PacB Group // Industrial Generator Suppliers – the African Market

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Industrial Generator Suppliers – the African Market

The market for industrial generators in Africa for 2020 was valued at $5,35 billion. This figure is expected to grow at a compound annual growth rate of 5,7% from 2021 to 2028. Unreliable grid power and strong growth in the establishment of data centers, as the region moves towards increased digitalization, have driven demand.

Market growth would have been even better had the Covid-19 pandemic not caused a decline in demand in the mining, industrial, and construction sectors in various African countries. Datacentres and the information technology infrastructure that supports them, such as servers and digital communication infrastructure, require robust redundancy as far as back-up power goes. Power failures of even a few minutes may result in considerable economic losses for these businesses.

The South African diesel generator market alone is expected to grow at a compound annual growth rate of more than 2% over the period 2020 to 2025. South African grid unreliability stimulates demand for reliable backup solutions and boosts the demand for gensets. Renewable power generation, such as solar and wind generation have, however, become less costly and improvements in large scale battery technology will increasingly offer “cleaner” alternatives to internal combustion-powered gensets.

With Covid-19 obliging many to work from home in the majority of countries in the region, the demand for internet services and remote conferencing infrastructure has increased substantially. These services rely on continuity of electrical supply and further stimulate the demand for diesel generators.

Eskom and the Prospects for Reliable Power

Industrial generator supply is a significant segment in the South African power sector but growth in the segment is very much tied into Eskom’s ability to provide stable, reliable electrical power. Eskom faces significant challenges with regard to finance, operations, labour, and the environment, to name but a few.

Eskom accounts for two-fifths of South Africa’s greenhouse gas emissions and has consistently failed to implement mandatory steps to mitigate their greenhouse gas emissions.

Eskom is busy restructuring in an attempt to stop the financial death spiral that they find themselves in. The business is being split into Generation, Transmission, and Distribution – each with its own board in an attempt to transform its centralised, top-heavy business model into something more agile and viable. The South African government as the major “shareholder” in Eskom has the final say in what Eskom’s management can do.

In effect, nothing happens if it is politically unpopular with the government. A case in point is the ongoing battle between the City of Cape Town on one side and the Minister of Energy and National Energy Regulator on the other. The City of Cape Town wants to be able to purchase electricity from independent power producers and the government wants to enforce Eskom’s monopoly on power provision.

Operationally, Eskom is not faring any better. In March, Eskom was forced to shut down Unit 1 at the Koeberg nuclear power station due to seawater leaks into the steam plant at the facility. Koeberg is widely recognised as South Africa’s best-maintained power station, so this should be seen as a major concern. As it was the shutdown resulted in stage four load shedding further damaging the already depressed economy.

At Medupi, a unit had to be shut down for 75 days for boiler plant modifications to correct design defects. Eskom’s financial woes were compounded when the country went into hard lockdown with the demand for electricity tailing off dramatically. Ironically, this actually helped Eskom to keep the lights on. Eskom’s energy availability factor is currently at about 65%. The internationally accepted norm is between 70% and 90%. This means that, on average, 35% of Eskom’s power plants are standing idle at any particular time due to faults or maintenance.

Andre De Ruyter, Eskom’s CEO, has warned that consumers should expect load shedding to get worse before it gets better.

Industrial Generator Suppliers to the Rescue

It is estimated that the loss to South Africa’s businesses and industries due to scheduled power cuts is in the region of R1 billion per load shedding stage, per day. The most rapidly deployed and least capital-intensive solution to this problem remains the installation of a diesel-powered genset. The increasing demand for uninterrupted and reliable power supply is expected to drive the market in the future.

Irregular supply from our utility company (Eskom) and further investments in the sector are expected to deliver ongoing market growth. South Africa’s focus on the Fourth (Digital) Industrial Revolution relies on stable and constant power provision. This is projected to provide continuing growth for industrial generator suppliers going forward. A number of government projects, including the National Development Plan 2030, the National Transport Master Plan 2050, and Vision 2025, which are aimed at boosting the industrial, commercial, and retail sectors, would create further demand for power backup solutions, including increased demand for diesel gensets in South Africa.

75 to 365 kVA industrial diesel generators currently constitute the majority of the volume in the market, and machines in this size range are expected to register the highest volume growth in the short to medium term due to growing demand in residential and construction sectors. A series of pending mega projects, such as the Johannesburg Airport Expansion, Multi-Modal Infrastructure Project, Modderfontein New City, Masingita City Mall, and others, should also drive growth for South African industrial generator suppliers.

Hybrid Gensets – Coupling Batteries and Renewables

The increasing popularity and improving the reliability of hybrid generators may be an opportunity for industrial generator suppliers. Hybrid systems integrate the use of a number of sources to drive down costs and reduce the dependence on a single fuel type. Hybrids are at the forefront of generator technology and combine traditional gensets with one or more additional electrical sources in order to provide a fuel-efficient, noise-abated source of power. These systems are usually also more environmentally friendly than conventional units.

Hybrids may be coupled to fuel cells, hydroelectric turbines, wind turbines, and solar power sources to name a few. Hybrids are useful in places where access to fossil fuel is difficult or very expensive. They reduce fuel usage as the various power sources all contribute to keeping a dedicated battery bank fully charged.

The systems are fully automated and have innovative control systems, which monitor the operation of the constituent parts of the system. Hybrid industrial generators are typically lighter, more compact, and can be transported more easily than a non-hybrid generator of similar capacity. At sites where grid power is not available, hybrid generators can be used as the primary source of power supply.