The case for power rentals in Asia

The rapidly developing economies of Asia are fuelling a constant need for fresh supplies of power to cure the energy shortfall problems being faced by utilities and all forms of industries and large building projects. This increasing need for power in Asia is being driven by industrial growth and people's improving living standards. These urgent demands for power mean that the power users and producers are being faced with critical decisions about what power generation solutions will satisfy their energy demands.

Before the required power can be supplied, the utilities and companies must make their mind up as to what kind of power system will generate the much needed power capacity. Various factors come into play when deciding upon the ideal solution to the problem of providing power. These decisive factors include the amount of power needed and duration it will be needed for, and the operating and financial aspects of the process. Then there is the final choice between purchasing a power system or renting one from a specialist supplier.

The critical decision between renting or buying a power system will depend largely upon the urgency of the problem being faced and the length of time that the power solution will be needed. Purchasing power generating equipment may at first seem to be the preferred option, however, consideration should be given to power rentals as they can often provide the most effective use of working capital, especially when ‘fast-track' power supply solutions are included into the equation.

There is no simple answer to the rentals verses purchase debate as each power supply problem will have its own tailor-made solution. The right power supply system needed by a project is defined by the requirements of the project in question. In some cases the right option is immediately obvious, for instance if the need for power is clearly temporary, as in an emergency, then rental is the obvious choice as the power can be supplied rapidly for as long as it is needed.

However, renting power equipment for large and small projects is becoming popular in various industries as it represents quick delivery and avoids the need for large capital expenditure. In cost terms, the financial benefits of a temporary rental solution are that the system's regular and predictable costs are factored into the business plan of the project in hand. Then, when the project is finished, there is no need for the user to arrange for the removal and storage of the power equipment as this is carried out by the rental company.

The benefits of power rentals

There are many features that make the proposition of power rental attractive, including improved cash flow and speed of supply. There are no down payments for a loan for purchase purposes and power rentals have a guaranteed payments schedule over the agreed term, with options to extend the rental period if required. Also, the rental option provides the end user with operational and maintenance services of the rental package.

When a company rents power supply equipment, its management team simply transfers the uncertainties and risks of power equipment ownership to the power rental company. This process allows the company to concentrate on its core business knowing they can rely on continuous supplies of power from the rented equipment. If required, the solution can be tailored to meet specific needs and should these needs then change, the equipment or the period of rental can be adjusted to suit the new demands.

One of the most frequent reasons for choosing a rental solution is timing as a power rental is often a fast-track supply, thereby giving the end user the vital power supplies needed within a short time. This fast delivery is critical to many users especially if there has been an unplanned power outage and reliable power is of paramount importance. Then there are the long lead times before a purchased power plant can be delivered; it can be 18 months or even two years before the new power plant is "in-power". It as at times like these when power rentals are the answer.

Another benefit of renting power equipment is the flexibility it offers as rentals allow the customer the freedom to increase or decrease the amount of power generating capacity according to need. An additional advantage is the extensive range of technical support services provided by the rental company which ranges from advice and design through to replacing faulty equipment and even operating and maintaining the equipment.

Fast track power for a Chinese mine

A copper mine, located in China's south western province of Yunnan, needed quality power urgently so that it could increase the mine's production levels and expand its operations. The mine's existing power supply was insufficient for the much needed increases in production and the planned expansion of the mine.

The mine, owned by Yunnan Simao Shanshui Copper Company Ltd and the Hong Kong based Pacific Group, is located in a remote and elevated region of Yunnan Province. The mine had used power supplied from the grid but power is weak and often cuts out which causes significant losses in production.

The owners of the mine had wanted to optimize operations for some time by improving overall performance and by expanding the operations. However, the lack of reliable supplies of quality power had delayed their plans as the mine's equipment cannot be effectively utilized. The mine company had even purchased new mining equipment which had been delivered to the mine but remained unutilised due to the lack of good clean power.

The mine's management awarded a contract to the power rentals company, Aggreko for a 9 MW temporary power plant. The power equipment had to be delivered in an extremely short time frame so that increases in production could commence as quickly as possible. The contract stated that Phase 1 of the power plant must be delivered and ‘in-power' within three weeks from the date of contract signature. Phase two was to be delivered and ‘in-power' shortly after the commissioning of Phase 1.

Whilst the speed of delivery, considering the remoteness of the mine plus the condition of some of the roads that the trucks had to negotiate is impressive, the time taken for engineering and commissioning is more so. From the delivery of the power equipment to the remote mine through to commissioning, the team from Aggreko enabled the generation of quality power within four days.

Vital power for a mine in Mongolia

With mineral prices at an all time high, mine owners are keen to extract maximum value from the ground. To do this they need power - but for remote mines, such as Ivanhoe Mine's Oyu Tolgoi project developed in Mongolia's Gobi Desert, power is almost as precious a commodity as the metal their new mine will be digging from the ground.

Without ready access to a power grid, and with existing power equipment already running at full load, Ivanhoe Mines choose to install a temporary power plant to supply a constant 4 MW which enabled the sinking of a new exploration shaft without interrupting other mine development operations.

The contract was handled by Aggreko's Houston, Texas, sales office, whilst its Singapore hub was chosen to manage the project as it was the closest operational centre to the Oyu Tolgoi site. The complete turnkey package consisted of six 1,250kVA generators, one 6.3MVA transformer, a 20,000 - litre fuel tank, two neutral earth resistors, a control room and Aggreko's spares container, with enough spares to maintain operations in the remote location for the duration of the contract.

The equipment shipment was delivered from Aggreko's Singapore base via ship to China where it was off loaded to be transported by train to the border between China and Mongolia. Upon arrival at the border the consignment had to be transferred to a Mongolian train as the gauge of the Mongolian Railway system is different from the Chinese rail system.

Upon reaching Ulaanbaatar the equipment was then transferred to trucks for the 540Km journey on unpaved roads from Ulaanbaatar to the Oyu Tolgoi mine. Once the trucks had completed their arduous journey the plant equipment was unloaded for the site team and commissioning engineer to erect the plant. From start to finish including commissioning, the work was completed within six days.

Growth in Asia's rentals sector

In recent years, the specialist power rental company Aggreko has seen their rentals business increase significantly in Asia. During 2006, they opened their first depot for China in Hong Kong and in early 2007 they opened the first mainland depot in Shanghai. The team in China have already won a number of significant orders and expect to see business increase as companies in China learn about the benefits of rental power.

In another significant development for Aggreko's power rentals business growth, the company has recently signed an agreement with the Beijing Organising Committee of the Olympic Games (BOCOG) under which it was nominated "Exclusive Supplier for Temporary Power Generation" for the Beijing 2008 Olympic Games. Aggreko was the first British company to be named as an Exclusive Supplier of the 2008 Olympic Games.

Power equipment rental offers a number of instant benefits to the client. Financial benefits include the release of capital for other core activities, a fixed price solution over a given term, the flexibility to increase or decrease the amount of equipment on hire at short notice, the elimination of labour plus the ordering and stocking costs normally associated with plant maintenance. A rental solution also includes all the other added value services such as technical advice and installation and decommissioning, plus a high quality 24/7 service and rapid response times.

Power rentals provide significant support towards getting projects completed on time and within budget. The services that a capable power rental company, such as Aggreko, offers are not just about power generation; they are more to do with a total energy supply solution. From technical advice and design through installation and commissioning to operating and maintaining the power system they will be providing the right solutions to the customer.