Our Market

Fundamentally, APR Energy is a power provider and serves the global market for electricity. This market is underpinned by a global supply/demand gap that continues to grow into the foreseeable future, in both developed and developing economies. While the overall market for electricity is large, broad and diverse, APR Energy’s focus is on serving sovereign utilities, private utilities and power-intensive industries, all having urgent needs extending from the short term into the long term. Our target opportunities typically range from 40MW to more than 500MW in size.

The key demand drivers of growth remain strong and unchanged from previous years. While these fundamental market dynamics persist, they fluctuate across countries and regions. Economic development, population growth and urbanisation are most pronounced in emerging markets. At the same time, there exists a shortage in electricity supply across all markets, driven by poor planning, ageing infrastructure, underinvestment, plant decommissioning, geopolitical and natural events, and climatic impacts on regions reliant on renewables. Today, some 1.3 billion people, or roughly 17% of the world’s population, lack access to electricity.

Historically, our largest opportunities have been in high-growth and underserved markets located across Africa, Latin America, the Middle East and Asia. However, as we have increased our fleet weighting in mobile gas turbines, this technology provides a strong play in developed markets, where power-dense and low-emissions technology is needed to counter ageing infrastructure and tightening emissions regulations. Industrial applications also are an area of increased opportunity, as seen from our 60MW turbine project in the South Pacific. Power-intensive industries, such as mining and oil & gas, often require dedicated generation separate from the power grid.

Defining and sizing our market

The solutions that we provide address only a portion of the global electricity deficit. In some cases, the need for electricity is addressed through construction of permanent plants, for those that have the time, money and resources, while others turn to rental or temporary power providers as a bridge to longer-term solutions. However, for many, the primary choice is simply to do nothing, causing blackouts or brownouts, inducing load shedding and forcing industries and private homes to compete for the limited power available.

Because of this, the true market for our services is difficult to measure, as indecision often keeps the customers needing power the most out of the market until issuance of an emergency decree. In many cases, we generate our own demand by convincing those who are underserved that a solution is both available and affordable, or by introducing new innovative solutions that can better meet their needs. In other cases, the need becomes so urgent or pronounced on the part of a customer – either through natural, social or political events – that an unforeseen opportunity will suddenly arise.

Another challenge in sizing our market is that we are positioned in a unique space spanning temporary and long-term power, meeting a largely unmet need, but also overlapping other competitive segments clearly defined within the industry. While industry analysts sometimes use the power rental market as a gauge for sizing our market, in reality, we are only competing against rental power companies in about a third of our opportunities. In the remainder of projects, we compete against companies in the permanent power space, such as Engineering, Procurement and Construction firms (EPCs), Independent Power Producers (IPPs), manufacturers and sellers of generation technology and the choice by some countries to take no action at all to fill their power gaps.

Market growth

Customer demand in our priority market spaces remains high. These customers need a number of applications, including bridging power, peaking power, grid stability and support, industrial generation and distributed generation. In addition, unexpected natural and man-made events drive opportunities for emergency power, although the very nature of such events makes them difficult to forecast. Often, as seen in countries with low electrification rates, the introduction of electricity leads to new incremental demand as constituents begin to modernise.

Over the last decade, meeting the world’s growing energy needs has become a critical challenge. The structural opportunity for fast-track power, bridging power and the solutions we provide is expected to expand, given electricity demand growth and persistent supply-side constraints such as the lack of financing, capacity retirements, restricted import, inflexible systems and high electrical losses. Considering that a new permanent power plant takes years to plan and construct, costs hundreds of millions of dollars and requires extensive permitting, we see the demand for alternative fast-track solutions to grow well into the future.

Market volatility

While the demand for power in the macro sense is quite robust and inelastic, the demand for our services in the short term can be volatile, particularly as countries delay addressing their power needs. Factors such as election cycles, economic downturns, fuel price variability and political instability have all impacted customer decision making. We are also seeing some customers moving to larger, longer-term projects, which often take longer to convert from opportunity to project. Such factors can make forecasting difficult, at least in the shorter term. Over time, pent up demand forces customers to make their investment decisions, causing cyclicality in our market and lumpiness in our business.

Turbines and natural gas broaden our opportunity

Strategically, APR Energy has broadened its addressable market by offering customers a greater choice of technology. With flexible and diverse solutions that include mobile gas turbines, our market opportunity has expanded beyond traditional temporary and rental power markets to bridge customers to longer-term solutions. As seen from our large-scale projects in Uruguay and Australia, many large utilities prefer to work with the reliable, power-dense and emissions friendly turbine technology with which they are most familiar, and such projects can feasibly operate on a long-term basis.

The production of natural gas continues to increase globally and offers a significantly cheaper alternative to diesel in many markets. APR Energy is well positioned to take advantage of this increasingly available fuel source. Our mobile gas turbines and gas reciprocating engines offer customers a cleaner, more cost-effective and lower impact option over diesel and other fuel alternatives, as well as offering a way to monetise indigenous natural gas resources.