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Cover Story | September 2012

Flexible power rental solutions could help...

"Flexible power rental solutions could help companies to keep operations on," says V Radhakrishnan, Country Head, Aggreko India

As per the recent power failure is concerned, India is far from being alone in its plight. Countries across the world are facing similar issues. This is not just an issue for the rapidly developing world economies such as Brazil, Russia, India, and China. It’s something that is being witnessed across the world, as many developed infrastructures are in need of critical refurbishments. For example, there are alternate solutions, which can keep the things on at the time of outage or at least provide power backup for the time being.

There are professional power rental companies in overseas countries and now also available in India provide energy through diesel or natural gas-run generator sets. The use of rental equipment gives flexibility to the companies in resource deployment. Many industries welcome the option of temporary rental, as the current alternative of significant revenue loss due to unreliable power supplies is potentially crippling. In addition, the government could consider supplementing the grid with temporary power, at least to address the regular power cuts caused by peak load.

There are a number of key financial benefits to choosing rental power over purchase: renting power generation equipment eliminates the need for capital expenditure on equipment. It incurs no large down payments or interest costs and preserves borrowing capacity. In addition, power rental guarantees fixed and regular payment schedules over an agreed term with options to extend the rental period if required which improves cash flow and allows for more accurate budgeting.

The lead-time for the purchase of generation equipment can be anywhere up to two years for mid size to large power plants, meaning that companies which need power urgently will find a rental option very attractive, due to the ‘fast-track’ aspect of rentals.

Moreover, rental power is a relatively new phenomenon in the Indian market, yet it is an area that is growing at an astronomical rate, in line with the demand that the nation has for reliable, 100 per cent dependable power supply. Those at the helm of the power and industry sectors would do well to consider new options such as rental, as a viable interim solution to an ever increasing critical power issue.
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