Saudi Arabia power rental market to grow 12.6 per cent by 2021

genset sa USAIDIn Saudi Arabia, generators are either used for prime or standby purposes, completely depending upon the grid connectivity. (Image source: USAID/Flickr)Saudi Arabia power rental market is forecast to grow at a CAGR of 12.6 per cent during 2015-21 due to the growth in construction industry, emerging manufacturing sector, rising electricity demand and need to provide power to off-grid areas, according to 6Wresearch

Plunging oil prices in the international market have impacted economies of many countries. However, this has not affected the kingdom much to restrict its investments in various construction projects. Although, effect on growth in investments can be recorded for the next two-three years, but due to country’s rich cash reserves, infrastructure development is anticipated especially in areas such as public infrastructure, utilities, healthcare and education.

Avishrant Mani, senior research analyst, Research and Consulting at 6Wresearch, said, “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. The government initiatives towards reducing carbon emissions are expected to boost the demand for these generators in the country.

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

Ravi Bhandari, research associate, Research and Consulting at 6Wresearch added that 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 country’s cash reserves.

“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 and gas, construction sites and areas lacking transmission & distribution network,” Ravi added.

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