The global generator sets market is anticipated to increase at a CAGR of 6% during the forecast period of 2024 to 2032. The expansion of the generator sales market can be attributable to the rising demand for uninterrupted and reliable power from a variety of end-users, including the residential, IT/telecom, healthcare, utility, power generating, marine, chemical, oil & gas, mining, and construction industries. In addition to driving demand for generators and power generation systems, the rapidly increasing manufacturing sector is also driving demand for generators and power generation systems.
Rapid Expansion of The Manufacturing Sector Drives Demand for Generators and Power Generation Equipment
The manufacturing sector has contributed significantly to the economic growth of various Asia-Pacific nations. Rapid urbanization is boosting the demand for goods and services, which is driving the expansion of the industrial sector. In addition, the governments of numerous Asian nations have negotiated extra-regional trade agreements in an effort to establish themselves as global industrial hubs. According to the ASEAN Economic Community (AEC), the Regional Comprehensive Economic Partnership (RCEP), if effectively implemented, would be a step in the right direction toward a larger Asia Pacific Free Trade Area (FTAAP). It can serve as an appropriate intergovernmental platform for free trade, promote the growth of diverse industries, and support the growth of the region's manufacturing sector. The expansion of the region's manufacturing sector has increased the demand for power generation equipment and generators.
In China, Brunei, India, and Thailand, new oil refineries are being developed and new power production projects are being initiated. Since 2001, the Chinese pulp and paper sector has grown fast. China is currently one of the world's top producers of pulp and paper products. Thailand is a significant center for the Southeast Asian vehicle assembly sector. The agricultural processing, food and beverage, tobacco, cement, tourist, textile, and apparel industries all contribute to Thailand's economic prosperity. Consequently, the government has taken positive steps toward the digitalization of manufacturing businesses. 2017 marked the introduction of Thailand 4.0, which is defined as a digitally linked corporate and social system with modern infrastructure. To transform itself into a digital economy, the country also seeks innovation in specific industries, especially aircraft and robotics. Such beneficial government measures have driven the expansion of the Asia-manufacturing Pacific industry, hence increasing the demand for standby generators.
Vietnam's ability to produce high-quality goods at lower production costs attracts a large number of businesses. The manufacturing industry has been utilizing renewable energy sources. For example, the DBW facility is the first air-conditioning factory in Vietnam to be fitted with solar panels, which may generate up to 20% of the energy required for operations during dry seasons. The expansion of the manufacturing sector drives the demand for backup diesel generators, as the outdated transmission and distribution infrastructure cannot match the manufacturing industry's requirement for a continuous and stable power supply. Consequently, the increasing demand for uninterrupted power by practically every industry in Asia-Pacific is driving the expansion of the generator sales market.
Increasing use of renewable energy sources and energy storage systems to Limit the Market Growth
The market for energy storage has expanded dramatically during the past several years. In 2018, the World Bank Group (WBG) pledged USD 1 billion to a program to expedite investments in battery storage for low- and middle-income nations' electric power infrastructure. In addition, the World Bank granted a $300 million loan for the China Renewable Energy and Battery Storage Promotion Project in order to boost the integration and use of renewable energy through the widespread deployment of battery storage systems. This initiative was designed to boost the use of wind and solar power, improve grid resilience, stability, and electricity quality, and reduce carbon emissions in developing nations. Battery energy storage systems can store these energies at peak output by including batteries, resulting in less energy waste. Regardless of the generation source, battery storage helps balance the grid and enhances the quality of electricity.
Diverse nations invest in energy storage technologies. Greenko Energy Holdings committed approximately USD 1 billion to a new battery storage business in 2020, which included a plan to manufacture lithium-ion batteries for power grid-scale applications in India. Hitachi Chemical Co., Ltd. signed a deal in 2018 to acquire Thai Storage Battery (BAT-3K), a manufacturer and distributor of batteries, for USD 74 million. The acquisition is anticipated to allow technical transfers, hence assisting (BAT-3K) in the future development of more efficient car batteries.
In the year 2020, governments were pursuing policies to combat a variety of environmental challenges, including global warming, carbon emissions, and rising pollution, which prompted countries to transition to clean energy sources. Governments are adopting various efforts to boost renewable energy-producing projects. Several European nations, including the European Union, and major Asian economies are trying to achieve net-zero emissions in the near future; Japan and South Korea by 2050, and China by 2060.
In 2025, according to the International Energy Agency, renewables will surpass coal as the main source of global electricity generation. In 2020, renewables accounted for 29% of worldwide electricity generation, up from 27% in 2019. In 2021, the generation of renewable electricity is anticipated to increase by 8%, reaching 8,300 TWh. In 2021, China is anticipated to account for about half of the global increase in renewable electricity, followed by the United States, the European Union, and India. Over the next ten years, the generation mix is anticipated to shift, with significant growth in utility-scale solar, distributed generation and storage, grid-scale energy storage, and wind.
Growing Need for Hybrid Generators, Bi-Fuel Generators, And Inverter Generators to Open Significant Opportunities During the Forecast Period
In an effort to replace traditional fossil fuels with alternative energy sources, new and creative fuel sources are currently being created. Numerous original equipment manufacturers produce hybrid generators that are essentially internal combustion engines coupled with batteries. When the load is high, these hybrid gensets provide electricity directly to the engine, while the battery delivers power when the load is low. They reduce generator running time, fuel consumption, and noise. They offer various advantages over conventional gensets and are anticipated to gain traction in the mobile genset market, which is mostly employed in rural region applications, urban building sites, and the mining industry.
Bi-fuel generators offer the benefits of both gas and diesel generators, hence enhancing the dependability of emergency power systems. They operate mostly on gasoline, but can also run entirely on diesel in an emergency. In dual-fuel mode, natural gas is fed into the intake system, lowering diesel consumption while retaining the same power density, torque, and transient responsiveness as the diesel engine. Several generator manufacturers are implementing bi-fuel technology in response to diesel engine emission regulations and expensive operational costs. Bi-fuel generators are therefore replacing the typical diesel generator sets.
An inverter generator is a modern innovation that employs sophisticated electronic circuitry and magnets. Inverter generators produce cleaner AC power than conventional generators and are typically used to power current-sensitive appliances. They are making progress in the market of tiny household generators.
Demand For Hybrid Generators, Bi-Fuel Generators, And Inverter Generators Is Growing
There are numerous homes, commercial, and industrial applications for diesel generators. Diesel combustion releases nitrogen oxides, carbon monoxide, and particulate matter. These pollutants are emitted directly into the atmosphere, and they harm both the environment and the population. Several international laws have been adopted to prevent air and noise pollution caused by generator sets. In response to rising environmental concerns, each nation has developed its own legislation and programs to combat air pollution. For instance, the United Arab Emirates has vowed to reduce emissions and boost the proportion of clean energy in the energy mix to 24% by 2021, up from 0.2% in 2014. In 2005, Canada vowed to reduce greenhouse gas emissions by 30% by 2030. Environmental rules, policies, and subsidy programs differ from country to country dependent on the intensity of harmful gas emissions, such as SOx, NOx, and CO2. In 2005, the International Maritime Organization (UK) issued MARPOL Annex VI recommendations defining the limitations for NOx emissions and mandating the use of fuels with low sulfur content. These regulations apply to vessels and ships trading in U.S. waters and within 200 nautical miles of the North American coastline, also known as the North American Emission Control Area (ECA). The makers of ship components are focused on the development of marine propulsion systems that are compliant with various international environmental requirements. This is a significant obstacle for new and regional generator sales businesses.
Diesel Is Anticipated to Be the Greatest Contributor to The Generator Sales Market by Fuel Type During the Forecast Period
By fuel type, the research classifies the generator sales market into diesel, gas, and others. Due to its widespread use in the manufacturing, healthcare, oil & gas, maritime, and IT/telecommunications sectors, diesel is projected to hold the biggest market share by 2031. Diesel generators are easier to build and operate than gas generators, making them more user-friendly. In addition, the fuel utilized in these generator sets is easily transportable, enabling its usage in any place. Diesel generators have a lengthy lifespan, and diesel is more accessible than natural gas. Therefore, diesel generator sets are optimal for long-term (primary) operations with a load range of 70–80% and applications requiring lengthy runtimes. This is a significant component driving market expansion. 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, causing the gas generator sales market to expand at a faster rate over the forecast period.
The Industrial Sector, Is Anticipated to Hold the Greatest Market Share Among End Users During the Forecast Period
Industrial, commercial, and residential users make up the category of end users. The industrial sector held the biggest market share for generator sales. Diesel and gas generators are in significant demand among industrial end users, particularly in developing nations. This segment's rise is attributable to rising demand from the mining, marine, chemical, defense, and manufacturing sectors. In the event of a power outage from the grid system, industrial generators deliver uninterrupted power. Increasing demand for distributed power generation in Asia-Pacific and the oil-and-gas boom in North America are primarily responsible for the expansion of the industrial market. Favorable government policies for the growth of industries in countries such as China, Brazil, and India are the primary factor driving the market.
In terms of Power Rating, The Up to 50 Kw Category Is Anticipated to Expand at The Highest CAGR During the Forecast Period
The sector with a power rating of up to 50 kW is anticipated to have the highest CAGR over the projection period. The market for generators with a power rating of up to 50 kW is driven by the rising need for residential backup power solutions. In addition, generators with a power rating of up to 50 kW are utilized to provide power backup solutions for small-scale commercial activities such as retail, telecom, and others. For prime power solutions, these generators are also utilized in recreational vehicles, fire and emergency vehicles, utility and telecom fleets, and other specialist vehicles.
Less than or equal to 75 kVA generator sets are utilized in the telecom industry, business complexes, small restaurants, small-scale industries, and gas stations, among others, largely as backup power in grid-connected locations and as the primary source of power in off-grid areas. As they provide emergency backup power, the purchasing of compact generators is mostly driven by cost and necessity, as opposed to efficiency. Unreliable and restricted power access, particularly in rural regions, has been the primary reason for the massive demand for low-capacity generators. With the transformation of the business sector, demand for small generators in the range of 0-75 kVA is soaring, particularly in the developing nations of the Asia-Pacific and African areas. India will have around 583000 telecom towers by 2020, which will demand a constant power supply. Since 0-75, kVA diesel generators are utilized in the telecom industry for backup power in grid-connected locations and as the primary power source in off-grid areas, the market for generator sets is anticipated to expand significantly.
The building and construction market in India and China is growing as a result of current government initiatives such as smart cities and green building initiatives, which are anticipated to increase the demand for portable generators during the forecast period and propel the generator sets market. As a result of the aforementioned considerations, generator sets with a capacity of less than 75 kVA are anticipated to have the biggest market share during the projection period.
Backup Generators Are Anticipated to Be the Largest Contributor by Application During the Forecast Period
The generator sales market has been categorized by application into standby, peak shaving, prime, and continuous. During the projected period, standby is expected to be the largest and fastest-growing sector. The expansion of healthcare infrastructure and demand for data centers is driving the need for standby generators. In addition, extreme weather and subsequent power outages around the United States have increased the demand for backup generators. Increasing demand for uninterrupted power supply during peak hours and power disruptions is anticipated to drive demand for generators.
On the basis of sales channels, it is anticipated that indirect sales channels will dominate the market. Indirect sales channels, such as original equipment manufacturers and third-party service providers, acquire generators and equipment from manufacturers and give services to various end users. Considering that the majority of generators are utilized for standby power, it is crucial that they are operational when required, especially during a power outage. Because of this, the distribution/sales network and customer service play the most significant part in the customer decision-making process. The expansion of distribution and service networks by businesses is propelling the generator sales market. Better product accessibility and a tendency for acquiring generators through indirect sales channels also present substantial prospects for market expansion. Thus, the indirect sales channel is anticipated to become the fastest-growing market.
APAC to Remain the Global Leader
Asia-Pacific is anticipated to be the largest and fastest-growing market due to China and India's significant demand for power products. Due to modernization, the manufacturing sector in Asia-Pacific is seeing tremendous growth, which has boosted demand for generators throughout the region's countries. India has become a very profitable market for OEM manufacturers as a result of new governmental reforms aimed at promoting industrial growth. In addition, this is anticipated to generate substantial demand for generators in the region. Asia-rapidly Pacific's developing data center industry will continue to drive demand for diesel generators in the area. It is anticipated that increased expenditures in data centers, particularly in China, Australia, Japan, and Singapore, will fuel the demand for generators.
China is the leading generator sets market in the Asia-Pacific region due to increasing infrastructure projects, a widening power demand-supply gap, the expansion of manufacturing facilities across the country, and the rise in commercial office spaces. The country benefits from the affordability and efficacy of diesel generators, with rising living standards driving increased demand for power backup equipment. Moreover, the rapid expansion of several end-use industries, such as infrastructure, telecommunications, information technology (IT), and IT-enabled services, is anticipated to further stimulate the need for generator sets in India. For example, in September 2021, Bharti Airtel announced new plans to invest approximately INR 50 billion (USD 673 million) to expand its data center business in India to accommodate the country's expanding customer base. Such investments in the telecom sector are likely to increase demand for generator sets over the forecast period. In order to provide a constant and stable power supply, the increasing power outages in Indonesia have led to an increase in the deployment of generator sets throughout the country. South Sumatra and Jakarta are the leading contributors to the growth of the Indonesian market because of their frequent power outages. Therefore, based on the aforementioned considerations, it is anticipated that Asia-Pacific will lead the global generator set market over the forecast period.
The Market for Generators to Remain Moderately Fragmented
The market for generator sales is dominated by a small number of significant companies with a substantial regional presence. Market leaders include Caterpillar (US), Cummins (US), and Rolls-Royce Holdings (UK) (US). Between 2018 and 2023, the corporations implemented growth initiatives, such as the introduction of new products, to grab a greater market share. Kohler Co., Briggs & Stratton, Generac Power Systems, Kirloskar, Yamaha Motor Co., Powerica, Sterling & Wilson, Cummins, HIMOINSA, Supernova Genset, and J C Bamford Excavators, among others, are the leading businesses in the global industry. To prolong their market dominance, several of these companies are focusing on product improvements. Caterpillar Inc., a U.S.-based manufacturer of construction machinery and equipment, introduced three new standby diesel generator sets with power levels ranging from 20 kW to 30 kW in August 2023. The generator sets are intended for modest industrial, commercial, and telecommunications users in North America.
Historical & Forecast Period
This study report represents analysis of each segment from 2022 to 2032 considering 2023 as the base year. Compounded Annual Growth Rate (CAGR) for each of the respective segments estimated for the forecast period of 2024 to 2032.
The current report comprises of quantitative market estimations for each micro market for every geographical region and qualitative market analysis such as micro and macro environment analysis, market trends, competitive intelligence, segment analysis, porters five force model, top winning strategies, top investment markets, emerging trends and technological analysis, case studies, strategic conclusions and recommendations and other key market insights.
Research Methodology
The complete research study was conducted in three phases, namely: secondary research, primary research, and expert panel review. key data point that enables the estimation of Generator Sets market are as follows:
Market forecast was performed through proprietary software that analyzes various qualitative and quantitative factors. Growth rate and CAGR were estimated through intensive secondary and primary research. Data triangulation across various data points provides accuracy across various analyzed market segments in the report. Application of both top down and bottom-up approach for validation of market estimation assures logical, methodical and mathematical consistency of the quantitative data.
| ATTRIBUTE | DETAILS |
|---|---|
| Research Period | 2022-2032 |
| Base Year | 2023 |
| Forecast Period | 2024-2032 |
| Historical Year | 2022 |
| Unit | USD Million |
| Segmentation | |
Fuel Type
| |
Application
| |
End User
| |
Power Rating
| |
Sales Channel
| |
|
Region Segment (2022-2032; US$ Million)
|
Key questions answered in this report
