The global data center generator market size was valued at USD 2.03 billion in 2021. It is expected to reach USD 3.23 billion by 2030, growing at a CAGR of 5.4% during the forecast period (2022–2030).
Data centers are mission-critical infrastructures that manage and process a large volume of data across multiple industries; as a result, data centers contribute significantly to the global economy. For data center facilities, however, reliable power backup to prevent data loss during power outages is of utmost importance. Generators offer a safe and cost-effective way to provide backup power for data centers and prevent the downtimes caused by restarting the entire system. Generators do not require an external power source to operate and can meet a data center's massive electrical power requirements have been the driving force behind the market's expansion.
Manufacturers of data center generators market are focused on equipping their products with technologically advanced features to meet the diverse needs of data center facilities. In addition, companies such as Cummins, Inc., and Himoinsa have added remote monitoring capabilities to generator sets. Thus, the data center operator can remotely observe the load levels, power system status, and alternator data and remotely control the alternator. These characteristics result in lower maintenance costs and increased operational efficiencies for the data center facilities. The market value chain for data center generators includes raw material suppliers, component suppliers, manufacturers, distributors, and end-users. Iron, steel, aluminum, plastic, semiconductor components, and insulating materials are the primary raw materials used in the production of generators. Some raw materials are supplied directly to generator manufacturers to develop the necessary components.
Additionally, raw materials are supplied to component manufacturers, who perform primary processing and distribute the components to generator manufacturers following their specifications. To meet the demand of generator manufacturers, vast quantities of raw materials are sourced from numerous sources. Demand for advanced generators with auto-start and stop systems is rising in data centers. A typical UPS can power data center servers for minutes. It gives data center operators time to start the generators after an outage. Thus, data centers need UPS to ensure uninterrupted power.
A data center is made up of networked computers and storage applications that are used to store, process, and distribute mission-critical data. As organizations expand and automate the management of their business data, several data centers are being established in various regions of the globe. However, effective power management is a significant obstacle for data center operators. Data centers use substantial electricity to power their computers, servers, and networking equipment. They also provide electricity to power the cooling equipment. Data centers must maintain temperatures of approximately 20 degrees Celsius. Not only can power outages disrupt the operation of the entire data center facility, but they can also affect the performance of the cooling equipment. Therefore, data centers rely heavily on generators to provide backup power during power outages. As a result, demand for data center generators is increasing, driving market expansion.
Several businesses are adopting cloud computing to improve their business operations' scalability, efficiency, and adaptability while simultaneously reducing their operational expenses. As more enterprises adopt cloud computing and rely on web hosting, colocation, and cloud services to run their operations, mega data centers are being constructed worldwide. While cloud computing involves managing large amounts of data, it also requires substantial computational power. The uninterrupted power supply is of the utmost importance if mega data centers continue to provide the necessary computational power during power outages. Thus, data center operators are aggressively investing in data center generators market to ensure an efficient and uninterrupted power supply for their data centers.
As data center power densities rise, backup power supply systems become increasingly important. Generators are powered by fuel and do not require an existing or stored power source to function. Consequently, they can serve as an efficient secondary power source in the event of a loss of primary power and power all of the data center's systems, such as computers, servers, networking equipment, and cooling systems. Thus, generators can guarantee a continuous power supply for data centers so long as they have fuel. However, conventional generator systems suffer from reliability and performance problems. Conventional generators sometimes fail to start or provide sufficient power due to issues with their subsystems. While their runtime was susceptible to low fuel levels, they frequently failed under unexpectedly high-power loads. However, advancements in generator systems, such as standby generator systems operating on diesel, natural gas, liquid petroleum, and gasoline, among other fuels, have resulted in the introduction of energy-efficient generator systems for data centers and are anticipated to create growth opportunities for the data center generator market over the forecast period.
Natural gas or diesel-powered standby generator systems are the most prevalent. A generator system typically comprises an emergency generator, an automatic transfer switch (ATS), and a management system. The figure above illustrates the output distribution. The ATS is supplied by two power sources, the utility, and the standby generator, with the utility being the preferred power source. In a power outage, the ATS automatically switches to the backup generator to ensure that the data center continues to receive uninterrupted power.
The fuel-powered generators used in data center facilities emit nitrous oxide, carbon dioxide, particulate matter, and other hazardous exhausts into the atmosphere. Therefore, data centers must comply with various environmental sustainability regulations when installing such generators. In addition, ample space and sizeable on-site fuel tanks are necessary for establishing the generators. In addition, a dedicated UPS is required for the generators to operate correctly. Due to the factors above, data center operators are evaluating alternative technologies to fuel-powered generators.
In addition, the integration of battery technologies such as fuel cells and Li-ion batteries has resulted in the emergence of fuel cell power systems, which is anticipated to impede market growth. Clean, scalable, and dependable fuel cells provide a means for data centers to satisfy their energy needs and environmental sustainability objectives. Depending on the fuel source, fuel cells offer low to zero emissions, thereby mitigating data centers' environmental and climate impacts. In addition, fuel cell systems can heat excellent data center equipment to maintain proper climate conditions, maximize server performance, and improve overall efficiency. Even though fuel cell power systems eliminate the need for large backup generators and reduce data center emissions, these systems have several drawbacks. Fuel cell power systems are more expensive per kilowatt-hour (kWh) than generators.
Moreover, fuel cell systems are only economically viable with government grants. In addition, fuel cell power systems have complex designs and require a constant power load. This factor continues to drive demand for power generators that are simple to install and have fewer complications than fuel cell systems.
In addition to data and productivity losses, power outages in data center facilities can incur high costs. There is a growing demand for dependable generators in data center facilities for efficient system backup due to the escalating frequency and severity of natural disasters and extreme weather events worldwide. Diesel, natural gas, liquid petroleum, and gasoline are used to operate generators. In the market for generators used in data centers, natural gas generators present the most significant expansion opportunities. These generators offer high efficiency and dependability, reduced gaseous emissions, and a chance for data center facilities to monetize unused power generators.
Furthermore, natural gas generators adhere to stringent government regulations regarding the greenhouse gas emissions of data centers. In addition, natural gas generators deliver superior efficiency and output power performance. In developed regions, the high dependability of the natural gas grid eliminates the risk of limited run times and refueling associated with other generator types. Natural gas generators can reduce the emissions of a data center. Natural gas-powered generators can reduce NOx emissions by 80 to 90 percent and CO2 emissions by up to 25 percent compared to diesel-powered generators. In addition, the relatively high prices of diesel and gasoline-powered generators and changing government policies and regulations are expected to spur demand for natural gas generator systems.
| Study Period | 2018-2030 | CAGR | 5.4% |
| Historical Period | 2018-2020 | Forecast Period | 2022-2030 |
| Base Year | 2021 | Base Year Market Size | USD 2.03 Billion |
| Forecast Year | 2030 | Forecast Year Market Size | USD 3.23 Billion |
| Largest Market | North America | Fastest Growing Market | Asia Pacific |
The global data center market is primarily segmented into three regions, namely North America, Europe, and Asia-Pacific.
The North American market is dominating the global data center market at a CAGR of 6.0% during the forecast period. The region is characterized by several service providers, OEMs, and a large customer base. Companies such as Cummins, Inc.; Caterpillar Inc.; and Generac Holdings Inc. are based in the region, significantly contributing to its dominant market share. However, the Asia-Pacific region is anticipated to witness a significant percentage. Investments by market leaders in developing countries like China and India are expected to drive the regional market.
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The global data center generator market is segmented by Product Type, Capacity, and Tier Standards.
Based on type, the global data center generator market is classified into Diesel and Gas.
The Diesel segment dominates the Data Center Generator Market since diesel generators are trustworthy and efficient devices to provide standby power in data centers. Diesel generators are chosen for their strong performance during critical conditions, as they have fast start times and higher power output, allowing continued operation during a power outage in a data center. Thus, with the increase in demand for data storage and processing, the market grows. Conversely, improvements to diesel generators in terms of better fuel efficiency and reduced emissions continue to fuel the adoption of these backup generators in data centers. The market is also threatened by environmental regulations and growing interest in alternative sources of energy, which can at any time dictate the future dynamics of the diesel segment in the data center generator market.
Gas generators are highly preferred in data centers because of their reduced emissions as compared to the traditional diesel generators, hence it aligns itself very well with the increased emphasis recently laid on sustainability and environmental regulations. Besides, they provide a reliable backup power source, hence allowing continuous operation in the event of power outage, which comes in high demand in data centers for high uptime and reliability. Further, gas generators help in bringing down operational costs over time and enhancing fuel efficiency. Recent advances in technology have further improved their performance as a viable option for modern data centers trying to balance performance with responsibility toward the environment. Accordingly, the share of a gas generator is expected to grow significantly with the growing demand for green power solutions in the data center industry.
Based on capacity, the global data center generator market is classified into <1MW, 1MW-2MW, and >2MW.
The less-than-1-MW capacity segment of the data center generator market is of relevance for its special applications and growing prominence. Generators in this category usually power small data centers, branch offices, or edge computing facilities that do not require as much power as a larger generator can deliver. These units provide reliable backup power to avoid disruptions of operations and the loss of data in a power outage. Demand for <1 MW generators is growing as data centers turn to distributed architectures and edge computing solutions. In such smaller or distributed data center environments, this growth in demand is being driven by the requirement for localized and scalable power solutions that efficiently support operational demands. The segment is characterized by a great variety of generator types, reaching from diesel and gas to hybrid systems
The segment of 1MW-2MW in data center generators has been an important sector catering to mid-sized data centers with key requirements of substantial power backup and reliability. This capacity range finds more relevance in data centers dealing with medium to large scale operations, ensuring optimal balance between power output and efficiency in operations. This segment's generators work through power outages to ensure uninterruptible operation, thus protecting data integrity. This device offers flexibility in fuel options and advanced control systems with the ability to integrate with existing data center infrastructure. With growing demands on data centers for increased reliability and energy efficiency, the 1MW-2MW segment provides greatly to satisfy these needs and fulfils today's trend toward being sustainable and cost-effective.
The >2-MW capacity segment is gaining prominence and constitutes a sizeable proportion in the data center generator market. Generators in this capacity range are designed to provide considerable power outputs, thereby catering to large data centers that require a high level of energy reliability and redundancy. These high-capacity generators are all about ensuring continuous operations and backup against power outage, which is of the essence for data integrity and operational continuity in large facilities. With rising demand for data storage and processing, the demand for >2 MW generators naturally take center stage especially in industries like cloud computing, telecommunications, and large enterprise IT environments. With the ever-expanding and evolving data centers, a market for these high-capacity generators is envisioned that will continue to grow with technological development and increased awareness for reliable backup power solutions.
Based on tier standards, the global data center generator market is classified into Tier 1, Tier 2, Tier 3, and Tier 4.
Tier 1 is considered the lowest standard in data center infrastructure within the data center generator market. It is also recognized to be basic and inexpensive. Tier 1 data centers are normally designed with a single, non-redundant power source; that is to mean, they rely on a single path for power and cooling. This type of infrastructure would be applicable to small businesses or organizations that do not process very vital data and can therefore afford to lose some minutes or hours of uptime. For generators, most Tier 1 data centers would use standard generators. These provide power during an outage but lack many of the redundancy and reliability features in higher-tier deployments. These generators are crucial in cases where loss of power would result in loss of operation, but they do not provide the same level of operational continuity and fault tolerance as those used by higher-level data centers.
Tier 2 data centers are represented as having a higher reliability compared to Tier 1; however, they are not as robust as Tier 3 or Tier 4 facilities. Tier 2 data centers typically have redundancy in power and cooling but may not have multiple paths for power and cooling, which does impact overall uptime. Tier 2 data center generators must provide backup power reliably to run the operations of the center when outages occur; generally, however, the systems are designed with lower redundancy and less fault tolerance. In Tier 2 data centers, demand for generators will be driven by the need for better power reliability and cost efficiency while at the same time balancing operational resilience with investment considerations. These generators are critical for the continuity of service and reduction in possible downtown; however, the infrastructure is much less demanding compared to the higher data center tiers.
Tier 3 comprises data centers that are designed with a focus on minimizing downtown and enhancing reliability while offering balanced methodology between cost and redundancy. Tier 3 data center have the feature that they can run continuously while planned maintenance is going on, by duplicating important components and systems. Tier 3 data center design involves multiple independently maintainable power and cooling paths. No single component failure is capable of disrupting operations. Such a system will feature redundant generators, UPS systems, and cooling units; all this work together to deliver continuous operation and system resilience under any single component failure. Tier 3 therefore covers those enterprises that have strong infrastructure needs but not at the extensive cost associated with the highest tier of data center standards.
Tier 4 generators spell out the highest possible reliability and performance standards for any Data Center Generator Market. The added layer of redundancy and fault tolerance in Tier 4 generators provides maximum tolerance to continue operation without loss of power in the event of failure of more than one component. They have multiple power sources, large backup systems, and thorough maintenance procedures to ensure a 99.995% uptime rating. This tier is necessary for data centers requiring the highest level of reliability, which includes a mission-critical application and high-availability environments. Growing demand for robust and resilient data infrastructures to serve increasing digital and cloud computing needs, where any type of outage has an operational and financial impact, will encourage market demand for Tier 4 generators.
