United States Power Rental Market Overview
Power rental is referred to the services that deals with the renting of power source equipment. These include renting generators and air compressors to a facility as a backup source of power supply for a certain specific period. The United States power rental market is thriving on the back of the increasing demand for power supply across the major end-user industries, including oil & gas, mining, manufacturing, construction, and related industries, coupled with the limited access to the power supply in the rural areas and remote locations in the U.S. and growing power cuts on account of aging infrastructures.
Moreover, the lack of power grid supply to small towns and cities of U.S. or limited access to the local transmission network might prohibit the consumers from the continuous access to electricity for residential and commercial purposes, on account of which there is an increasing requirement for power rental services such as generators for access to the continuous power supply in case of emergencies. The U.S. utility companies utilize power rental generators in the peak hours called the peak shaving generators. The peak shaving generators are used by large industries to save extra expenses during peak hours. Such factors are anticipated to promote the growth of the United States (US) power rental market in the coming years.
The United States (US) power rental market is anticipated to achieve a CAGR of 5.98% during the forecast period, i.e. 2020-2025. The market registered a value of USD 8230.0 million in the year 2019 and is anticipated to reach a value of USD 9900.69 million in the year 2025. Additionally, the market is also anticipated to grow by 1.3x and gain an absolute $ opportunity of USD 2493.69 million during the forecast period.
Market Segmentation Synopsis
By End Use
The US power rental market has been segmented on the basis of end use into oil & gas, construction, telecom, manufacturing, mining industry and others. The construction segment registered the largest market share of 32.61% along with a value of USD 2684.12 million in the year 2019. The growing development in the construction industry has increased the daily activities which require a higher electric power supply to run the various equipment and machines used for the construction working locations. The construction locations are mostly in the remote areas where they cannot avail continuous grid power supply for different types of equipment. As a result, there is a significant increase in the demand for generators and air compressors in the construction industry in the nation.
Moreover, the demand for diesel and natural gas generators has witnessed significant improvement in the construction industry, majorly in the railway construction business, roadways construction, building constructions, and others. On the other hand, one of the significant applications of power rental in the construction industry is the requirement of adequate lighting services for running the work without any interruptions. Often, the working of the constructions at remote areas carries on during the late hours, on account of which there is an increasing necessity of lighting services with the help of backup power rental solutions. The construction segment in the US power rental market is further anticipated to grow by 1.4x and gain an absolute $ opportunity of USD 965.3 million during the forecast period. The segment is also anticipated to achieve the highest CAGR of 6.90% throughout the forecast period.
Market Drivers and Challenges
Growth Indicators
Rapidly Growing Energy & Uninterrupted Power Supply Needs
The need for uninterrupted and reliable power supply has increased significantly over the years, which has dramatically increased the demand for generators to provide power backup in industrial buildings, data centers, and during emergencies. The surging power demand from commercial and industrial sectors in the nation is one of the primary factors that is driving the growth of the United States power rental market. Additionally, factors such as the aging grid infrastructure, rapid development in the US infrastructure, and an increase in natural calamities in the country in the form of hurricanes that hampers power usage, are also anticipated to drive the market growth.
Growing Demand for Power Rental Services From End Use Industries
Increasing growth in the construction sector, including the development of hotels, malls, and complexes, coupled with the elevating costs of data center outages and downtimes are some of the factors anticipated to drive the US power rental market. Moreover, rising uptake of various construction projects at different locations, challenges faced while transporting power set from one location to another, increasing energy demand across upstream, midstream, and downstream operations in the oil and gas industry and others are additionally driving the market growth. In the United States, specifically in the oil and gas industry, the demand for power rental services has increased massively on the back of the growing offshore drilling activities. According to EIA, US crude oil production increased by 17% in 2018, setting a new record of nearly 11.0 million barrels per day (b/d). Moreover, in 2018, US natural gas production increased by 12% to 28.5 billion cubic feet per day on the back of continuous growth in liquefied natural gas export capacity. Major players prefer rental power solutions instead of buying a power generation system as rental offers flexibility to increase or decrease the rental period as per the amount of power generation capacity required. Such factors are anticipated to drive the US power rental market during the forecast period.
Barriers
Stringent Government Regulations for Lowering Carbon Emissions
Environmental agencies such as the U.S. Environmental Protection Agency (EPA) regulate the amount of carbon emitted into the atmosphere by generators. As a result, every manufacturer, importer, and assembler of generators must possess a Type Approval Certificate for each generator. Environmental agencies aim to reduce carbon emissions, forcing the power generation system manufacturers to set aggressive targets. With the growing ecological concern, the US has its own set of regulations to reduce air and noise pollution. To meet these emission standards, generators are required to run on Ultra-Low Sulfur Diesel (ULSD). The US environment regulation requires a 97% reduction in the sulfur content of the diesel fuel. These stringent norms by the government agencies are directly impacting the cost of investment for power rental companies. On the other hand, the increasing government regulations encourage the consumers to shift their trends towards renewable power generation, which is further anticipated to negatively impact the growth of the United States power rental market.
Top Featured Companies Dominating the Market
Some of the affluent industry leaders in the United States power rental market are Caterpillar Inc., Cummins Inc., Atlas Copco Group, United Rentals, Inc., APR Energy, Ingersoll-Rand plc, Briggs & Stratton Corporation, Generac Power Systems, Inc. and Yamaha Corporation.
