Nigeria Diesel Genset Market Size & Share Analysis - Trends, Drivers, Competitive Landscape, and Forecasts (2024-2030)

Nigeria Diesel Genset Market Trends & Growth Drivers

Substantial Base Power Deficit and Transmission Losses Is Key Driver

• The power and energy infrastructure in Nigeria is quite weak, leading to a large base power deficit and significant power transmission losses. This is, in turn, predicted to propel the demand for diesel gensets in the country. Further, Nigeria’s electricity demand is growing rapidly with economic growth and swift urbanization.
• According to an article published by the International Trade Administration, the country’s government is investing heavily to boost generation through large, medium, and small hydrostatic power plants, with a total capacity of over 6,024 MW, in various cities, including Mambila (3,050 MW), Gurara (11,360 MW), Zungeru (700 MW), Lokoja (750 MW), Kashimbila (40 MW), and Makurdi (1,000 MW).
• Further, the government has signed a USD 2-billion deal for electricity production with Siemens under the Presidential Power Initiative. Due to the booming population, Nigeria will need to increase its power generation capacity to meet the electricity requirements of its citizens.
• According to the World Bank, the electricity deficit in Nigeria is majorly because of the existence of an inefficient electricity infrastructure, volatile natural gas prices, and lack of investments in electricity transmission and distribution networks. Several existing power generation units in Nigeria are underperforming owing to their low technical capabilities.
• Further, gas-based and hydropower plants produce 85.0% and 15.0% of the country’s total energy, respectively. As the operational costs of the gas-based power plants are quite high and the global natural gas prices are exhibiting volatility, the high reliance of the country on gas-based power generation facilities is positively affecting the market in a huge way.
• Hence, individuals in the country are using alternative power sources, such as petrol or diesel gensets, to self-generate electricity, to meet their residential, commercial, and industrial requirements. The persistent grid power uncertainty is also responsible for the deployment of gensets for 15–18 hours per day across several regions in the country. Additionally, the country’s decision to scrap gasoline subsidies could contribute to the high sales volume of diesel gensets in the coming years.

Adoption of PV–Diesel Hybrid Systems Offer Growth Opportunities

• As per the data collected by various agencies, in 2023, more than 86 million Nigerians did not have access to grid electricity. Nigeria ranks at the top in the lack of access to power supply, which is one of the major constraints for the private sector.
• Power shortage acts as a hindrance, particularly for the country’s tech industry. Various Nigerian tech startups find electricity problems to be a "major" or "very severe" obstacle to their business, placing it higher than corruption, taxes, and government red tapism.
• These power outages are still persistent and regularly challenge businesses and their associated activities in the country. This has fueled the popularity of hybrid energy systems, especially in rural areas. These systems are more reliable and environment-friendly than the traditionally employed diesel gensets.
• PV–diesel hybrid generator systems are the new alternative energy sources in Nigeria that generate reliable power with low carbon emissions. To supply continuous services to their subscribers, telecom operators in the country are using either diesel gensets or PV–diesel gensets.
• With the increasing volatility in fuel prices and rising environmental concerns, people are expected to prefer such hybrid systems, which are integrated with intelligent features to optimize both PV and engine–alternator operations and save energy.
• Apart from telecom operators, small and medium enterprises (SMEs) and the agriculture industry have started using these hybrid systems. Hence, the customer base for these gensets is expected to expand in the near future, thereby providing immense scope to the market players for new product development.

High Operating Cost of Diesel Gensets and Growing Adoption of PV Systems Are Key Challenges

• The growing utilization of fossil-fuel-based generators in Nigeria is fueling the requirement for capital and resource allocation for the import and distribution of a large volume of petroleum products, which, in turn, is creating a significant burden on the country’s economy.
• Thus, in order to reduce the dependence on petroleum products, several residential and industrial users have already switched to the cost-effective and environment-friendly PV systems.
• Moreover, the operating cost of a diesel genset is quite high, and the device releases toxic fumes in high volumes. As the use of solar PVs in place of diesel generators leads to savings of as much as 65%, the popularity of the former is soaring in the country.
• Furthermore, the electricity generated by PVs situated on rooftops cost less than that produced by diesel gensets. Apart from the cost factor, diesel gensets also affect the environment by emitting greenhouse gases. These emissions, which consist of carbon black, carbon monoxide, carbon dioxide, and oxides of nitrogen, are harmful to humans as well.
• Thus, in order to reduce the cost and environmental impact, many public and overseas companies have started promoting solar power systems in the country. The Federal Government of Nigeria is seeking to achieve renewable energy capacities of 13,800 MW by 2030. In addition, in December 2023, the World Bank approved the Nigeria Distributed Access through Renewable Energy Scale-up (DARES) project.
• The World Bank has also funded the Nigeria Electrification Project, which aims to supply electricity to 300,000 households and 30,000 businesses through renewable mini-grids.
• Thus, the growing public and private adoption of PV systems in several sectors is expected to hinder the growth of the diesel genset market in the country.

Nigeria Diesel Genset Industry Outlook

Power Rating Insights

• Based on power rating, the 15 kVA–75 kVA category held the largest share in the Nigerian diesel genset market in 2023. The category is also expected to register the highest growth rate during the forecast period. This can be mainly attributed to the low price and high demand for these gensets in residential facilities, small industries, telecom towers, restaurants, commercial complexes, and hotels.
• Furthermore, the residential sector accounted for a significant share in the demand for these gensets owing to the inadequate power supply in the residential units of Nigeria.

The power ratings covered in the report include:

• 15 kVA–75 kVA (Largest and Fastest-Growing Category)
• 76 kVA–375 kVA
• 376 kVA–750 kVA
• 751 kVA–999 kVA
• 1,000 KVA and Above

Application Insights

• Under this segment, the commercial category held around 45% share in the Nigerian diesel genset market in 2023.
• This is due to the wide usage of gensets in retail establishments, commercial offices, telecom towers, hospitals, and hotels.
• The industrial category is expected to witness the highest CAGR during the forecast period. High-capacity diesel generators are generally used for meeting electricity needs in Nigerian industries, which often face erratic grid power supply.
• In recent years, the Nigerian government has initiated programs, and pro-business policies to encourage industrialization in the country. Through these, the government will finance local businesses involved in areas such as food manufacturing, textile and garment production, leather industry, mining and downstream activities, petrochemical industry, and general manufacturing.
• Such initiatives of the government to reduce the country’s dependence on imports are expected to further increase the diesel generator usage in the industrial sector in the near future.

The following applications are included in the report:

• Commercial (Largest Category)
  • By user
    • Retail establishments
    • Commercial offices
    • Telecom towers
    • Hospitals
    • Hotels
• Industrial (Fastest-Growing Category)
  • By user
    • Manufacturing
    • Energy & power
• Residential

Market Nature – Consolidated

The Nigerian diesel genset industry is consolidated in nature, with the presence of few key players. In recent years, the players in the market have been involved in product launches in order to attain a significant position. Moreover, various notable players make and supply the genset for different domains, such as commercial and residential, which is increasing the market share.