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U.S. Diesel Genset Market Overview
Valued at $2,069.8 million in 2018, the U.S. diesel genset market is projected to reach $3,005.5 million by 2024, demonstrating a CAGR of 6.2% during the forecast period. The growth in the market can be attributed to the rising demand for diesel-based power gensets in the country, primarily in residential buildings, retail stores, offices, hospitals, and hotels. Furthermore, in the industrial sector, these gensets are required in construction, manufacturing, and oil and gas applications.
A diesel genset or a diesel generator set is an integrated system comprising a diesel engine and an electric generator that work in conjunction to produce electricity. The electricity, so produced, is used for meeting prime and auxiliary power requirements.
On the basis of power rating, the U.S. 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 4.4% during the forecast period. The demand for these gensets is majorly generated from residential complexes, small commercial installations, telecom towers, and retail establishments. The aging and inefficient power grid infrastructure in the U.S. is expected to further drive the demand for these low-power gensets in the near future.
The U.S. diesel genset market is also categorized into commercial, industrial, and residential applications. In terms of sales volume, the commercial sector was the largest application area of diesel generator sets in the country in 2018. Moreover, the market for this category is expected to exhibit 4.8% CAGR during the forecast period. This can be mainly ascribed to the heavy adoption of diesel generator sets in commercial areas, such as construction sites, retail establishments, and offices for both standalone power and backup power supply.
U.S. Diesel Genset Market Dynamics
The launch of new, Tier 4-compliant diesel gensets is identified as a key trend in the U.S. diesel genset market. Since 2015, the demand for environmentally efficient diesel generator sets has increased in the country on account of the growing concerns over the greenhouse gas emissions and carcinogenic nature of the exhaust produced by diesel gensets. The U.S. Environmental Protection Agency’s (EPA) Tier 4 exhaust emission standards for non-road engines, which were fully implemented in 2015, have led to the development of next-generation diesel gensets. In this regard, several companies, including Caterpillar Inc., Cummins Inc., and Atlas Copco Construction Equipment North America, have upgraded their product lines to manufacture these regulation-compliant diesel generator sets in the country.
During the forecast period, the U.S. diesel genset market is expected to be driven by the increase in the number of data centers, rise in the instances of power outage, and growth in the construction industry.
The U.S. is witnessing a rise in the usage of data centers by hyperscale cloud providers and companies that seek to capitalize on the domestic and global data consumption. Since data centers require a continuous supply of power, there is a huge demand for diesel gensets from these companies for 24/7, reliable power. Additionally, data center components, such as power controls, server rooms, heating, ventilation, and air conditioning (HVAC) systems, and security controls, have low tolerance toward power spikes, with power cuts further causing disruption of their operations, which necessitates the deployment of these gensets in data centers.
In addition, there have been increased instances of power outages in the U.S. in recent years, majorly due to natural calamities, aging power infrastructure, and overloading. Critical application areas, such as hospitals, nuclear power plants, telecom towers, data centers, and fire stations, require stable and continuous supply of power. Instances of power failure affect these application areas, thereby hampering their ability to function properly. Thus, the increased adoption of diesel generator sets in these areas to mitigate the risks associated with power failure is driving the U.S. diesel genset market growth.
The growth of the U.S. diesel genset market is moderately affected by the adoption of alternative sources of power, such as natural gas gensets and photovoltaic (PV) power systems, in the country. In the low-power category, the cost of natural gas gensets is lower than that of diesel gensets. Moreover, gas gensets emit comparatively less emissions than diesel gensets, which encourages their adoption in residential and commercial facilities. Furthermore, PV power systems are environment-friendly in nature, which is boosting their adoption and, to some extent, negatively affecting the demand for diesel generator sets in the country.
The growth in the mining industry is expected to offer lucrative opportunities to the U.S. diesel genset market players during the forecast period, owing to the heavy reliance of the industry on diesel generator sets for construction, drilling, and other aspects of mining. Diesel gensets are widely used in the mining industry to power various types of equipment, including large drills and shovels. Iron ore, coal, construction sand, and crushed rock are mined in large volumes in the country, which further requires the use of these gensets for powering mining activities.
U.S. Diesel Genset Market Competitive Landscape
Some of the major players operating in the U.S. diesel genset market are Caterpillar Inc., Cummins Inc., Generac Holdings Inc., Kohler Co., American Honda Motor Co. Inc., Southwest Products Corporation, General Electric Company, Denyo Co. Ltd., AB Volvo, and Atlas Copco AB. Among these companies, Caterpillar Inc. held the largest market share in 2018, which can be mainly ascribed to its vast product portfolio, strong customer base, and high brand value in the U.S.