The power rental market in Saudi Arabia is expected to grow at a CAGR (compound annual growth rate) of 12.6 per cent over the next six years mainly due to the construction sector boom and the rising electricity demand, said a report.

With plunging oil prices in the international market, the impact on economies of many countries can be witnessed globally. However, this has not affected Saudi Arabia much to restrict its investments in various construction projects, according to 6Wresearch.

Although, effect on growth in investments can be recorded for the next 2-3 years, but due to country’s rich cash reserves, infrastructure development is anticipated especially in areas such as public infrastructure, utilities, healthcare, and education, it stated.

The projected growth in the power rental market for 2015-21 will also be driven by the emerging manufacturing sector and also the government's need to provide power to off-grid areas.

In Saudi Arabia, generators are either used for prime or standby purposes, completely depending upon the grid connectivity.
 
"In Saudi Arabia, diesel generators have accounted for majority of share in the overall power rental market. Easy availability and inexpensive diesel have poised the growth of diesel generators on rent in the country; however, in the forecast period, penetration of hybrid and gas powered generators is exhibited," remarked Avishrant Mani, a senior research analyst at 6Wresearch.

"Government initiatives towards reducing carbon emissions are expected to boost the demand for these generators in the country," he pointed out.

“Additionally, in Saudi Arabia’s power rental market, utilities, oil & gas, construction and industrial applications are the major revenue generating segments and would remain key contributing segments through the forecast period,” stated Mani.

Ravi Bhandari, a research associate at 6Wresearch, said due to low crude oil prices, short to medium-term effect could be witnessed on power rental business in the country.

"This drop in oil prices may delay execution of government projects to maintain county’s cash reserves," he observed.

"In the forecast period, Saudi Arabia’s initiative to shift towards renewable resources to generate electricity can affect sourcing of diesel generators on rent, but growth would still be witnessed in oil & gas, construction sites and areas lacking transmission & distribution network," said Bhandari.

Some of the key companies in Saudi Arabia’s power rental market include Aggreko, Enerco, Hertz, Byrne Investments, Peax, Altaaqa, Cummins Olayan Energy, RSS and SES.-TradeArabia News Service