the customers. Fuel is becoming more
and more important in the total kWh price, and our assets have been purchased with
that in mind. For us, fuel is probably the number one parameter deciding which type
of equipment is bought and how it is configured,” argues den Boogert.

“If I look at some fleets from three to four years ago when I
first came to the region, and I see the huge fleets that are common now, there is
a huge leap forward in terms of technology. What customers demand is more flexibility
and better efficiency. What counts at the end of the day is what solutions you can
bring to a customer’s business,” concludes den Boogert.

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