Data Center Generator Market Size & Outlook, 2026-2034

Data Center Generator Market Overview

The global data center generator market value in 2025 is estimated to be approximately USD 9.2 billion. Looking ahead, the market is projected to grow at a compound annual growth rate (CAGR) of about 7.25% from 2025 to 2034, reaching an estimated value of USD 18.9 billion by 2034. Generators are the backup power supply for data centers during a power interruption.  The growth in power demand from the data center sector, along with the growing emphasis on sustainability, has resulted in substantial advances in generator fuel technology. 

Key Market Trends and Insights

• Global data center generator market size is projected to grow from approximately USD 9.2 billion in 2025 to around USD 18.9 billion by 2035, indicating significant expansion potential. 
• The market is expected to grow at a compound annual growth rate (CAGR) of about 6.9% from 2025 to 2035. 
• Based on type diesel generators dominate the market with over 74% share in 2024, favored for high reliability, while gas generators are among the fastest-growing segments with nearly 9% CAGR. 
• The market is characterized by increasing demand for high-capacity (>1 MW) generators to support growing hyperscale and colocation data centers worldwide. 
• Asia-Pacific leads growth, particularly China with a 10.1% CAGR from 2025 to 2035, driven by rapid expansion of hyperscale facilities and new data center regulations. 
• Based on end-use the hyperscale data center segment accounts for more than 45% of the data center generator market share as of 2024.

Market Size and Forecast

• 2025 Market Size: USD 9.2 billion 
• 2035 Projected Market Size: USD 18.9 billion 
• CAGR (2025-2035):6.9% 
• Dominating Region: North America
• Fast Growing Region: Asia- Pacific

The data center generator market is a critical segment in the broader power backup and reliability landscape, serving as a vital component to ensure uninterrupted power supply for data centers worldwide. This growth is fueled by rapid data consumption increase, the proliferation of cloud computing, digital transformation initiatives, and the heightened demand for business continuity amid rising power outage risks. Key drivers include the expansion of data centers globally, particularly from hyperscale operators and cloud providers, as well as growing integration of renewable energy sources, edge computing, and stringent energy efficiency standards. These dynamics underscore the crucial role of generators in maintaining reliable and resilient data center operations under varied circumstances. 

Major markets for data center generators include North America, Europe, and Asia-Pacific, with the United States leading in terms of installed data center facilities. The market trends emphasize high reliability, fuel efficiency, rapid deployment, and the incorporation of advanced technologies like predictive maintenance and remote monitoring.

Latest Market Trends

Growing Demand Driven by Hyperscale & Edge Data Centers

The rapid expansion of hyperscale data centers, which consume significant amounts of power—sometimes exceeding 100 megawatts per hour—is compelling operators to adopt high-capacity backup generators. With rack densities pushed into the megawatt range by artificial intelligence workloads, hyperscale facilities require reliable generators rated from 2.25 MW to 4 MW or more to meet stringent uptime and Tier III/IV standards. These advanced diesel generators offer improved fuel efficiency, lower emissions, and enhanced power density to cater to this demand. Edge data centers, meanwhile, are driving a need for compact, modular generators that allow distributed and flexible power backup solutions essential for latency-sensitive applications and rapid scalability. 

Shift Towards Sustainable and Fuel-Flexible Solutions

Although diesel generators still anchor most data center installations due to their reliability and power capacity, increasing environmental regulations and volatile fuel prices are accelerating the adoption of alternatives like natural gas, hydrogen, and hydrotreated vegetable oil (HVO)-compatible platforms. Natural gas generators offer cleaner combustion and integrate easily with existing gas infrastructure, reducing emissions and potentially lowering operational costs. Hydrogen-based generators and hybrid systems that combine renewables with traditional fuel sources are gaining interest to meet aggressive carbon-reduction goals, better comply with Tier 4 emission norms, and improve sustainability profiles. This shift is complemented by growing deployment of hybrid power architectures integrating battery storage, diesel/natural gas generators, and renewables for energy resiliency. 

Technological Innovations in Power Management

Advancements in remote monitoring, automation, and predictive maintenance are revolutionizing data center backup power solutions. Modern generator systems are equipped with IoT sensors and analytics software that enable real-time tracking of performance metrics, fuel consumption, and operational health. Predictive analytics allow operators to forecast potential failures or maintenance needs, significantly reducing downtime and operational costs. Intelligent load balancing and automatic start-up/shutdown features enhance overall reliability, ensuring instant response during power disruptions and optimizing energy use. Advanced control systems now enable seamless integration of generators with uninterruptible power supplies (UPS), energy storage, and renewable sources, thus creating resilient and cost-effective power ecosystems.

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Market Drivers

Rising Demand for Reliable Backup Power

The demand for reliable backup power in data centers is driven by the exponential increase in data processing and digital services. As of 2025, data centers globally are consuming massive amounts of electricity, with utility power demand expected to rise by roughly 11.3 GW this year alone. This growth is fueled by the proliferation of hyperscale data centers, leased facilities, and crypto-mining operations, with total data center grid-power demand projected to reach 134.4 GW by 2030. Data centers are becoming critical infrastructure for cloud computing, e-commerce, video streaming, and AI, requiring uninterrupted power to avoid costly outages and data loss. Hyperscale operators demand large-capacity, redundant generators rated above 2 MW to meet strict uptime and Tier III/IV certification standards, while edge data centers require compact and modular backup systems for local power resiliency. 

Regulatory Emphasis on Data Security and Resilience

The regulation comes from the U.S. Environmental Protection Agency (EPA) issued on May 1, 2025. On this date, the EPA published clarifying guidance, including a Fact Sheet and Frequently Asked Questions (FAQ), which detailed when stationary emergency backup generators may be operated for nonemergency situations under a 100-hour annual limit, with authorized participation in demand response programs capped at 50 hours annually. This regulation aims to balance the need for grid reliability and emergency power with air quality and emissions standards, enforcing strict compliance protocols while allowing flexibility for emergency and certain nonemergency uses by data centers and other critical infrastructure operators Strict uptime requirements driven by Service Level Agreements (SLAs) and regulatory mandates compel data center operators to invest in highly reliable and redundant generator systems. This ensures continuous power availability to avoid costly downtime and data loss. Standards such as Tier III and Tier IV certifications mandate backup power solutions with minimal switch-over times and system redundancy, elevating generator system complexity and quality. Environmental regulations are increasingly stringent, focusing on reducing emissions from data center backup generators. Compliance with air quality standards, such as those from the U.S. Environmental Protection Agency (EPA), limits the operational hours of diesel generators, especially for non-emergency uses like testing or grid demand response. For emergency power, generators can operate without hourly limits but must comply with reporting and emissions controls. 

Market Restraints

High Initial Investment and Operational Costs

High initial investment and operational costs remain crucial challenges in the data center generator market as of November 2025. The upfront capital expenditure for installing advanced generator systems can often exceed USD 1 million, reflecting costs associated not only with the generators but also the extensive supporting infrastructure such as electrical switchgear, enclosures, sound attenuation, fuel storage, and commissioning. This is especially true for hyperscale and Tier III/IV certified data centers, where redundancy, compliance, and operational complexity add layers of expense. Operational costs also present a substantial financial burden, with continuous expenditures on fuel (diesel or natural gas), routine maintenance, parts replacement, and adherence to increasingly stringent emissions and safety regulations. Additionally, rising material costs, such as copper and steel due to global supply chain constraints, further elevate acquisition and maintenance expenses.

These high costs tend to deter smaller or emerging data center operators, limiting market penetration primarily to large-scale operators. Careful evaluation of return on investment and operational efficiency is essential when selecting generator solutions, making cost concerns a key restraint in the market's broader adoption and growth. 

Supply Chain Constraints and Delivery Delays

Supply chain constraints and delivery delays have become major challenges in the market. Global disruptions have significantly extended lead times for critical components such as large-bore engines and alternator parts, exacerbated by record-high copper prices, pushing generator delivery timelines from the traditional 20-30 weeks to upwards of 72-104 weeks. This prolongation negatively impacts the timely commissioning of new data centers and expansion projects, forcing operators to either delay capacity growth or pivot towards modular, regionally assembled generator solutions that offer faster deployment and mitigate supply risks. These challenges are compounded by labor shortages and geopolitical uncertainties affecting equipment manufacturing and logistics, underscoring the fragility of the current supply ecosystem. 

Infrastructure and Space Limitations

On the infrastructure side, space limitations particularly affect data centers in urban or densely populated areas, where acquiring sufficient physical footprint for large-scale generator installations is difficult. Operators must carefully balance spatial constraints with requirements for cooling systems, fuel storage, sound attenuation, and adherence to noise regulations. This spatial pressure limits the size and number of traditional generators that can be deployed, especially in hyperscale facilities that demand megawatt-scale power capacity. As a result, there is growing adoption of compact, modular, and containerized generator systems that enable flexible power capacity scaling while optimizing space usage and operational efficiency. The combination of supply chain challenges and infrastructure constraints necessitates innovative design approaches and strategic sourcing to maintain data center reliability and resilience. 

Market Opportunities

Shift Towards Sustainable and Greener Solutions

The data center generator market is increasingly driven by environmental regulations and corporate commitments to sustainability. Diesel generators, while widely used, are recognized as significant sources of air pollution and face growing restrictions under federal, state, and local regulations aiming to reduce emissions of nitrogen oxides, carbon monoxide, and other harmful pollutants. Operators are transitioning to cleaner alternatives such as natural gas generators, which emit substantially fewer pollutants and are better suited for long-term, steady operation, although they require continuous fuel supply instead of onsite storage. Emerging technologies like hydrogen-fueled and hydrotreated vegetable oil (HVO)-ready generators offer even lower emissions, supporting ambitious carbon reduction goals. Additionally, hybrid power systems integrating renewable energy sources such as solar and wind with battery storage and traditional generators are gaining traction, reducing fuel consumption and operational costs while enhancing resilience. Leading tech companies like Microsoft and Apple are actively pursuing these greener backup power options to meet carbon-neutral targets, further accelerating market demand for sustainable generator technologies. Regulatory efforts, including tighter emissions limits and incentives for renewable integration, are expected to continue shaping this shift towards environmentally friendly power backup solutions in data centers. 

Emerging Markets and Regional Expansion

The Asia-Pacific region, particularly China and India, represents one of the most promising growth areas for the data center generator market. Rapid digital transformation initiatives, increasing cloud adoption, and a surge in data center construction drive demand for reliable backup power infrastructure. Supportive government policies in these countries promote investments in data center parks, streamlined approvals, and sustainability targets, creating an enabling environment for market expansion. Additionally, the rise of edge data centers in these markets to cater to localized data processing and low-latency needs further amplifies demand for compact, modular generator solutions. Despite challenges like grid instability in some areas, this creates opportunities for onsite backup generation. Furthermore, new state-level regulations in countries such as India emphasize energy efficiency, renewable energy procurement, and emissions reporting for data centers, aligning with global sustainability trends and encouraging adoption of cleaner, fuel-flexible generator technologies. The combination of infrastructure growth, regulatory support, and burgeoning digital economies positions Asia-Pacific as a fertile ground to capture untapped market potential for data center generators in the coming decade.

Regional Analysis

North America holds the largest market share in the data center generator market, accounting for around 37.5% of the global share as of 2024. This dominance is largely driven by the region’s high concentration of hyperscale and colocation data centers, particularly in the United States and Canada. The expanding demand for cloud services, AI workloads, and 5G infrastructure fuels the need for reliable, high-capacity backup power solutions. Technology adoption is advanced, with operators increasingly integrating diesel and natural gas generators along with emerging hybrid systems to meet uptime and emissions requirements. 

The United States is the fastest-growing country in this region, contributing over 87.4% of the North American market share. It is projected to grow at a CAGR of approximately 4.8% during 2025-2033, supported by investments in distributed data centers and edge computing facilities. Growth is also stimulated by regional grid reliability challenges, pushing data center operators to adopt redundant power systems to ensure continuous operation. 

Asia Pacific's Market Trends

The Asia-Pacific region holds a significant market share in the global data center generator market, accounting for approximately 28% of the total market as of 2025. This region benefits from rapid urbanization, technological advancements, a surge in cloud adoption, and expanding digital infrastructure across emerging economies. Key countries such as China, India, Japan, and Southeast Asian nations contribute substantially to this growth, with widespread deployment in hyperscale and edge data centers. The region is also witnessing increased government investments promoting smart city projects and digital transformation initiatives, which further enhance the demand for reliable and sustainable data center backup power solutions. 

China and India are the fastest-growing countries in Asia-Pacific, showing particularly strong momentum in the market. China alone accounts for nearly 49% of the region's data center investment and is expected to grow at a CAGR of around 10.1% driven by massive hyperscale data center projects and strict sustainability mandates. India follows closely with a CAGR near 9.9%, fueled by policies such as the Digital Personal Data Protection Act, rapid expansion of domestic cloud infrastructure, and rising edge deployments in urban centers like Mumbai. Other emerging markets like Malaysia, Singapore, and Indonesia are also notable contributors with increasing modular data center builds and cost-competitive power generation solutions supporting growth. 

European Market Insights

Europe holds an important share in the global market, accounting for approximately 26% of the total market share as of 2025. This market presence is supported by a concentration of large data center hubs in countries such as Germany, the UK, France, and the Nordics. The region’s focus on regulatory compliance, energy efficiency, and the transition toward cleaner fuel options is driving demand for advanced generator technologies. While diesel generators remain widely used, investments in natural gas and hybrid systems are accelerating in response to stringent sustainability goals and emissions regulations, especially under initiatives like the EU Green Deal. 

Germany dominates the European data center generator market with the largest share and acts as the fastest-growing country within the region, expected to grow at a CAGR of around 8.4% through 2029. This growth is fueled by policies promoting the transition to low-carbon backup power and significant investments in large-scale data centers. The UK and France also show steady growth, contributing to the regional expansion with their strategic focus on renewable energy adoption in data centers. The Nordics, relying heavily on renewable energy from hydropower and wind, present a unique scenario where traditional generator demand is lower; however, there is increased adoption of battery backups and microgrid systems. 

Middle East and African Market Trends

The Middle East and Africa region holds a smaller but steadily growing market share in the global market, contributing approximately 8% of the total market as of 2024-2025. This growth is driven by rapidly developing digital infrastructure in the Gulf Cooperation Council (GCC) countries and South Africa. The region benefits from investments in new data center parks and government-led digital transformation programs that foster demand for reliable backup power generators. Additionally, the extreme climatic conditions across much of the Middle East and Africa necessitate generator systems with robust cooling capabilities and high reliability to maintain uninterrupted operations in challenging environments. 

The United Arab Emirates (UAE) is the fastest-growing country in this region, with a CAGR exceeding 8%, largely due to trade hub status, increasing hyperscale investments, and innovation in sustainable energy integration. Saudi Arabia and South Africa are also emerging markets with growing data center presence and power infrastructure modernization efforts. 

Latin American Market Insights

Latin America holds a modest market share but is anticipated to experience gradual growth driven by digital infrastructure expansion in Brazil, Mexico, and Colombia. Improved grid reliability and a rise in data center construction create opportunities for backup power adoption. Diesel generators are commonly used, with gradual interest in cleaner fuels and hybrid systems. 

Brazil is the leading growth country in Latin America, projected to grow at a CAGR of around 7% due to the increasing number of colocation facilities and government initiatives to boost IT infrastructure. Mexico and Colombia are also contributing to regional market expansion through ongoing digitalization programs.

Type Insights

The diesel generator segment holds the largest market share in the data center generator market, accounting approximately of 74% of the total market as of 2024. Diesel generators remain the preferred choice for many data center operators due to their high energy density, reliability, and established technology. They offer cost-effectiveness and are widely used in large-scale and hyperscale data centers that require uninterrupted power supply. The prevalent use of diesel generators is also supported by their compatibility with existing infrastructure and ease of maintenance, making them the backbone of backup power in data centers globally. 

The fastest-growing segment in the market is the gas generator segment, which is expanding at a remarkable CAGR of approximately 8.9% during the forecast period. Natural gas generators are increasingly favored for their lower environmental impact and compliance with stricter emissions regulations. They provide an attractive alternative by reducing carbon footprint and fuel costs, particularly as data centers aim to meet sustainability goals. Growth in this segment is bolstered by advances in gas generator technologies and a rising demand for hybrid systems that combine conventional and green technologies to provide cleaner, reliable backup power. 

Capacity Insights

The data center generator market by capacity is largely dominated by the less than 1 MW segment, which accounted for more than 58% of the market share in 2024. This segment's dominance is attributed to the widespread use of smaller generators in a variety of data center sizes, especially in colocation and edge data centers where modularity and flexibility are essential. Generators with capacities under 1 MW are preferred for their compactness, ease of maintenance, and efficiency in providing backup power for medium and small-scale data centers, which constitute a significant portion of the market. 

The data center generator market segment with capacities ranging from 1 MW to 2 MW has seen the most rapid growth in data center generator market, projected to grow at a CAGR of around 7.05% over the forecast period. This growth is driven by increasing demand from hyperscale and large enterprise data centers that require higher capacity generators to support substantial power loads while maintaining redundancy and reliability. The 1 MW to 2 MW generators offer a good balance of power output, efficiency, and operational flexibility, making them ideal for scalable, high-density data center deployments. Additionally, the growing adoption of hybrid and natural gas generators in this capacity range is contributing to its accelerated market expansion. 

End Use Insights

The hyperscale data center segment accounts for more than 45% of the market share as of 2024, representing the largest portion of the market. Hyperscale data centers, operated by major cloud providers and large enterprises, require highly reliable and redundant generator systems to ensure continuous uptime and protect against costly outages. These facilities typically use large-capacity diesel generators for backup power due to their efficiency, reliability, and proven performance. The significant investment by hyperscale operators in expanding cloud computing, big data, and artificial intelligence infrastructure continuously fuels the demand for backup power solutions. 

The fastest-growing end-use segment in the data center generator market is the edge data center segment, projected to expand at a CAGR of around 10.3% over the forecast period. Edge data centers are smaller, decentralized facilities located closer to end users to reduce latency and enable real-time data processing. Their growth is driven by the increasing adoption of IoT, 5G, and other latency-sensitive applications, especially in regions with less reliable grid infrastructure. Edge data centers demand compact, modular, and fuel-efficient generator solutions that can deliver reliable power in diverse and distributed locations, contributing to the rapid growth of this segment.

Competitive Landscape

The competitive landscape of the data center generator market is moderately fragmented with several key players driving innovation and market growth. Leading companies include Caterpillar Inc., Cummins Inc., Generac Power Systems Inc., ABB Ltd, Rolls-Royce plc, Atlas Copco AB, and HITEC Power Protection. These players have established strong global footprints with extensive dealer and service networks, enabling them to cater to large-scale hyperscale data centers, colocation facilities, and edge data centers. Continuous investment in research and development (R&D) focusing on sustainability, fuel efficiency, hybrid technology integration, and compliance with stricter emissions regulations are crucial strategies for maintaining competitive advantage. 

Several companies differentiate themselves by offering advanced technologies such as hydrogen-capable generators, hybrid diesel-gas solutions, and intelligent power management systems integrated with data center infrastructure management (DCIM) software. Market leaders like Caterpillar and Cummins leverage their broad product portfolios, strong service capabilities, and partnerships with data center operators and EPC (engineering-procurement-construction) firms to secure long-term contracts. Emerging players and specialists focus on niche segments, including natural gas and renewable fuels, to capitalize on the growing emphasis on clean energy.

List of key players in Data Center Generator Market

1. Caterpillar Inc.
2. Cummins Inc.
3. Generac Power Systems Inc
4. ABB Ltd
5. Rolls-Royce plc
6. Atlas Copco AB
7. HITEC Power Protection
8. Eurodiesel Services
9. Himoinsa
10. KOHLER
11. Yanmar Holdings Co. Ltd.
12. Langley Holdings plc
13. Deutz AG
14. Kirloskar Oil Engines Limited
15. Mitsubishi Motors Corporation

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Recent Developments

• In April 2025, Generac launched five new generators for the data center market, ranging from 2.25 MW to 3.25 MW. Featuring Baudouin M55 engines, Deep Sea controllers, and modular scalability, these low-emission, high-performance units addressed hyperscale to edge data center needs with fast deployment and integrated energy ecosystem compatibility. 
• In May 2025, Cummins Inc Partnered with AVAIO Digital in May 2025 to supply backup power for its AI-ready US data centers, marking a $200M investment. 
• August 2025: Caterpillar inked a contract for a Utah campus featuring 1.1 GWh of battery storage paired with CHP engines. 
• July 2025: Rolls-Royce allocated USD 75 million to expand mtu Series 4000 machining in South Carolina.