The Rental Model is Dying

Delivering a message with the overarching theme of challenging conventions and blazing new trails in the power industry, James Shepherd, CEO of Altaaqa Global Energy Services, cements the company’s reputation as the industry game changers in his keynote speech at the Ministerial Opening of the ‘Powering Africa Summit’ and the ‘Latin America Energy Forum’ in Miami in late February 2020.

Honorable Ministers, Ladies and Gentlemen,

As the Forum Sponsors and on behalf of Altaaqa Global Energy Services, welcome to Miami and to this year’s Powering Africa Summit and Latin America Energy Forum.

The good news is you only have to listen to my dulcet tones for around five minutes before you can head off to the catered food and drinks.

I want to cover three of the key themes of the conference, namely stranded gas and associated gas power, BOOT and Hybrid Solutions.

The world of energy has changed and continues to change rapidly. The rise of renewables, the growing environmental concerns of fossil fuels, lack of liquidity in the markets and the macro economic challenges have pushed many governments and industries to focus on developing long-term energy strategies that align to the growing trends, whilst in many cases trying to keep the lights on as the power-hungry world continues to demand more and more energy. In short, a two-tier strategy is required to be implemented by many.

Stranded and associated gas in Africa and Latin America is playing a bigger part of that strategy, aligning itself to being a cleaner fuel, immediately available and providing in many cases a win-win solution through monetization of natural resources. In Altaaqa Global, we are currently providing solutions for stranded gas in Africa and South America, whilst in Kazakhstan we have a 15-year contract to provide energy utilizing associated gas. 

For many years rental was the go-to model for these types of short-term power projects, but without doubt the rental model is dying.

There is no doubt that over the next decade, and with the onset of LNG facility development across Africa and Latin America, gas will remain a key part of the energy mix for power generation.

In many cases it is easier to generate electrons and send them across the wire to where they are needed than it is to build gas infrastructure and pipelines, and here is where Altaaqa Global’s fully financed BOOT model comes into play.

For many years rental was the go-to model for these types of short-term power projects, but without doubt the rental model is dying.

Sure it has its uses in the event of emergency, but utilities and industry through better planning are able to minimize the use of expensive rental power.

The advantages of BOOT over rental are clear for all to see: no capital outlay; newest, most efficient technology; flexibility terms and a long-term strategic partner, to name a few. But the biggest advantage I can see is that someone is not going to come along after a few years and leave you with nothing to show for all the money spent on expensive rental solutions.

At Altaaqa Global, we have seen over the past two years a surge from industrial and utility customers towards fully financed BOOT options, and we are pleased to be delivering such projects in South America, West Africa and Eurasia.

With the costs of solar falling dramatically over the past years and battery technology following the same trends, it is undeniable that hybrid solutions are here to stay, emerging as one of the most cost-effective and sustainable baseload power solutions. 

This brings me on nicely to the topic of hybrid solutions. Typically hybrid solutions are a pure fuel displacement play utilizing solar and/or battery storage to minimize fuel usage, providing a cost-saving and a reduction in carbon emissions that align to investors’ concerns of being more in-tune with the growing environmental concerns of industry.

Altaaqa Global’s BOOT options are uniquely placed to provide hybrid solutions through our sister company Greencells, a leading solar EPC and developer, who has executed over 2 GW of solar PV projects globally.

With the costs of solar falling dramatically over the past years and battery technology following the same trends, it is undeniable that hybrid solutions are here to stay, emerging as one of the most cost-effective and sustainable baseload power solutions. 

In summary, hybrid solutions are a great way of blending the old with the new, helping to keep the lights on whilst aligning to the long term strategic goals I talked about earlier.

With that ladies and gentlemen and as promised all that is left is for me to wish you all an enjoyable and fruitful conference here in Miami.

Thank You.

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