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The fast-track power sector is currently at the centre of a perfect storm of opportunities.
More and more developing nations are hungry for power and they need that power delivered fast. At the same time, developed nations are beginning to pause when thinking about building large-scale permanent power plants and instead are looking to the benefits of distributed energy.
It’s a business black cheque and those companies leading the market are cashing in.
One such is US firm APR Energy. Founded in 2004 and headquartered in Florida, it last year bought GE’s rental business in a deal described by APR chief executive John Campion as “transformational”, and you can see why: suddenly APR became the world’s leading mobile gas turbine power provider and it picked up 520 MW of existing contracts in Canada, the US, Bangladesh and Australia.
Already well-established in the Middle East and Africa, APR also last year opened its first Asian office in Singapore and the business has boomed.
“The region has grown like crazy,” says Clive Turton, APR’s head of business development for the Asia Pacific region. “We’ve got four projects up and running in Indonesia, a project in Myanmar, a large industrial application in the South Pacific and a medium-term contract in Port Headland in Australia.
“So we’ve gone from zero to around 500 MW in less than 18 months. It’s been a great growth phase for us.”
The 100 MW plant in Myanmar is notable, not least for the fact that it is there at all – Myanmar is regularly listed as one of the hardest countries with which to do business.
However, APR’s own road to Mandalay was smooth, no doubt driven by Myanmar’s desperate need to electrify great swathes of its country – more than 70 per cent of its population of around 60 million has no access to the grid.
And Turton is upbeat about more business there: “All the sanctions have been lifted so there’s a lot of need for new infrastructure. They have a lot of indigenous gas and they have a government that is keen on supporting the development of the infrastructure. There is a lot of opportunity there, so that market has grown very quickly.”
He believes APR’s fast-track offering – with GE’s TM2500+ machine at its heart – is filling a gap in the market.
“We have those machines in Libya, Angola, Australia, Japan – the model works across the board and it’s a model that allows us to go for very large scale: the project in Libya is 450 MW.
“What we are finding is that, as we roll this out, everybody is fascinated because this is something in between the emergency rental/short-term power market and the large-scale IPP – it’s a large-scale, fast-track IPP, if you like.
“If you are a utility or a large customer and you want gas-fired, turbine-based power, you can have it up and running in two and half months – there’s no reason for you to build a great big three- to five-year project.”
Another company riding the wave of electricity demand in Asia is Aggreko. Debajit Das is its regional director for Asia Pacific and he says the region “presents significant growth opportunities and is a key focus for Aggreko”.
“Our power projects business, in particular, is focused on these emerging markets, with our own growth in this space driven by structural challenges. Demand for electricity in these markets is growing faster than GDP, with few countries able to finance the additional permanent generating and transmission capacity needed to keep up.
“These structural challenges are likely to remain in place for the foreseeable future, and we therefore expect to see an increase in market demand for temporary power by 10-15 per cent per year over the next five years.”
APR’s Turton believes there is a fundamental shift going on in the fast-track power market and the way it is viewed by utilities.
“The role of fast-track power provider is changing. There’s no reason any more to decide between a large-scale open cycle gas plant versus fast-track – it’s the same thing.
“Most grids aren’t planning five years in advance – they’re planning what they’re going to do next year, so fast-track is the only solution. When a utility looks at its options for gas-fired generation, knowing that a plant doesn’t have to take five years, doesn’t have to involve project finance and big institutional investors – that changes the game completely.”
This change of mindset is fuelling optimism for Turton. Asked which Asian countries he is targeting, he says: “All of them. I’m not being flippant – this solution is applicable everywhere. Where you’ve got a fast-developing grid and you need power quickly and you don’t have an enormous amount of space nor a lot of time, this is an ideal solution.”
And he sees the stagnating large-scale thermal market in Europe as ripe for semi-permanent fast-track solutions.
“In Europe, people are looking more and more at the concept of distributed power – the idea of, instead of having enormous power plants and enormous distribution infrastructure, having disparate, smaller stations locally generating. So instead of having 1000 MW and an enormous amount of transmission infrastructure, you can have two or more 200 MW plants.”
Aggreko’s Das is also aware of a shift in the adoption of fast-track technology in the Asia Pacific’s developing countries.
“Emerging markets face a key challenge in coping with power demand that far exceeds their generating capacity. The region’s governments are taking the necessary measures to implement permanent solutions, increasing power generation efficiency and distribution infrastructures by modernizing power plants and employing smart grid technologies – all vital first steps.
“However, permanent infrastructure-driven solutions take time and depend on the interplay of multiple factors, including substantial financial investment and the overcoming of regulatory frameworks that impede energy efficiency and access.”
This, he says, is where temporary power comes in. “We do not claim to offer a replacement for permanent power, and are very up-front about the circumstances where permanent solutions may be more suitable than temporary, rental solutions.
“However, we bridge the power gap until those permanent solutions can be brought on board. Every day, our customers count on us to overcome business roadblocks by eliminating the power limitations they face, and we do this by addressing significant power problems and shortages in markets where economic growth has overtaken infrastructure development speeds.
“We help companies and governments augment inconsistent power supply and inadequate grid capacity, helping to keep the lights on in entire cities when their existing grid cannot cope with demand by delivering hundreds of megawatts of additional power, producing cost-effective power during season temperature extremes and eliminating emergency and maintenance-induced downtime.”
He says this is primarily illustrated by Aggreko’s work with national utility companies in rapidly-emerging economies, “who require significant support in supplementing inadequate grid capacity, overcoming aging power infrastructure and addressing geographic difficulties – such as in Indonesia, which is made up of over 17,000 islands.”
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