Market Dynamics
Market drivers
An increase in continuous and stable energy demands from developing economies such as China, India, Japan, and Brazil is driving the growth of the market. This is attributed to the fact that diesel generators are used as a backup power source when main grid power is unavailable, which helps in continuing the manufacturing and other processing operations in industries without any production loss. In addition, owing to properties such as quick startup time, high efficiency, and reliability of diesel generators, an increase has been witnessed in their demand from the sectors such as oil & gas, manufacturing, building & construction, and processing. This factor is anticipated to significantly contribute toward the growth of the global market during the forecast period.
An increase in road construction activities and a rise in infrastructure projects coupled with other construction activities in developing and developed economies propel the demand for diesel generators, which, in turn, drives the growth of the market in the upcoming years. This is attributed to the fact that activities carried out in construction and building industries, such as concrete mixing, crane operation, bore well digging, on-site pre-stressed concrete production, welding operations, bridge construction, and rail/road construction, require consistent electric power. Such an increasing need for electricity can be met with the help of diesel generators, which significantly contributes toward the growth of the global market. However, the outbreak of the COVID-19 pandemic halted these abovementioned activities, which, in turn, has led to a decrease in crude oil prices, thus resulting in sluggish growth of the market in the current and upcoming years.
Also, The diesel generator industry continues to witness substantial growth due to advancements in product manufacturing technologies over decades. This is attributed to rapid industrialization and urbanization, which have boosted the demand for efficient, advanced diesel generator sets to cater to the regulatory criteria related to emissions. Furthermore, the diesel generator market in regions such as Asia-Pacific, the Middle East, Latin America, and Europe exhibits potential growth opportunities due to the rise in demand for diesel generators in construction & building activities, oil & gas mining, commercial complexes, and other residential & industrial applications. This has resulted in an upsurge in energy consumption at an enormous rate, which, in turn, augmented the demand for diesel generators.
Market restraints
Significant development of the renewable energy sector is expected to negatively impact the diesel generator market growth during the forecast period. Asia-Pacific has registered the highest growth rate, owing to an increase in investment toward renewable energy projects. Renewable energy sectors such as hydropower and, wind & solar meet the increasing needs for electricity from residential, commercial, and industrial consumers, which further hampers the demand for diesel generators. Moreover, advantages associated with renewable energy, such as its bulk availability, cost efficiency, and clean source, fuel the demand for renewable energy, resulting in the development of the renewable energy sector, thereby hampering the growth of the market globally.
Market opportunities
Emerging economies such as China, India, and Brazil are engaged in investment in the electrification of remote and rural areas. An increase in population and a surge in urbanization are the primary factors increasing the need for electrification, which fuels the demand for diesel generators in these countries. Countries such as Bhutan, Afghanistan, India, Nepal, and Cambodia in Asia-Pacific registered the highest electrification growth rate in the past five years with the help of on-grid and off-grid solutions. Thus, considering all aforementioned factors, an increase in demand for diesel generators from emerging economies is expected to provide remunerative opportunities for market expansion during the forecast period.
Regional Analysis
The global market for Diesel generators has been segmented based on geography into North America, Europe, Asia Pacific, and LAMEA.
The U.S. is the leading manufacturer and consumer of diesel generators in North America. Other countries offering huge potential for a diesel generator in the region include Canada and Mexico. Diesel generators witness substantial demand from the building & construction industry, which is experiencing steady growth. An increase in demand for diesel generators from various industrial sectors such as construction sites, residential, manufacturing & operations, mining, and hospitals is the major factor, which is anticipated to drive the growth of the market during the forecast period. In addition, continuous power failures due to environmental disasters and the aging of electric grid infrastructure have resulted in increasing demand for diesel generators, which augments the market growth in the region. Furthermore, the rise in demand for diesel generators as a backup source from manufacturing, commercial offices, and educational institutes has significantly contributed to the growth of the diesel generator market in North America. The U.S. Diesel Generator Market garnered the highest share in the North American region at about 60.2 % in the year 2021 and is expected to maintain growth during the forecast period.
Europe accounts for a major share of the market, with predominance in the construction and healthcare segment. Countries such as Germany, France, the UK, Spain, and Italy are the major contributors to the revenue of this region. Europe is one of the largest producers of automobiles accounting for 4% of its GDP. Hence, manufacturing and processing need a continuous and stable power supply met by diesel generators. According to the EUROCONSTRUCT, the construction industry in Europe is experiencing slower growth, which is anticipated to decline the demand for diesel generators in the upcoming years. An increase in demand for diesel generators from data centers, hospitals, educational institutes, banks, and other commercial offices is driving the growth of the market. The global market in the European region is registering sluggish demand from the construction industry, which declined the growth of the market. In the upcoming years, it is expected that an increase in investment in the upgradation of the existing infrastructure will fuel the growth of the market in the region. Germany dominated the market share in 2021, followed by the economies such as Italy and France. Moreover, an increase in investment in renewable energy sources is anticipated to hamper the growth of the market during the forecast period.
Asia-Pacific grows at the highest rate in terms of revenue in the market. China, Japan, India, South Korea, and Australia are the major contributors to the growth of this region. In addition, the rapid population surge and rise in Asia-Pacific's economy propel the growth of the building & construction, and healthcare industries. The rise in power outages and increase in demand for uninterruptible and stable power supply drive the growth of the market in Asia-Pacific. In addition, a diesel generator is gaining traction in the construction, healthcare, and IT industries, owing to its reliability and high fuel efficiency, which, in turn, fuels the growth of the market during the forecast period. In the last ten years, the rapid development of construction and building infrastructure in developing economies such as India, China, and Japan is anticipated to boost the demand for diesel generators in Asia-Pacific's building & construction industry.
Moreover, China and India have emerged as manufacturing hubs, which augment the demand for diesel generators for continuing manufacturing and other processes, thereby propelling the growth of the market in upcoming years. Furthermore, in remote areas where grid power is unavailable, an increase in demand for power supply has been witnessed, boosting the market's growth. However, a rise in awareness toward renewable energy, such as solar, wind, and biomass, is expected to hamper the growth of the market during the forecast period.
LAMEA is one of the key regions garnering the highest share in the market, owing to the rapid growth in oil & gas, building & construction, and other industries. In LAMEA, the major economies in the market include Brazil, Saudi Arabia, and South Africa. The rise in population and rapid urbanization has led to increased construction activities in Latin America, the Middle East, and Africa. In addition, the expansion of the building & construction industry in the economies such as the UAE and Saudi Arabia is expected to drive the market in this region. However, the decrease in crude oil prices across the globe has made major oil-producing economies enter other sectors, reducing the demand for diesel generators. This may hamper the growth of the market owing to the transition toward other sectors. On the contrary, it may rebound in the next two to three years, as crude oil prices and demand for crude oil are anticipated to increase during the forecast period.
Segmental Analysis
The Global Diesel Generator Market is segmented based on Type, Mobility, Cooling system, Application, and End-user.
Based on type, the market is classified into small, medium, and large diesel generators.
Small diesel generators have a rated capacity of up to 75 kVA and are portable in nature. These generators are used in various applications such as shops, showrooms, households, apartments, and small hospitals. These types of generators tend to be air-cooled. An increase in demand for electricity from residential and small commercial applications boosts the growth of the small diesel generator market globally. In addition, small diesel generators are portable, attracting a large consumer base, which significantly contributes toward the market's growth. In rural areas where there is a lack of availability of electricity services, small diesel generators act as an ideal option, boosting the segment's growth. As per the study by the World Bank Group study, some places in developing economies, such as India, South Africa, and Brazil, are not completely electrified, thus increasing the demand for small diesel generators.
Medium diesel generators range from 75 kVA to 375 kVA. These are mostly used in medium-sized commercial offices and malls. In addition, medium diesel generators are used as backup power in medium-scale organizations or in some big complexes. Factors such as high power demand and operational benefits of diesel generators are expected to drive the growth of the medium diesel generator market globally. Rapid industrialization in developing nations such as India and China drives the growth of the global market. An increase in demand from medium-scale commercial offices, organizations, and complexes boosts the growth of the market globally. The rapid increase in infrastructure projects, such as metro road construction in developing and developed economies across the globe, is anticipated to fuel the growth of the market in the coming years.
Large diesel generators range more than 375 kVA. These diesel generators are also referred to as industrial diesel generators. They are used in huge industries such as oil & gas, mining, and process industries. As these industries are located in remote areas where electrical grid power is not available, the use of diesel generators as a baseload power supply has increased. An increase in consumer energy demand is driving the demand for large diesel generators globally. The rapid expansion of the telecom sector has resulted in a demand for continuous power supply, which boosted the growth of the global market. Power shortage, discontinuous power supply from the power station, and fuel availability are the key factors propelling the growth of the large diesel generator market. In addition, an increase in demand from large-scale industries such as mining, healthcare, commercial, manufacturing, and data centers is propelling the growth of the market.
Depending on mobility, the market is classified into Stationary and Portable.
Stationary diesel generators are used in residential and commercial applications as a power backup if the conventional power supply fails. They are the most commonly used diesel generators, owing to the one-time and permanent installation of the generator in large industries and commercial & residential applications. As the name suggests, stationary diesel generators are fixed and permanent installations. The rise in the need for continuous power supply in manufacturing units and other sectors augments the need for diesel generators globally. In addition, the surge in oil & gas and mining activities in emerging regions such as Asia-Pacific, LAMEA, and Europe is expected to drive the growth of the market. The industrial sector is the largest consumer of stationary diesel generators, which includes manufacturing, mining, agriculture, and construction, which is further anticipated to fuel the growth of the market during the forecast period. Apart from commercial and industrial sites, stationary or standby generators are increasingly used in residential applications (large housing societies, apartments, and others). Thus, all factors collectively are expected to contribute toward the growth of the global stationary diesel generator market.
Portable diesel generators can be moved to any location where a continuous power supply is not available. They are applicable across various sectors, such as mining and construction. They are available in a variety of power configurations feasible for a different types of uses. Portable generators are convenient to handle during natural disasters and when the grid network breaks down. Portable diesel generators are mostly used in residential and small commercial applications such as retail, shops, homes, and construction sites for powering equipment, which drives the growth of the portable diesel generator market. Rapid industrialization and an upsurge in population have augmented the demand for energy, which is anticipated to significantly contribute toward the growth of the market globally. In extreme weather conditions or in emergency conditions, the need for continuous energy supply increases, which is expected to boost the demand for portable diesel generators in residential applications.
Based on the cooling system, the market is bifurcated into Air Cooled and Liquid Cooled.
Continuous usage of diesel generators results in the heating of various components. Hence, the need for cooling systems to reduce or withdraw heat produced in it boosts the need for air-cooled diesel generators. As the name suggests, air-cooled diesel generators depend on natural air or forced air to cope with the heating of generators. Air-cooled diesel generator uses only the air intake system as an additional part of the generator system. These systems are either open-ventilated or completely enclosed. Air-cooled diesel generators are used in a variety of applications such as agriculture, military, construction, and as the main power source. The rise in the need for energy supply from residential consumers is expected to drive the growth of the air-cooled diesel generator market globally. An air cooling system is mostly used in diesel generators with a rating of up to 30 kVA. Air-cooled diesel generators are used only in residential, portable, or smaller power rating applications. Thus, with an increase in need from residential consumers and from small commercial applications, the global market is expected to witness significant growth during the forecast period. In addition, the surge in demand for air-cooled diesel generators from various applications such as agriculture, military, and remotely located construction is fueling the growth of the air-cooled diesel generator market systems.
In continuous operation, diesel generators produce a large amount of heat. This can lead to severe damage to diesel generators. To prevent damage from producing heat, the interior of the diesel generator needs to be constantly cooled. The generator with a rating of more than 30 kVA uses a liquid cooling system. The liquid used to cool down the diesel generator can be either oil, water, or coolant. This type of cooling system uses additional parts, such as a radiator and water pump. This type of diesel generator is more expensive than air-cooled diesel generator systems, but they are more strong and more durable than air-cooled systems. An increase in demand for high-power rating diesel generators from large industrial and commercial applications is expected to drive the market's growth globally. In addition, rapid industrialization and urbanization in developing regions such as Asia-Pacific and Europe boosted the demand for high-power diesel generators, which resulted in a rise in demand for liquid cooling systems in diesel generators. This is anticipated to propel the growth of the market globally. Moreover, an increase in power failures, owing to storms and other environmental calamities, is augmenting the demand for large or stationary industrial generators, which, in turn, drives the growth of the liquid-cooled diesel generator market diesel generators.
Based on the Application, the market is bifurcated into Standby backup power and Peak shaving.
Diesel generators provide backup power when a power source fails during high energy demand or natural disasters. In case of emergencies, the need for overpowering the grid to increase production in manufacturing sites is met by standby backup power, which serves as an ideal option to continue operations. An increase in demand for uninterruptible power supply and the development of the construction & building sector is expected to boost the demand for diesel generators in standby backup power applications. In addition, natural disasters such as storms and earthquakes are common in regions such as North America, resulting in consistent power outages owing to the grid network's damage. Owing to these conditions, the demand for standby backup power has increased substantially, which acts as a key driver of the global market. Moreover, an increase in the frequency of power outages/failures is fueling the growth of the market for standby backup sources.
Peak shaving is leveling of the load. With peak shaving, customers reduce power usage instantly for a short period of time. Diesel generators are used to provide power in these peak shaving conditions. These diesel generators help reduce electricity costs during peak demand periods. Peak shaving is utilized to overcome the shortage of power during maximum or peak demand conditions. The rise in power demand from densely populated areas and from manufacturing (sites where the production rate is high) has boosted the growth of the market globally. The rise in consumers' need for electricity, increase in manufacturing operations, and maximum demand for electricity during several hours in summer significantly contribute to the market's growth.
Based on the End use industry, the market is bifurcated into Residential, Commercial, and Industrial.
Diesel generators are used in power rating up to 75 kVA for residential applications such as houses, apartments, family functions, small shops, and offices. Residential diesel generators are small in size and are mostly portable. The increase in population in the economies such as India and China surges the need for energy in this region. This rise in energy demand further boosts the demand for diesel generators, which drives the growth of the global market. Presently, standby diesel generators are used in residential applications such as large apartments and societies for continuous power supply, which further augments the growth of the market globally. The most widely used diesel generators in residential applications are portable type diesel generators.
Diesel generators are used to provide backup power in maximum or peak energy demand conditions. Commercial complexes such as shops, malls, theatres, and other commercial facilities use diesel generators to provide a continuous power supply. These diesel generators in commercial applications are used to power up light appliances, equipment, and systems such as computer systems, escalators, elevators, warning systems, sump pumps, and heating/cooling systems. An increase in demand for diesel generators from commercial sites such as shops, complexes, malls, and theatres drives the growth of the global market. In addition, an increase in urbanization and rapid industrialization in developing economies such as India, China, and Brazil boost the demand for diesel generators to provide continuous power, which, in turn, fuels the growth of the market. Moreover, advantages associated with diesel generators, such as less operational cost, uninterruptible supply of power, and reliability, propel the demand for diesel generators, which significantly contributes toward the growth of the global market.
Diesel generators used in industrial applications must exhibit toughness and ruggedness properties and can perform in various harsh conditions. Generally used diesel generators in industrial applications are stationary-type diesel generators. Occasionally, when location is not appropriate, portable diesel generators can be used in those industrial applications. An increase in demand for diesel generators from industrial sectors such as oil & gas, mining, telecom, data centers, processing plants, and construction projects is driving the growth of the market for industrial sector applications. In the mining industry, nearly 70% of the power demand is met by large-size diesel generators, which further supplements the growth of the market. The rise in demand from manufacturing and processing industries for diesel generators to provide continuous power supply is anticipated to augment the global market growth during the forecast period.
