Diesel Genset Market Overview
Valued at $12,656.2 million in 2018, the global diesel genset market is projected to reach $17,821.3 million by 2024, demonstrating a CAGR of 5.8% during the forecast period. The growth in the market is attributed to the growing requirement for electricity in both urban and rural areas for standalone and backup power requirements. The major application areas of diesel fueled gensets are construction sites, industries, residential buildings, retail stores, office spaces, hospitals, and hotels.
A diesel generator set is a system in which a diesel engine works in conjunction with an electric generator to generate electricity. Some of the critical components of a diesel generator include a fuel delivery system, an alternator, a canopy or enclosure, a control panel, and a cooling and exhaust system. The genset uses diesel as a fuel, and the electricity, so produced, is used for both prime and backup power requirements.
On the basis of power rating, the diesel genset market is classified into 5 kVA–75 kVA, 76 kVA–375 kVA, 376 kVA–750 kVA, and above 750 kVA diesel gensets. In terms of sales volume, 5 kVA–75 kVA gensets accounted for the largest market share during the historical period. Besides, the market for these gensets is expected to witness a CAGR of more than 4.5% during the forecast period. The demand for these gensets is majorly generated from residential complexes, small commercial installations, telecom towers, and retail establishments.
The inefficient and insufficient grid infrastructure in developing and under developed countries is expected to further drive the demand for these low-power gensets during the forecast period.
Based on application, the diesel genset market is classified into commercial, industrial, and residential applications. In terms of both sales volume and value, the commercial sector was the largest application area of these gensets in 2018. Moreover, the market for this category is expected to exhibit a CAGR of more than 5.0% in value terms during the forecast period. This significant growth can be mainly ascribed to the high adoption of diesel generator sets in commercial areas, such as construction sites, retail establishments, and commercial offices, for both standalone power and backup power supply.
Diesel Genset Market Dynamics
The diesel genset market is characterized by high-volume market activities in the form of product launches, acquisitions, partnerships, and other developments by genset manufacturers. In recent years, several major manufacturers in the market have been fairly active and have resorted to a number of steps aimed at improving portfolio depth and distribution reach, developing brand identity in foreign markets, aligning prices with markets, and ensuring service and spare part availability for these genset products across different geographies.
The growth in the diesel genset market is likely to be driven by growing demand for diesel fueled gensets in data centers and application areas with low-power requirements, owing to grid uncertainty in several countries.
The hyperscale creation and consumption of data globally has led to high-volume development of supportive infrastructure to collate, analyze, and supply services in the form of data centers. Furthermore, with advancements in technologies and adoption of autonomous cars, intelligent personal assistants, internet of things (IoT), digital currencies, and accounting services, among others are expected to draw additional demand for data centers, thereby, driving the demand for these gensets to serve auxiliary and prime power requirements at these installations and facilities.
In addition, the power and electricity ecosystem in several African nations such as Nigeria, Ghana, are crippled with high-value base power deficit and a significant volume of power transmission losses, which in cognizance, are responsible for generating a significant demand for alternate power sources such as diesel fueled gensets. The sole solution to the conundrum of lower-power supply than demand is to develop off-grid solutions or use power generation equipment such as diesel or gas gensets. Thus, all these factors contribute to high-volume adoption of diesel fueled gensets across the residential, commercial, and industrial sectors, resulting in the growth of the diesel genset market.
The exhaust of a diesel genset operating on diesel fuel releases gas and solid particles, which are toxic in nature and harmful for plant and animal assemblages and human beings. As increasingly stringent environmental laws and regulations start to take the center stage at the worldwide level, with countries diversifying their energy baskets to renewable and cleaner sources of power, coupled with mounting pressure on state grids to reduce dependence on diesel generators for power generation and backup, the demand for diesel generators is likely to suffer. This transition is likely to restrain the diesel genset market to a moderate extent during the forthcoming period.
The construction industry in all its totality is expected to witness strong growth as emerging economies continue to industrialize, while developed countries continue recovery from a period of economic instability in the foreseeable future. Countries such as India, China, the U.S., Indonesia, and the U.K. are expected to be key hotspots for infrastructure development, driven by public and private partnerships. A plethora of proposed investment projects in these countries and strong demand for good infrastructure by commercial and residential sectors are likely to drive the construction industry, which require standalone power and backup power for several activities. The increased need of power is expected to draw demand for diesel fueled gensets during the forthcoming period, resulting in driving the diesel genset market growth.
Diesel Genset Market Competitive Landscape
Some of the major players operating in the global diesel genset market are Caterpillar Inc., Cummins Inc., Generac Holdings Inc., Kohler Co., General Electric Company, Denyo Co. Ltd., AB Volvo, Escorts Limited, Siemens AG, and Kirloskar Oil Engines Limited.