Diesel Generator Market Size, Share, Growth, Analysis

[316 Pages Report] The global diesel generator market in terms of revenue was estimated to be worth $17.9 billion in 2024 and is poised to reach $23.4 billion by 2029, growing at a CAGR of 5.4% from 2024 to 2029. The diesel generator market size is expanding due to the increasing demand for reliable backup power sources in regions prone to frequent power outages has bolstered the adoption of diesel generators, industries and businesses are increasingly relying on diesel generators to ensure uninterrupted operations, particularly in sectors where power stability is critical, such as healthcare and telecommunications and the portability and versatility of diesel generators make them a popular choice for remote locations or construction sites where grid connectivity may be limited or non-existent.

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Diesel Generator Market Dynamics

Driver: Growing demand for uninterrupted & reliable power supply.

Due to the undeniable importance of a consistent and uninterrupted power supply in fostering the prosperity of contemporary societies, the reliance on electricity has become increasingly apparent. In today's digital economy, which operates round the clock, electricity serves as a linchpin across various sectors, from sustaining critical medical equipment in hospitals to facilitating remote work and virtual meetings. The recent challenges precipitated by the Covid-19 pandemic have only reinforced the pivotal role electricity plays in our daily lives.

As outlined in the IEA World Energy Outlook, the proportion of electricity in final energy consumption has steadily climbed from 15% in 2000 to 20% today, with projections indicating a further increase to 24% by 2040 if current trends persist. In alignment with the objectives of the Paris Agreement, the Sustainable Development Scenario emphasizes the potential for enhanced electrification across diverse sectors, foreseeing electricity accounting for 31% of final energy consumption by 2040. This trajectory underscores the escalating demand for electricity as a cleaner and more sustainable energy option. Against this backdrop of mounting electricity demand, diesel generators emerge as pivotal components in ensuring reliability during power grid outages or disturbances. As industries, commercial entities, and residential communities endeavor to mitigate the repercussions of electricity disruptions and sustain operational continuity, the reliance on diesel generators is poised to grow. This evolving trend underscores the indispensable role diesel generators play in furnishing backup power solutions and addressing the evolving energy requisites of modern societies.

Restraint: Rapidly growing renewable energy technology.

The growth of renewable energy technologies has been propelled by various factors, including escalating concerns over supply disruptions and the volatility of fossil fuel prices. Globally, energy consumers are increasingly embracing on-site renewable energy systems and transitioning towards electrified technologies across diverse sectors. For instance, the buildings sector witnessed a significant surge in heat pump installations in 2022, marking a notable 10% increase over the previous year, with Europe experiencing a particularly remarkable 38% growth. Similarly, the attractiveness of rooftop solar installations surged amid the rise in fossil fuel prices. In energy-intensive industries, worries about energy expenses and security drove a notable 21% uptick in corporate power purchase agreements (PPAs) in 2022. Renewable-powered industrial parks gained traction for providing insulation against energy price fluctuations and supply interruptions. Moreover, the transport sector grappled with rising energy costs, resulting in doubled energy bills for many public transport operators in Europe, although those with existing PPAs experienced more stable costs. The electrification of road transport continued its upward trajectory, witnessing unprecedented investment in electric vehicles and associated charging infrastructure, particularly in Asia. Several Asian nations implemented bans on internal combustion engine vehicles, further stimulating demand for electric alternatives. In agriculture, there's a discernible shift towards self-sufficiency and additional income generation through the adoption of renewable energy solutions like agrivoltaics, geothermal, and bioenergy. Solar water pumps, prevalent in the Asia Pacific region, have significantly enhanced agricultural productivity. As renewable energy technologies continue their expansion, there could be a potential impact on the demand for diesel generators. The increasing affordability and appeal of renewable energy alternatives may lead to a downturn in diesel generator demand, particularly in sectors such as buildings, industry, transport, and agriculture, where renewable energy solutions offer cost savings, energy security, and environmental advantages.

Opportunities: urbanization and industrialization.

During a special meeting, the President of the United Nations Economic and Social Council (ECOSOC) underscored the critical role of infrastructure, industrialization, and innovation in global poverty eradication efforts. Emphasizing the importance of Sustainable Development Goal 9 (SDG 9) focusing on these aspects, ECOSOC President Frederick Shava emphasized the necessity of prioritizing these goals in national, regional, and global policymaking. Urbanization presents a significant opportunity for industrial and infrastructure development, with the projected doubling of the population in emerging market cities by 2030, leading to an addition of two billion people to urban areas. However, this rapid urbanization also brings challenges, including the requirement for resilient infrastructure and industrialization in rural areas. Diesel generators can play a crucial role in addressing the energy needs of rapidly expanding urban centers and industrial hubs. As cities grow and industries flourish, the demand for reliable and uninterrupted power supply rises. Diesel generators offer a dependable backup power solution, ensuring continuous electricity supply during grid outages or fluctuations.

According to estimates by the UN Economic Commission for Africa (UN-ECA), Africa needs approximately USD 93 billion over the next three years to upgrade its infrastructure. Diesel generators can contribute to closing the infrastructure gap by providing reliable power for industrial operations, urban infrastructure, and rural electrification initiatives. Furthermore, diesel generators can support sustainable industrialization by offering affordable and clean energy solutions. As the international community commits to supporting infrastructure development and sustainable industrialization, diesel generators emerge as a viable option to meet the increasing energy demands of urbanization and industrial expansion.

Challenges: Stringent government regulations

According to the Renewables 2023 Global Status Report, the year 2022 witnessed a global expansion of climate commitments, with 10 countries revising their Nationally Determined Contributions (NDCs) to align with emissions reduction targets under the Paris Agreement. However, out of the 193 countries that have signed agreements, only 25 have set goals for achieving net-zero emissions. Climate policies enacted by various nations are focused on decarbonizing energy usage across diverse sectors, albeit with progress varying by region. In 2022, approximately 80 new renewable energy policies were introduced worldwide, primarily in the form of fiscal or financial incentives. These policies were implemented across 49 countries, with the majority concentrated in Europe, Latin America, and Asia.

Within the buildings sector, policies supporting the adoption of renewables, such as rooftop solar and geothermal heat pumps, were in place in 52 countries, featuring both fiscal and regulatory incentives. In the industry sector, 19 countries implemented policies incentivizing or mandating the use of renewables, primarily through renewable energy mandates and fiscal incentives. Notably, the European Union's Carbon Border Adjustment Agreement (CBAM) introduced a carbon tax on imports to EU member countries, expected to accelerate global industrial sector decarbonization. In the transport sector, 61 countries had renewable energy mandates or enabling policies, predominantly focusing on biofuel blending mandates and setting targets or bans on internal combustion engine vehicles. Regarding agriculture, 14 countries established targets and policies for renewables, primarily for solar-powered irrigation and agrivoltaics. These climate policies and renewable energy targets adopted by various countries could have implications for the market. As countries prioritize the adoption of renewable energy and enact policies to decarbonize different sectors, there may be a decrease in demand for diesel generators, particularly in industries and sectors where renewable energy alternatives are encouraged or mandated. Additionally, the transition towards renewable energy sources may result in a shift away from fossil fuel-based power generation, which could impact the market for diesel generators.

Diesel Generator Market Ecosystem

Leading companies in this diesel genset market include well-established, financially secure producers of diesel generator products. These corporations have been long operating in the market and have a differentiated product portfolio, modern manufacturing technologies, and robust sales and marketing networks. Major companies in this market include Caterpillar (US), Cummins Inc.(US), Rolls-Royce plc (UK), Mitsubishi Heavy Industries, Ltd. (Japan) , Generac Power Systems, Inc (US).

The commercial segment is expected to be the second largest market by end user during the forecast period.

By end user, the diesel generator market is divided into industrial, commercial and residential. The commercial segment is expected to be the second largest in the diesel generator market Due to its versatility and widespread applications, its growth is attributed to increasing demand from sectors such as hospitality, healthcare, and retail, driven by the need for reliable backup power to ensure uninterrupted operations and data integrity.

By power rating, 51 to 280 kW is expected to be the largest segment during the forecast period.

The 51 to 280 kW segment is expected to be the largest in the diesel generator market due to its increasing usage in utility plants, distributed generating facilities, and large commercial or industrial settings, the 51 to 280 kW segment emerges as the largest in the market. Its growth is fueled by burgeoning economies in developing regions like Asia Pacific and the Middle East & Africa, where expanding industrial sectors and unreliable grids necessitate primary or backup power solutions. Infrastructure development initiatives, exemplified by the launch of USD 1.7 billion worth of national highway projects in Patna, Hajipur, and Bihar, further contribute to genset market expansion. Additionally, the demand for generators within this segment is propelled by various construction activities, including single houses, smaller roads, low-rise apartments, and temporary construction jobs, which require electric tools and equipment consuming 51-280 kW of electricity. Governments worldwide are also implementing infrastructure-related policies to attract foreign investments, such as India's significant FDIs in the construction development and infrastructure sectors.

“Asia pacific”: The largest in the diesel generator market.

Asia Pacific is the largest region in the diesel generator market size owing to a region experiencing a boom in industrial activity and urban growth. This translates to a surging demand for reliable power sources, especially for factories and commercial buildings that can't afford downtime during outages, thus providing a prospect for the market. Moreover, Pacific emerging nations in Asia- have undeveloped electrical infrastructure. As a result, there are frequent blackouts and an unstable supply of electricity, this serves as an opportunity for the diesel generators market. The diesel generator market size is greatly influenced by China, a prominent participant in the region. The need for dependable backup power is fueled by the nation's continuous infrastructure projects, rising manufacturing base, and developing commercial sector and diesel generators are frequently used to meet this demand. Furthermore, Diesel fuel is widely accessible throughout most of Asia-Pacific, making it a convenient option for powering generators. This is especially important in remote areas where access to other fuel sources might be limited.

Key Market Players

The market is dominated by a few major players that have a wide regional presence. The major players in the diesel generator market are Caterpillar (US), Cummins Inc. (US), Rolls-Royce plc (UK), Mitsubishi Heavy Industries, Ltd. (Japan), Generac Power Systems, Inc (US). Between 2020 and 2024, strategies such as product launches, contracts, agreements, partnerships, collaborations, alliances, acquisitions, and expansions are followed by these companies to capture a larger diesel generator market share.

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Scope of the Report

This research report categorizes the diesel generators market by vertical, offering, technology, source, and region

On the basis of power rating, the diesel generator market has been segmented as follows:

• Up to 50 kW
• 51 – 280 kW
• 281 – 500 kW
• 501 – 2,000 kw
• Above 2,000 kW

On the basis of design, the diesel generator market has been segmented as follows:

• Stationary
• Portable

On the basis of application, the diesel generator market has been segmented as follows:

• Commercial
• Industrial
• Residential

On the basis of source, the diesel generator market has been segmented as follows:

• Standby power
• Peak Shaving
• Prime & Continuous Power

On the basis of region, the diesel generator market has been segmented as follows:

• Asia Pacific
• Europe
• North America
• Middle East & Africa
• South America

Recent Developments

• In January 2024, Explore Plant and Transport Solutions has made a significant investment exceeding £6 million in acquiring a fleet of over 100 JCB machines. This Worksop, Nottinghamshire-based specialist in haulage and plant hire services has received delivery of various new models, including JCB Loadall telescopic handlers, site dumpers, generators, and, notably, JCB midi and X Series excavators for the first time.
• In May 2023, Anglo Belgian Corporation (ABC) disclosed the signing of a contract with FRERK Aggregatebau GmbH based in Schweringen, Germany. The agreement entails the supply of seven generating sets powered by +5000 HP V16 engines. These medium speed gensets will be packaged by FRERK Aggregatebau GmbH into modular 15x4m super silenced containers, ensuring a dependable energy source for Germany's largest Salt Mining Company across four distinct sites.
• In February 2023, Caterpillar Inc. has introduced the Cat XQ330 mobile diesel generator set, presenting a fresh power option for standby and prime power uses that adhere to U.S. EPA Tier 4 Final emission standards. Propelled by a proficient Cat C9.3 Tier 4 Final compliant engine, it incorporates the Cat NOx Reduction System for enhanced efficiency.
• In July 2020, Rolls-Royce bolsters its expansion prospects through the purchase of Kinolt, a Belgian expert in dynamic uninterruptible power supply. Kinolt joins Rolls-Royce's Power Systems business unit and aligns with its MTU product and solutions brand. This acquisition bolsters Rolls-Royce's standing in safety-critical sectors and fills gaps in its power supply product range.

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