Power Generation Equipment: Rent versus Purchase
In some cases, such as for plant turnarounds or retrofits; or to power temporary, portable housing or office trailers; the decision to rent a generator can be clear-cut. Similarly, for entities such as data centers or public safety authorities for whom an outage is unacceptable, permanent installation of standby power is an obvious choice.
Between these two ends of the spectrum are many situations where mitigating factors or unusual circumstances make the rent-versus-purchase question more complex. As a firm that both rents and sells generator sets, we frequently counsel our clients on this very decision. The following information, developed from actual client experiences, will give you additional insights for making the right choice.
Budgetary Constraints: Frequently, budgetary limitations or purchase caps cause companies to rent a generator set rather than buying one. This solution is sometimes unavoidable. However, if you need a generator for more than six months (fewer if it is a large or high-end unit), buying may be a better choice. If you do rent a unit, ask whether the provider will transition from rental to purchase once your finances improve.
Optionally, if you cannot afford a new unit but have some budget, you may find a gently used unit that has been fully tested and will provide many years of reliable service. If your provider can help you obtain low-interest financing, you’ll be in even better shape.
Period of Use: As mentioned above, unless you need a generator for more than a few months, rental can be the prudent choice. However, an increasing number of our customers purchase standby generators for permanent, onsite placement, even though they may require them only occasionally.
If you have ongoing intermittent projects, or if you live in an area that experiences outages due to seasonal storms, a comprehensive calculation of your needs may indicate that purchase makes more sense. (If you are considering a purchase for business continuity, don’t forget to calculate the value of both missed opportunity and lost customer good will.)
Time to Delivery: If your power requirements pass the budget allocation and period-of-use tests but you need it quickly, it might make sense to rent while you wait for a permanent unit to arrive. Even here, we counsel our clients not to be hasty. Working with the right provider, you may be able to secure a new surplus unit (with a full factory warranty) in a fraction of the 4-6 months required to order a new generator from the manufacturer.
A Few More Thoughts
Whether you decide to rent or buy, you’ll likely be more satisfied with your decision if you choose a reliable provider with extensive inventory. Key attributes of a quality company include:
Unbiased Sales Approach: Companies that both rent and sell generators don’t have a stake in the outcome, so they should be more objective in helping you make a decision.
Robust Inventory Database: The most proficient firms maintain an up-to-date database that they (or you) can search quickly to determine the availability of equipment that meets your needs.
Quality, Quantity and Flexibility of Inventory: The provider should have access to a wide variety of generator sets, from 20 Kilowatts to 2 Megawatts. Furthermore, they should be willing to work with you on the optimal solution, even if it’s rental of a new unit they have for sale.
Tiered Pricing Structures: If you determine rental is the best choice, make sure the terms will work for you. For example, does the provider offer a tiered structure for overtime, with a standard single-shift rate, plus double-shift and triple-shift rates at a lower average cost per hour? Such a structure can be a boon on rush jobs—one common reason for generator rental.
Excellent Customer Service: The provider should offer set-up and ongoing technical service (if desired). They should ensure all units (rental or purchase) are fully tested before sending them out. Furthermore, they should have knowledgeable, competent professionals to work with you, every step of the way.
Whether you decide to rent or purchase, keep in mind there may be more alternatives than you realize. Don’t settle for anything other than what you really need, just because someone tells you it’s the only viable option. A company that is committed to your success won’t stop until they find the solution that is right for you.
About the author:
Mark Lum is Executive Vice President of Worldwide Power Products (WPP), a power-generation equipment provider to industrial clients worldwide. In December 2011, WPP was named to Forbes’ first annual Most Promising Companies list. WPP specializes in new and used power generation equipment including Caterpillar generator sets and engines and Cummins generator sets. For more information, visit www.wpowerproducts.com