Electricity price hikes drove South African UPS market up 20% in 2012

IHS reports that South Africa’s market for uninterruptible power supplies (UPS) grew last year in excess of 20% to more than $50 million primarily because of rising electricity prices in the country.


South Africa’s market for uninterruptible power supplies (UPS) grew last year in excess of 20% to more than $50 million, a notable increase considering the slow economic growth of the region. The main driver for growth was rising electricity prices in the area, according to a new report titled “The Middle East & Africa Market for Uninterruptible Power Supplies - 2013 Edition” from IMS Research, now part of IHS. 

Following the rolling blackouts of 2008, South African public-utility company Eskom invested in building new power stations and installed new power-demand-management programs that have since greatly improved power reliability. But because of the investment required to keep electricity supply in line with demand, Eskom has had to raise power prices each year, resulting in prices tripling from 2007 to 2012. All these developments, in turn, powered the UPS market in the country by double-digit growth last year.

In the latest round of price hikes, the National Energy Regulator of South Africa, the country’s regulatory body for piped gas and petroleum, approved in February this year further increases at an annual rate of 8% from 2013 to 2018, setting the stage for continued growth of the UPS market in the years ahead. 

“Ever-increasing electricity prices are causing South African businesses to invest in new practices and equipment in order to minimize the cost of power,” said Liz Cruz, senior analyst, data center and critical infrastructure, at IHS. “Much of this attention has been directed at data centers, which account for a significant portion of the electricity consumption of businesses. In turn, a resulting demand for more efficient UPS has spurred replacement sales of 3-phase UPS units, and is driving up the average unit price of this product segment.” The earlier replacement of UPS with a more expensive product explains the major increase in UPS market growth. 

The need to control power costs has also led to a desire for better information, Cruz noted. “Companies want to know where and how their power is being used, which is also generating demand for data center infrastructure management (DCIM) software.” 

While some are investing in DCIM to implement better power usage practices, others are choosing to outsource this aspect of efficiency management. In particular, colocation facilities are experts in the design, construction and operation of efficient and reliable data centers, an appealing proposition for companies looking to minimize electricity costs with the added benefit of deferring capital expenses.

As electricity prices continue to climb, so, too, will the market for equipment, services and software that help constrain power costs. All told, the UPS market in South Africa can look forward to continued double-digit growth rates through 2017. 

IHS regularly analyzes all aspects of the market for data-center infrastructure. Click here for more information regarding these detailed reports. “The Middle East & Africa Market for Uninterruptible Power Supplies - 2013 Edition” report provides the most in-depth analysis available for the Middle East and African market for UPS. Unit shipments, average sales prices and revenues are estimated for 2012 and forecast through 2017. The market is segmented by country, product type, power rating and sales channel. Supplier market share estimates for 2012, and an analysis of the competitive environment, are also provided.

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