DIESEL GENERATORS MARKET SIZE AND SHARE ANALYSIS - GROWTH TRENDS AND FORECASTS (2024- 2031)

Market Size and Trends

The diesel generators market is estimated to be valued at USD 20.02 Bn in 2024 and is expected to reach USD 29.51 Bn by 2031, growing at a compound annual growth rate (CAGR) of 5.7% from 2024 to 2031.

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The diesel generators market is expected to witness positive growth over the forecast period. There has been increasing demand for uninterrupted and backup power supply from various industries such as healthcare, telecom, and data centers. Also, growth in the construction and infrastructure sectors along with rising industrialization in developing nations has augmented the product demand. However, stringent emission norms and rising deployment of renewable energy resources are the key factors anticipated to hamper the market expansion. Nonetheless, growing industrial & construction activities in off-grid locations coupled with benefits of diesel such as portability is likely to offer lucrative opportunities for diesel generator manufacturers during the forecast timespan.

Growing Infrastructure Development Projects

The global infrastructure development sector has witnessed significant growth over the past few years. For instance, India is focusing on expanding its national highway network, with about 13,800 km of highways construction planned in 2023-24 alone, amounting to Rs 2.81 lakh crore. Both developed and developing countries worldwide are ramping up investments to develop new roads, highways, bridges, airports, seaports, rail networks, power generation and transmission facilities, commercial buildings, and other infrastructure projects. These growing infrastructure development activities have proven to be a major driver for the diesel generators market. Most large infrastructure projects, especially during the construction phase, require reliable and uninterrupted power supply to run heavy machineries and equipment. Since centralized grid connectivity may not always be feasible or sufficient during construction in remote or rural locations, diesel generator sets serve as the most viable alternative to power various construction equipment, temporary site offices, labor camps, and other on-site electricity needs. Diesel gensets provide cost-effective, movable, and easily scalable power solutions at construction sites of roads, buildings, factories, power plants, and other commercial and industrial infrastructure ventures. They can be rapidly deployed without requiring permanent fixtures or invasive wiring at temporary deployment locations. This mobility and flexible on-site power provision has made diesel generators an indispensable part of the infrastructure building process. With more countries initiating ambitious infrastructure development plans, the demand for diesel generator rentals and sales is expected to further increase from the infrastructure sector. 

Market Concentration and Competitive Landscape

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Remote and Off-Grid Electrification

A large population worldwide, especially in rural and far-flung areas of developing nations, still lacks access to centralized electricity grids and stable power supply. The challenges and costs associated with extending power transmission and distribution networks to remote, scarcely populated, and difficult terrains have meant that reliable grid electrification remains a challenge in many regions. It is in such off-grid remote locations that diesel generators play a crucial role in providing electricity for applications ranging from domestic household use and local community centers to telecom towers, agricultural activities, small enterprises, and infrastructure development projects underway in remote areas not yet connected to main power networks. Since most renewable energy options are also not economically or technically viable in all off-grid settings, diesel gensets are frequently the only viable option to electrify and energize unelectrified rural populations, villages, and townships located far from existing grid lines. As governments and international organizations step up efforts to achieve universal electrification goals, the dependence on diesel generators for decentralized distributed power generations is likely to continue playing an important role in remote area electrification in the foreseeable future.

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Market Challenges: Growing environmental regulations

The diesel generators market faces several challenges. Environmental regulations globally are becoming more stringent due to rising pollution levels, restricting the use of diesel generators. The market is also impacted by fluctuating fuel prices as diesel generators are heavily dependent on diesel prices. Additionally, technological advancements in alternate energy resources like solar and wind energy are enabling reliable off-grid power solutions, increasing competition for diesel generators.

Market Opportunities: Growing demand from end-use industries

Demand remains strong from several end-use industries globally to combat power outages. Ongoing infrastructure development projects especially in emerging nations also catalyze the market growth. Adopting modular and mobile gen-sets along with the development of fuel-efficient and low-emission models can help tackle challenges while catering to demand.

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Insights, By Application: Emergency Power Outages Drive the Demand for Standby Power Solutions

 In terms of application, standby power contributes 67% share of the diesel generators market owing to the critical need for uninterrupted power supply during emergencies and power outages. Diesel generators that provide standby power act as a reliable backup source of electricity during interruptions to the main utility supply. Their automatic operation offers seamless transition from city power to generator power within seconds. This ensures business continuity and safeguards sensitive operations or processes that cannot tolerate even momentary power fluctuations. Standbys are widely adopted across industries with zero-tolerance for downtime such as healthcare, data centers, manufacturing, hotels and banks. Hospitals in particular rely on backup diesel generators to keep lifesaving equipment operational round the clock. Data centers house mission-critical IT infrastructure and require non-stop power availability to avoid data loss or disruptions to hosted services. Similarly, manufacturers cannot afford production delays due to power failures that may damage raw materials or finished goods. The need to minimize financial losses or revenue leakage during outages drives businesses across these sectors to equip facilities with standby generators.

Insights, By Power Rating: Maximizing Power Output Drives Demand in the 350-1,000 KVA Range

In terms of power rating, the 350-1,000 KVA segment contributes 41.2% share to the diesel generators market owing to advantages in optimizing power output. Generators in this range are suitable for applications requiring higher power capacities than smaller gensets can support. They enable more efficient sizing matching the standby loads at commercial, industrial, and institutional facilities. Right-sizing ensures the full rated power output of generators is utilized to avoid excess capacity and higher operating costs. Larger gensets in the 350-1,000 KVA band are commonly used to back up medium to large industrial processes and infrastructure. Manufacturing units with multiple production lines, warehouses, cold storages, and auxiliary systems demand high power outputs that only mid-range generators can deliver. Critical power demands of 500 KVA or higher across sections of hospitals, data centers, hotels, and educational campuses also contribute to sales. With capacities sufficient for small commercial buildings and multi-tenant housing complexes, such generators achieve high load bank utilization.

Insights, By End-User: Constant Operations Drive the Commercial Adoption of Diesel Generators

In terms of end-user, the commercial sector contributes 43.3% share of the diesel generators market owing to requirements of steady, reliable power for continuous operations. From offices and shops to malls, hotels, and other commercial establishments, uninterrupted electricity is critical to maintaining services, transactions, and customers footfall round the clock. Even short outages can result in heavy losses as operations come to a grinding halt until power resumes. Commercial real estate such as retail complexes house tenants that may lose customers if branch connectivity drops during payments or transactions. IT parks, BPO hubs, and call centers incur steep penalties for SLA breaches arising due to power issues. For hotels, outages impact room service, restaurants, laundries, and ancillary functions. Lack of power disrupts cash registers, inventory management systems as well as air conditioning, lighting, and security that are vital to business continuity across sectors. 

Regional Insights

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North America has traditionally been the dominant region in the global diesel generators market with 42.2% of the market share. The stable industrial and commercial sectors have ensured steady demand for backup power solutions over the years. Furthermore, the presence of diesel generator giants, such as Caterpillar, Cummins, and Generac, has cemented the region's leadership position. These companies have strategically established manufacturing and distribution networks across the key markets to effectively serve the on-going as well as emergency power needs. Stringent regulatory norms regarding carbon emissions have also played a role in driving the sales of fuel-efficient diesel generators in North America. Equipment meeting Tier 4 emission standards is highly sought after by industrial clients aiming to reduce their environmental footprint. Overall, the strong industrial infrastructure combined with supportive government policies have made North America the dominant force in the global diesel generators industry.

Asia Pacific displays immense potential for future expansion of the diesel generators market. Surging industrialization and infrastructure development across nations such as China, India, and Indonesia is propelling the need for reliable backup power solutions. Furthermore, diesel remains a widely available and cost-effective fuel option in most parts of Asia Pacific. This helps address the requirements of off-grid communities or temporary applications effectively. The export oriented manufacturing sector is also augmenting the demand for diesel generators in Asia Pacific. Frequent power outages can cause production downtime and losses for companies. Hence, they are increasingly turning to diesel-powered gensets as an insurance against grid failures. Overall, Asia Pacific's rapidly developing economy along with the ongoing electrification of rural areas is opening up new avenues for diesel generator market players. Additionally, growing local manufacturing presence of global OEMs will give further impetus to the region's rise over the coming years.

Market Report Scope

Key Developments

• Kirloskar Oil Engines Ltd (KOEL) launched a new iGreen genset in June 2022. The iGreen version 2.0 is powered by the R550 series of engines and offers good fuel efficiency and high power quality. Kirloskar Oil Engines Limited specializes in manufacturing both air-cooled and water-cooled engines and diesel-generating sets across a wide range of power outputs from 2.1 kW to 5,200 Kva.
• The Government E-Marketplace (GEM) floated a tender in December 2021 for the installation project of diesel generator sets at the head office of the Ministry of Commerce & Industry in New Delhi, India. The tender required the supply of at least five DG sets for backup power supply.
• In July 2021, Qulliq Energy Corp. accelerated the replacement of community diesel gensets that had exceeded their useful lives, following the decommissioning of Grise Fiord's aging diesel plant. The new diesel gensets have enhanced the reliability of the community's power supply. Diesel generator sets play a vital role in providing backup power solutions in various sectors, including residential, commercial, and industrial settings.
• In December 2021, Enregon, a diesel generator firm based in the U.K., announced a deal to provide 30 megawatts (MW) of diesel generators to a data center in the Middle East. Although specific details regarding the exact location were not provided in the search results, the contract marked Enregon's largest deal yet, valued at (US$10 million).

*Definition: The diesel generators market consists of companies that manufacture diesel-powered generators for commercial and residential use. Diesel generators use diesel engines that convert the chemical energy stored in the fuel into electrical energy. They are used as backup power sources during power outages and can provide power for homes, businesses, healthcare facilities, data centers, telecommunications networks, and industrial operations. Diesel generators offer reliable standby and emergency power and are a popular choice when the grid power is unreliable or unavailable.

Market Segmentation

• Application Insights (Revenue, USD Bn, 2019 - 2031)
  • Standby Power
  • Peak Shaving
  • Prime or Continuous Power
•  Power Rating Insights (Revenue, USD Bn, 2019 - 2031)
  • 0-100 Kva
  • 100 – 250 Kva
  • 350 – 1000 Kva
  • 1000 Kva
•  End-use Insights (Revenue, USD Bn, 2019 - 2031)
  • Industrial
  • Commercial
  • Residential
• Regional Insights (Revenue, USD Bn, 2019 - 2031)
  • North America
    • U.S.
    • Canada
  • Latin America
    • Brazil
    • Argentina
    • Mexico
    • Rest of Latin America
  • Europe
    • Germany
    • U.K.
    • Spain
    • France
    • Italy
    • Russia
    • Rest of Europe
  • Asia Pacific
    • China
    • India
    • Japan
    • Australia
    • South Korea
    • ASEAN
    • Rest of Asia Pacific
  • Middle East & Africa
    • GCC Countries
    • Israel
    • Rest of Middle East & Africa
• Key Players Insights
  • AKSA Power Generation Company
  • Atlas Copco AB
  • Caterpillar
  • Cummins Inc.
  • Doosan Portable Power
  • Generac Power System Inc.
  • Honda India Power Products Ltd.
  • Kohler Co.
  • Rolls-Royce plc
  • Wartsila Corporation
  • Honda India Power Products Ltd.
  • Yamaha Motor Co Ltd.
  • Mitsubishi Heavy Industries Ltd.
  • Mahindra & Mahindra Ltd.
  • Kirloskar Oil Engines Ltd.