FEATURE

Power

Diesel generating set exports to Africa

A review of the market developments and product initiatives set in place over six months in 2010
John Ridout omparing the first six months of this year with a similar set of results for the first six months of 2009 might lead one to think stagnation had set in as both values are almost identical. Last years six months results appeared to suggest a slowdown in exports of diesel generating sets to Africa. However, the reverse happened the second six months of 2009 to December showed a large increase, boosting the predicted forecast up from US $852.2mn to US$1,271.1mn. This was only US$202mn down from the record breaking 2008 exports. So Africa appears to be bucking the trend, which is good news for genset suppliers, but a sad reflection on the inability of the power generating sector to keep pace with the ever-growing demand for electricity. As Fig 1 shows, exports to Africa totalled nearly US$500mn for the first six months of this year but the forecast for the whole year is bullish and showing an increase over the 2009 figures. This is partially based upon the value of exports shipped over the last 12 months, from June 2009 to June 2010, which shows an encouraging increase. The second half of 2009 was much busier and exports were up 75 per cent on the previous six months. It is anticipated this may recur again this year, although perhaps not quite so dramatically. A restocking took place during the second half as distributors replaced their greatly reduced inventories. This anticipation has been extended into Fig 2 showing the value of imports by the top countries in Africa. A simple Exports of Diesel Generating Sets To Africa Six Months to June 2010 (Value US$mn) Range: 1 to 2,000 kVA
YEAR Actual 6 months Projected 12 months 12 months 12 months 12 months
*1 OTHERS

US 16.8

UK 107.1

EU*2 230.1

JAPAN 7.5

CHINA 85.8

OTHERS*1 50.0

TOTAL 497.3

2010

2010 2009 2008 2007

30.0 76.8 80.2 53.5

330.0 341.5 420.1 403.5

630.0 539.8 531.4 495.4

13.5 15.1 28.2 17.6

190.0 197.9 322.7 126.5

100 100 91 64.9

1293.5 1271.1 1473.6 1161.4

includes exports from India, Lebanon, Singapore and Turkey

*2 Excluding UK Source: HM Customs & Excise Statistics

doubling of the first six months results has not been used on this occasion and an attempt to predict the full years results are based on their import record over the last 12 months from June 2009 to June 2010. Also the actual six months export figures do not take production from other countries such as India, Turkey, Lebanon and Singapore into consideration. These countries contributed US$100mn into Africa last year and are quite likely to repeat that, perhaps even exceed these figures. The top four importing countries, Nigeria, Angola, Algeria and Egypt are now joined by Libya. Four years ago Libya imported a modest US$7.8mn (even that was a big increase compared to previous years) but that has now increased to ten times that volume and is quite likely to show an even greater increase this year. A relative newcomer to the top ten now includes this year the Ivory Coast, with their six months figures beating their yearly results. Their imports are spread

across all categories of kVA sizes up to 2,000kVA with mainly suppliers from Europe, although China is knocking on the door with US$3mn in the first six months of this year. Tunisia is showing activity of a positive nature and, from a very low rating four years ago, is now importing generating sets, mainly standby operational functions for hotels and administration offices, to the tune of US$13 to US$15mn a year. European manufacturers are the main suppliers with the US and China a long way down the list. The US appears to have a relatively small share of the African market if their direct exports from the US are compared. This shows a very modest six per cent share. However, if US-owned companies are considered the picture changes dramatically as a very large proportion of diesel generating sets being exported to Africa from Europe, and particularly the UK, are US owned. As a rough approximation, this could account for around 75 per cent of the UKs

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Power
output and at least 10 per cent of the EU exports. In terms of value, the US direct exports lean heavily towards very large generating sets on the 1,000 to 3,000kVA range. Some 76 per cent of their exports to Africa for the first six months of 2010 account for these sizes, shipping mainly to Angola and Egypt. South Africas imports are well down the list now. This time last year, they were third in the top league but are now lying 11th, in the second division. The FIFA world football tournament, held in South Africa, and severe power shortages boosted their imports up to US$266mn in 2008 but from their current six months results are unlikely to exceed US$30mn this year. Until the surplus second-hand generating sets currently flooding the market become absorbed, they are likely to revert to their own in-house manufacturing capacity rather than import new kit. Exports to the top five countries still remain in a reasonable steady state and account for over 50 per cent of all Africas

Top Importing Countries in Africa, Diesel Generating Sets Range: 1 to over 2,000 kVA (US$ million)
COUNTRY 2010 Actual 6 months 103.1 43.4 35.7 29.1 25.0 18.6 15.5 11.9 11.7 11.5 11.9 9.6 8.2 7.5 7.1 6.9 5.9 5.5 3.8 1.4 1.4 2010 Projected 12 months 200.0 140.0 80.0 110.0 70.0 30.0 45.0 40.0 40.0 30.0 30.0 32.0 16.4 16.0 15.0 14.0 13.0 12.0 8.0 10.0 7.0 2009 2008 2007

Nigeria Angola Egypt Algeria Libya Ivory Coast Sudan Ethiopia Kenya Congo Rep South Africa Ghana Gabon Congo Dem Rep Tunisia Senegal Cameroon Tanzania Chad Madagascar Uganda TOTALS

175.5 146.4 79.7 111.3 59.6 12.2 47.7 44.2 46.0 29.4 100.7 40.5 11.3 17.5 13.6 33.3 16.2 11.6 13.7 13.3 8.5 1115.5

286.9 164.3 97.6 110.5 21.9 11.6 96.3 32.7 38.8 32.6 265.9 25.3 17.9 32.6 13.0 27.8 8.4 14.8 nr 36.9 8.8 1394.7

306.4 105.9 57.1 51.6 16.3 15.4 60.3 8.8 21.5 41.6 66.4 72.3 16.0 nr nr 17.0 11.2 18.7 nr 26.1 25.9 984.4

Figures based on six months 2010 results Comprises data from 29 countries Source: HM Customs & Excise Statistics

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Power

World Exports of Diesel Generating Sets, Six months to June 2010, Range: 1 to over 2,000 kVA (Value US$ million)
YEAR Actual 6 months Projected 12 months 12 months 12 months 12 months 2010 US 513 UK 586 EU*2 1027 JAPAN 263 CHINA 557 OTHERS*1 50 TOTAL 2996

2010 2009 2008 2007

906 949 2107 1337

1385 1235 1797 1777

2586 2388 2517 2548

573 617 774 564

1003 881 1304 791

100 100 120 70

6553 6170 8619 7087

Exchange rate fluctuations and growing Chinese manufacturing are the dominant forces reshaping the worlds genset export markets
rate changes and the relentless growth of Chinese equipment manufacturers are the dominant forces that are reshaping the worlds export markets in generating sets, construction equipment and consumer goods. Quality remains a persistent worry in this headlong economic manufacturing boom for China and has not been enhanced after serious welding faults have allegedly been found in the new 140 wind turbine towers due to be installed on the Greater Gabbard sandbank, located off the UKs Suffolk coast. Some 180,000t of steel, in the form of

*1 Estimates of exports, six months 2010 from India, Singapore, Lebanon and Turkey *2 Excluding UK Source: HM Customs & Excise Official Statistics

imports. The remaining 50 countries absorb the rest and many fail to rise above two digit imports. World Exports, as per Fig 3, shows a possible increase for 2010 of around 6 to 10 per cent based upon the comparison between the first six months of 2009 and 2010, plus the volume of exports shipped during the last 12 months up to June this year. All show positive increases. The US is maintaining volume by

concentrating sales into Latin American and Asian countries. The EU countries, with the exception of the UK, appear to be charging ahead and are predicted to match the record 2007/8 export figures. The UK drastically lost ground in 2009, dropping US$562mn from 2008 export figures and seeing only a modest increase for this year. Japan is steady but China seems ready to explode in spite of the relative low 12 month forecast. Exchange

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African Review of Business and Technology - October 2010

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Power
part of their national grid supply. Nigeria has suffered power outages, brown outs and power rationing for many years as a result of over demand and insufficient power generation capacity. It has now been stated that Nigerian officials have begun preparing a plan to sell off the crippled state electricity system in a privatisation sale. Nigerians currently spend an estimated US$8bn a year running costly diesel generating sets that have now become the main source of power. Although the Nigerian Government has poured US$1bn a year into the power sector in recent years, restoring power lines felled by neglect or theft and the lack of any large expansion in power generation still means that the country only provides enough electricity to run a refrigerator for one in every 30 people among the 150mn population and even charging a mobile phone is a daily ordeal.

wind tower parts, have been assembled by Chinese steelworkers and ferried 4,500 miles to Europe. Industry very buoyant Although China is in the forefront of wind power technology, fuel, in the oldest form of power, is now being provided by 250,000 Chinese cows. Four Jenbacher gas engines have been installed and will power the new Lianong Huishan cow farm producing four 1,000kW or 38,000MWh a year in what is claimed to be the worlds largest biogas projectbased on cow manure. It is called getting your own back! Jenbacher, now part of G.E., have been producing gas powered engines for many years in Austria and hold a very respectable reputation for their quality of product. A pilot installation of this nature had already been installed in the Ukraine with a plant converting cow manure into

Nigeria spends US$8bn a year running the diesel generating sets that have now become the main source of power
energy (or biogas) from 4,000 cows producing 625kW of electricity and 686kW of thermal output. This has been in operation for 12 months now and reduces 18,000 metric tons of carbon dioxide. Gabon, whose imports of diesel generating sets are predicted to reach US$16mn this year have recently placed an order with MAN Diesel and Turbo for two dual fuel large bore diesel/gas engine powered generating sets that will produce 35MW of power for the area of Libreville as

Containerised 1,000 and 2,000kVA gen sets on a production line

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African Review of Business and Technology - October 2010

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Power
of the electricity produced for its own use. Wartsila recently won a contract to supply and install a large gas powered generating power station in the republic of Cameroon. Using their 18V500F eighteen cylinder vee-formation dual fuel (diesel or gas) engines, the station is expected to produce around 300MW and will require 60 skilled workers to operate. This contract follows an 86MW D1 bamba power plant at Yassa which uses eight vee 18 cylinder engines each producing over

The plan would break up the Power Holding Company of Nigeria (PHCN) known to the Nigerians as Please Have Candles Nearby. In August this year, Nigeria announced plans to build a 700kV, US$3.5bn electricity grid to improve power supplies. The new grid is expected to be completed in four years and will overhaul the existing 330/132kV electricity grid. Nigerias available power generation capacity will rise to 6,939MW by April next year and 14,019MW by December 2013 according to a presidential committee on power. At present Nigerias generating capacity stands at less than 5,000MW. A joint venture by five African nations to develop a multi-billion dollar hydropower project of 2,000MW in the Democratic Republic of Congo has collapsed which will affect users in Southern Africa. The cost of electrical power would have been up to 260 per cent cheaper than current costs but the Congo decided to pull out of the deal because it wanted to retain more

A 2,000kVA genset in soundproof housing for a data centre

Lighten up your life

Power & Industrial Machinery Company Pimco

Cummins Generator Sets

Following our slogan "best quality, steady progress, customer satisfaction", our efforts are focused on providing generating sets of high quality standards, reliable and safe products, which meet our customers' expectations and keep up with the demands of our continuously changing market place. We Are Special in selling and assembling generating sets and electrical control panel boards, manufacturing sound proofs and finding the appropriate solutions for all sound proofing system, offering the installation for all kind of Generating sets with their correlative accessories Synchronizing & ATS's Panels; all Kind of Insulation & anti-Vibration system & the installation of the Fuel system. Also, We are engaged in various commercial and industrial activities such as importing, exporting and re-exporting. In a world where it is more dependent on electrical power supply, We are confident that we can be your best choice. We will always find the way to satisfy you and fulfill your demands whatever are your performance requirements. Rashid Karameh Street, Verdun 732, 7th Floor, Beirut, Lebanon. Tel/Fax: + 961 1 812818/9. Factory Tel/Fax: +961 7 225226/9

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African Review of Business and Technology - October 2010

Power
10MW. Some 450MW of power in the Cameroon by Wartsila will be completed by 2011. A recent survey by an American magazine indicates that within the range of 500kW to 3,500kW diesel generating sets some 1,442 generating sets were installed in Central, West, East and Southern Africa during the period January December 2009, but only 54 in North Africa. From 3.5MW to 12MW, the number decreased significantly accounting for just 35 machines. The survey covers the production and export shipments from 15 of the largest diesel engine generating set manufacturers in the world. In general, the type of generating set made shows a 50/50 split between standby applications as against continuous operation and peak lopping. Aggreko continues to hit the news announcing record profits and reacting to bid speculation as shares reached over US$24 a share with over excited prospectors piling in, awaiting a take over. Certainly

FEATURE

Nigeria plans to build a 700kV electricity grid to improve power supplies, with completion expected in four years
Aggreko did well in South Africa during the World Cup, which generated revenues of over US$45mn for the company, which pushed up first half revenues by 17 per cent to US$933mn and profits before tax up 19 per cent to US$200mn. Philip Rogerson, Chairman, said, We believe that we will make further good progress in the second half and that the outcome for the year as a whole will be slightly better than our previous expectations. The company invested a further US$215mn in their new fleet in the first

half of 2010 but expenditure for the full year will be around US$425mn. Aggreko is being targeted, it is rumoured, by ABB, the Swiss Company for Power Generation or GE the American conglomerate. Caterpillar are bouncing back with a positive and healthy outlook for the year and a rebound from last years first quarter loss. The company generated US$233mn in net income in the first quarter of 2010 compared with a US$112mn loss last year. In the same period, they also acquired Electro-Motive Diesel (EMD) who have the largest installed base of diesel-electric locomotives in the world. According to Caterpillars Vice Chairman and CEO, Doug Oberhelman, The acquisition of EMD is a natural fit as it supports our enterprise strategy to aggressively grow our Energy Power Systems business. The deal was concluded for US$820mn in cash plus a networking capital adjustment worth another US$108mn. The company also launched a new

African Review of Business and Technology - October 2010

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FEATURE

Power
telecom and events industry and Hertzs acquisition is a great fit with our Energy Services Division. Being environmentally friendly is a surefire buzzword for promoting your products in todays markets. As an example, a rental company in the UK, with a diesel generating set fleet of 800 generating sets has decided to make all its hires carbon neutral by only using carbon offset diesel fuel. The company, Mather & Stuart Generators Ltd, has struck a deal with Crown Oil UK, who have bought high quality carbon offsets. Apparently using these offsets mean carbon released by the burning of the diesel is effectively cancelled out. Director, Mark Stuart, commented, We believe that this is a big win for the environment and one distinguishes us from other hire companies. The company also sells Caterpillar generators. Cummins Power Generation sales fell sharply last year and although business in China, Australia and the Far East is brisk,

generating set using its G3516B gas engine producing 1,250kW, 480/277 V, 60 Hz. Produced as a mobile unit, in a 12.2m ISO sound attenuated container, the complete unit is designed for rental operation, via Caterpillar dealers and is totally self contained. The low emission natural gas engine has an integrated exhaust after treatment system to comply with the latest US regulations. Hertz is not a name normally associated with diesel or gas engine generation but they have recently purchased an Italian company called Rent One for an undisclosed price. Rent One specialises in generating sets for customers such as Vodafone and Wind, the Italian Football Championships and Ferrari team events. With revenue last year of US$3.9mn, the company will become part of HERC Hertz Equipment Rental Corporation. Gerry Plescia, President of HERC, said, Rent One Italy has a solid reputation in the

An alliance of companies and Governments is set to convert waste carbon dioxide into diesel fuel by using solar power
overall business is still very flat compared to 2008. To capitalise on Chinas booming economy, Cummins Power Generation (CPG) has recently opened a plant in Central China that will manufacture diesel generating sets from 11 to 2,000kW, Gdrives and automatic transfer switches (ATS) for emerging back-up and continuous electrical power. An investment of US$19mn in the 20,000sqm factory is expected to produce 7300 diesel generating sets annually, 20,000 G-drives and 15,000 ATS units. It is expected to source engines locally and other key components.

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African Review of Business and Technology - October 2010

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Power
next 7-10 years. Units are expected to be manufactured at costs approaching conventional power generation technology. The units are expected to be ideal for RV campers as features such as virtually silenced power, low fuel consumption and very low emissions (as no exhaust treatment is required) are all beneficial aspects. Slightly up market from these units is the 1,400kW fuel cell, manufactured by FuelCell Energy Inc for use on a poultry ranch in French Camp, California, USA. Using renewable biogas for fuel, derived from a solid waste lagoon, the system harnesses ammonia, methane and other gases from this source via an anaerobic digester to create methane gas as a byproduct to feed the fuel cell to make electricity. British company, Chloride, who are specialists in UPS (uninterruptible power supplies) that are linked to standby diesel generator installations, have finally succumbed to the takeover battle and are now part of Emerson also in the same line of business but US owned. They do, however, employ 3,000 staff in Britain, whereas Chloride only have 350 with the majority of its manufacturing located overseas. The deal, worth an estimated US$1.2bn, will increase Emersons world market share from 12 per cent to 18 per cent.

Demand for Cummins products in China has been so high that this is the third Cummins operation in the country. Meanwhile, back in the US, Cummins is expanding its high horsepower engine production line at its manufacturing facility in Seymour Indiana, USA. Although the company is shy about outputs at the moment, the US$100mn investment is obviously meant to extend its range into, and perhaps beyond, the 3MW market. The Seymour plant already manufacturers its V903, K19, QSK19 and QST30 diesel and natural gas engines. Tom Lineberger, President and COE, is quoted as saying, Our high-horsepower business continues to grow in importance. Cummins Power Generation recently took over the well-known US-based rental company of Terex Corporation. This adds to the companys rental business in the States and CPG will assume aftermarket support (parts, service and warranty) for both companies product lines. As part of its research programme, Cummins are one of a team of six companies developing fuel cells. Long running tests have already been satisfactorily completed with a 3kW fuel cell which is using a solid oxide fuel cell-based mobile power product. They are expected to become commercially available within two to three years and units up to 100kW within the

It is estimated that Gabonese imports of diesel generating sets will amount to business worth some US$16mn this year
Finally, 2,700 new electrical power generation projects worldwide in 122 countries are expected to produce a further 1,243,320MW to new capacity, if all these planned projects finally reach completion. At present the annual new power capacity completed is 143,000MW. An alliance of companies and Government organisations have been formed to convert waste CO2 (carbon dioxide) into diesel fuel by using solar power. This powerful consortium of companies are already planning commercial plants, and deployment of their plants can begin in 2013. As the US consumes close to 60bn gallons of diesel fuel every year and total CO2 emission have increased 17 per cent from 1990 levels and continued to grow one per cent a year, the commercial and environmental gains using such a system can only be viewed as beneficial to all mankind.

New range packs a powerful punch

ummins Power Generation has launched a new line of low-range generator sets, powered by X 1.3 and X 2.5 engines, designed to maximise performance and minimise environmental impact. The X 1.3 powered sets are available in 8 11kVA configurations at 50Hz, and the X 2.5 powered sets in 17 28kVA at 50Hz (12

20kVA at 60Hz). Engineered to deliver maximum power whilst occupying a small space, the innovative range meets the most stringent EU legislation and provides a reliable power solution for a wide variety of prime and standby applications for key market segments, including retail, defence, telecoms, oil, construction, healthcare, banking and insurance. Steve Juden, Executive Product Manager, said, Our advanced products have established the benchmark in costeffective, efficient power generation and this range of smaller generators is set to do the same. We believe this new line with its unique

features and benefits will take leadership in the global generator market. www.cumminspower.com

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African Review of Business and Technology - October 2010