Back up power supply

Energy demand could increase generator usage

Energy demand
The delay in the Medupi power plant and under investment in municipal electrical infrastructure can lead to a future power crisis this year, which will increase genset sales in South Africa. The cost of downtime companies face, when electricity blackouts and ‘load-shedding’ occur, can be significant and companies that do not prepare for this possible situation, can face permanent damage to their operations and reputations.
New analysis from Frost & Sullivan ( finds that the South African genset market earned revenues of $212 million in 2010 and this is expected to almost double by 2016.The market concentration in the South African genset market is very high, with the top three companies having more than 50% of the market share.
“The South African genset market is influenced by the uncertainty of Eskom’s future power supply and the unpredictability of the global economy”, states Frost & Sullivan’sEnergy & Power Systems research analyst Tanyever Loren van Themaat.
With Eskom currently being able to supply the needed electricity demand, gensets have become a ‘grudge buy’. Many companies are not willing to invest in the high initial start-up costs of gensets before disaster strikes.
A global financial slowdown is the greatest threat to the South African genset market. During the 2008 power crisis, the competitors in the South African genset market increased from under 40 to over 300 suppliers. Many of these were opportunistic companies that imported gensets into the country to make some quick cash. Cheap, unreliable Asian imports flooded the market.
“The South African genset market was a very price sensitive market, during the 2008 power crisis with end-users often choosing low price over high quality”, notes ver Loren van Themaat.“The purchasing criteria are shifting from choosing low price to looking at the after-sales services that suppliers offer, due to bad quality and unreliable suppliers from previous experience.”

 During the 2009 economic crisis, genset sales in South Africa slowed, predominantly due to the decrease in exports from South Africa.The demand for electricity in South Africa as a result, therefore, decreased. A future global financial slowdown will affect gensets sales in a similar way.
Companies that have a strong presence in the Sub-Saharan African market, managed to survive the economic recession, because of the strong growth in that area. Therefore genset suppliers must try and expand their target market by targeting the Sub-Saharan African market.
Genset suppliers that want to maintain their current market share must focus on their after-sales services to overcome negative end-user perception and set their clients mind to ease. Fast responses to end-user requests as well as excellent engineering capability will allow companies to increase their market share.
“Suppliers must realise that end-users of standby gensetsview them as an insurance policy, protecting them against power outages and the consequences they provoke”, concludes ver Loren van Themaat.
If you are interested in more information on this study, please send an e-mail with your contact details to Samantha James, Corporate Communications, at
The South African Genset Marketis part of the Energy & Power Systems, which also includes research in the following markets: The Nigerian Genset Market and The Southern African Oil and Gas Market. All research included in subscriptions provide detailed market opportunities and industry trends that have been evaluated following extensive interviews with market participants.


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