During the period between 2024 and 2032, the global market for generator sets is predicted to expand at a CAGR of 6%. The expansion of the generator sets market can be attributed to the rising demand for uninterrupted and dependable power from a variety of end-user industries, including the residential, IT/telecom, healthcare, utility and power generating, marine, chemical, oil & gas, mining, and construction sectors. In addition to driving demand for generators and power generation systems, the continuously expanding manufacturing sector also drives this demand.
The manufacturing industry has considerably contributed to the economic expansion of numerous Asia-Pacific nations. Rapid urbanization is fuelling the rise of the industrial sector by increasing the demand for goods and services. In an effort to promote themselves as global industrial hubs, the governments of a number of Asian countries have also negotiated extra-regional trade agreements. According to the ASEAN Economic Community (AEC), successful implementation of the Regional Comprehensive Economic Partnership (RCEP) would be a step in the right direction toward a broader Asia Pacific Free Trade Area (FTAAP). It can serve as a proper intergovernmental platform for free trade, encourage the growth of varied industries, and assist the expansion of the manufacturing sector in the region. The rise of the region's manufacturing sector has raised the demand for generators and power generation equipment.
China, Brunei, India, and Thailand are developing new oil refineries and initiating new power-generating projects. Since 2001, the Chinese pulp and paper industry has rapidly expanded. China is one of the world's leading manufacturers of pulp and paper products. Thailand is an important hub for automobile assembly in Southeast Asia. Agriculture processing, food and beverage, tobacco, cement, tourism, textiles, and apparel all contribute to Thailand's economic growth. Therefore, the government has made important steps toward the digitalization of manufacturing companies. Thailand 4.0, characterized by a digitally linked business and social system with contemporary infrastructure, was introduced in 2017. In order to transition into a digital economy, the nation also needs innovation in certain industries, such as the aerospace and robotics sectors. Thus, the demand for standby generators has increased as a result of the expansion of the Asia-manufacturing Pacific sector, which has been fueled by these advantageous government policies.
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Numerous enterprises are attracted to Vietnam due to its capacity to produce high-quality goods at cheaper costs. The manufacturing sector has adopted renewable energy sources. For instance, the DBW plant is the first air-conditioning factory in Vietnam to be equipped with solar panels, which can provide up to 20% of the required electricity during dry seasons. The rise of the manufacturing sector drives the demand for backup diesel generators, as the industry's need for a continuous and reliable power supply cannot be met by the outmoded transmission and distribution infrastructure. As a result, the rise of the generator sets market in Asia-Pacific is being driven by the growing demand for uninterrupted power across virtually all industries in the region.
In recent years, the market for energy storage has developed significantly. In 2018, the World Bank Group (WBG) committed $1 billion to a scheme to accelerate investments in battery storage for the electric power infrastructure of low- and middle-income countries. In addition, the World Bank provided a $300 million loan to the China Renewable Energy and Battery Storage Promotion Project in order to increase the integration and use of renewable energy through the broad implementation of battery storage systems. This effort aimed to increase the use of wind and solar energy, enhance grid resilience, stability, and electricity quality, and reduce carbon emissions in developing countries. By incorporating batteries, energy storage devices can store these energies at peak output, resulting in less energy waste. Regardless of the source of power, battery storage helps balance the grid and improves electricity quality.
Diverse nations invest in technologies for energy storage. In 2020, Greenko Energy Holdings would invest around USD 1 billion in a new battery storage business, including a plan to produce lithium-ion batteries for grid-scale applications in India. Hitachi Chemical Co., Ltd. entered into an agreement in 2018 to acquire Thai Storage Battery (BAT-3K), a battery manufacturer and distributor, for USD 74 million. It is hoped that the acquisition will provide technical transfers, thereby aiding (BAT-3K) in the future development of more efficient automobile batteries.
In the year 2020, governments were pursuing legislation to fight numerous environmental concerns, such as global warming, carbon emissions, and rising pollution, which drove countries to migrate to clean energy sources. Governments are using a variety of initiatives to promote renewable energy production projects. Several European nations, including the European Union, and major Asian economies are pursuing net-zero emissions in the near future; Japan and South Korea by 2050, and China by 2060.
According to the International Energy Agency, renewables will surpass coal as the primary source of energy generation worldwide by 2025. In 2020, renewables generated 29% of the world's electricity, up from 27% in 2019. In 2021, it is expected that renewable electricity generation would increase by 8%, reaching 8,300 TWh. China is expected to account for almost fifty percent of the global increase in renewable electricity in 2021, followed by the United States, the European Union, and India. Over the next ten years, the production mix is expected to evolve, with utility-scale solar, distributed generation and storage, grid-scale energy storage, and wind experiencing significant expansion.
In an effort to replace traditional fossil fuels with alternative energy sources, inventive new fuel sources are being developed at present. Numerous original equipment manufacturers produce hybrid generators that consist mostly of internal combustion engines and batteries. When the load is high, these hybrid gensets provide power directly to the engine, while when the load is low, the battery provides power. They reduce the generator's running time, fuel consumption, and its noise output. They provide numerous advantages over conventional gensets and are expected to gain traction in the mobile genset market, which is mostly utilized in rural region applications, urban construction sites, and the mining industry.
Bi-fuel generators provide the advantages of both gas and diesel generators, hence increasing the reliability of emergency power systems. They mostly function on gasoline, however, diesel can be used in an emergency. In dual-fuel mode, natural gas is injected into the intake system, reducing diesel consumption while maintaining the same power density, torque, and transient response as the diesel engine. In reaction to diesel engine emission laws and high operational costs, a number of generator manufacturers are developing bi-fuel technology. Thus, bi-fuel generators are replacing conventional diesel generator sets. A recent innovation that employs sophisticated electronic circuitry and magnets is an inverter generator. Typically used to power current-sensitive appliances, inverter generators produce cleaner AC power than traditional generators. They are making success in the market for diminutive residential generators.
Diesel generators have numerous residential, commercial, and industrial applications. Nitrogen oxides, carbon monoxide, and particulate matter are produced when diesel fuel is burned. These pollutants are immediately released into the atmosphere, and they are detrimental to both the environment and the human population. Multiple international legislation has been enacted to reduce air and noise pollution produced by generators. In response to growing environmental concerns, each nation has adopted its own anti-air pollution laws and programs. The United Arab Emirates, for instance, has pledged to reduce emissions and increase the share of clean energy in its energy mix to 24% by 2021, up from 0.2% in 2014. Canada pledged in 2005 to reduce greenhouse gas emissions by 30 percent by 2030. Depending on the intensity of hazardous gas emissions, such as SOx, NOx, and CO2, environmental laws, policies, and subsidy programs vary from country to country. In 2005, the International Maritime Organization (UK) issued MARPOL Annex VI recommendations specifying NOx emission limits and regulating the use of low-sulfur fuels. These laws apply to vessels and ships engaged in commerce in U.S. waters and within 200 nautical miles of the North American shoreline, also known as the North American Emission Control Area (ECA). The manufacturers of ship components are concentrating on the creation of marine propulsion systems that comply with worldwide environmental regulations. This is a major barrier for new and regional generator sets enterprises.
The report categorizes the generator sets market by fuel type as diesel, gas, and others. Diesel is anticipated to hold the largest market share in 2031 because of its extensive use in the manufacturing, healthcare, oil & gas, maritime, and IT/telecommunications industries. Diesel generators are more user-friendly than gas generators since they are simpler to construct and operate. Additionally, the fuel used by these generator sets is easily transportable, allowing for its use anywhere. Diesel generators are durable, and diesel is more readily available than natural gas. Diesel generator sets are optimum for long-term (primary) operations with a load range of 70–80% and applications needing extended runtimes. This is a crucial factor in the expansion of the market. To reduce emissions, however, developed nations such as the United States, Canada, the United Kingdom, Germany, France, the Netherlands, and Japan are rapidly adopting natural gas-based power generation technologies, thereby accelerating the growth of the gas generator sets market over the forecast period.
The category of end users includes industrial, commercial, and residential customers. The industrial sector held the largest generator sets market share. Industrial end-users, especially in developing nations, have a substantial demand for diesel and gas generators. This segment's growth is due to increased demand from the mining, marine, chemical, defense, and industrial industries. Industrial generators provide uninterrupted power in the event of a power loss from the utility grid. The rise of the industrial market is mostly attributable to the growing need for distributed power generation in Asia-Pacific and the oil-and-gas boom in North America. The market is primarily driven by favorable government policies for the expansion of industries in countries such as China, Brazil, and India.
During the forecast period, the sector with a power rating of up to 50 kW is predicted to have the highest CAGR. Increasing demand for household backup power solutions drives the market for generators with a power rating of up to 50 kW. In addition, generators with a power rating of up to 50 kW are used to provide backup power for small-scale commercial activities such as retail, telecommunications, and others. These generators are also utilized in recreational vehicles, fire and emergency vehicles, utility and telecom fleets, and other specialized vehicles for prime power solutions.
Less than or equal to 75 kVA generator sets are utilized in the telecom industry, commercial complexes, small restaurants, small-scale businesses, and petrol stations, among others, mostly as backup power in grid-connected places and as the primary power source in off-grid locations. The purchase of compact generators, which provide emergency backup power, is mostly motivated by cost and necessity, as opposed to efficiency. Unreliable and limited access to electricity, particularly in rural areas, has been the primary driver of the enormous demand for low-capacity generators. With the development of the business sector, the need for small generators ranging from 0 to 75 kVA has skyrocketed, especially in the developing nations of the Asia-Pacific and African regions. By 2020, India will have over 583000 telecom towers, which will require a consistent power supply. Since 0-75, kVA diesel generators are used in the telecom industry as backup power in grid-connected sites and as the major power source in off-grid areas, the market for generator sets is expected to grow substantially.
The building and construction industry in India and China is rising due to current government initiatives such as smart cities and green building programs, which are expected to enhance the need for portable generators throughout the projected period and propel the generator sets market. As a result of the aforementioned factors, it is projected that generator sets with a capacity of less than 75 kVA will have the largest market share over the forecast period.
By application, the sales market for generators has been segmented into standby, peak shaving, prime, and continuous. During the projected time frame, the sector of standby is anticipated to be the largest and fastest-growing. The demand for standby generators is driven by the expansion of healthcare facilities and the demand for data centers. In addition, severe weather and accompanying power outages have raised the demand for backup generators throughout the United States. The market for generators is predicted to be driven by the rising demand for consistent power supply during peak hours and power outages.
It is projected that indirect sales channels will dominate the industry in terms of the sales channel. Indirect sales channels, such as original equipment manufacturers and third-party service providers, obtain generators and equipment from manufacturers and provide a variety of services to end customers. Due to the fact that the majority of generators are used for standby power, it is essential that they are operational when needed, particularly during a power outage. Therefore, the distribution/sales network and customer service play the greatest role in the client decision-making process. Businesses' expansion of distribution and service networks drives the generator sets market. Better product accessibility and a trend toward procuring generators through indirect sales channels also give significant market potential opportunities. Consequently, the indirect sales channel is predicted to become the market with the highest growth rate.
Due to China and India's enormous demand for power products, Asia-Pacific is expected to be the largest and fastest-growing market. As a result of modernization, the Asia-Pacific manufacturing sector is experiencing explosive growth, which has increased demand for generators throughout the region's nations. As a result of new government policies aimed at fostering industrial growth, India has become a particularly lucrative market for OEM manufacturers. In addition, this is expected to increase the demand for generators in the region. Asia-rapidly the expanding data center industry in the Pacific will continue to drive demand for diesel generators in the region. It is projected those growing investments in data centers, especially in China, Australia, Japan, and Singapore, will feed the demand for generators.
Due to expanding infrastructure projects, a widening power demand-supply gap, the expansion of manufacturing facilities across the country, and the growth of commercial office spaces, China is the largest generator set market in the Asia-Pacific region. The country benefits from the price and effectiveness of diesel generators, with improving living standards driving demand for backup power equipment. In addition, the rapid growth of numerous end-use industries, such as infrastructure, telecommunications, information technology (IT), and IT-enabled services, is predicted to increase the need for generator sets in India. In September 2021, for instance, Bharti Airtel announced new plans to invest roughly INR 50 billion (USD 673 million) to expand its data centers business in India to match the country's growing client base. During the projection period, these expenditures in the telecommunications industry are projected to enhance demand for generator sets. In order to guarantee a steady and stable power supply, the rising power outages in Indonesia have led to a nationwide increase in the deployment of generator sets. Due to their frequent power outages, South Sumatra and Jakarta are the primary contributors to the expansion of the Indonesian market. On the basis of the aforementioned factors, it is predicted that Asia-Pacific will dominate the worldwide generator set market during the forecast period.
The market for selling generators is dominated by a small number of large enterprises with a major regional presence. Caterpillar (US), Cummins (US), and Rolls-Royce Holdings (UK) are market leaders (US). In order to increase their market share between 2018 and 2023, the firms launched growth strategies, such as the introduction of new products. Kohler Co., Briggs & Stratton, Generac Power Systems, Kirloskar, Yamaha Motor Co., Powerica, Sterling & Wilson, Cummins, HIMOINSA, Supernova Genset, and J C Bamford Excavators are among the industry leaders. To maintain their market supremacy, a number of these businesses are concentrating on product enhancements. In August 2023, Caterpillar Inc., an American producer of construction gear and equipment, announced three new standby diesel generator sets with outputs ranging from 20 kW to 30 kW. The generator sets are designed for small North American industrial, commercial, and telecommunications users.
