The Diesel Generator Market is forecast to reach $21.27 billion by 2025, growing at a CAGR of 4.07% during the period 2019-2025. The growth of the Diesel Generator Market can be attributed to increasing applications in telecommunication and data center segments. The low cost and high power density of diesel generator are the key factors for its adoption in telecommunication and data center, as this establishment needs uninterrupted power supply round the clock.
Telecom sector is one of the growing industries using diesel generator towers for an inexpensive and environment-friendly manner of providing power-failure safety. Every year, 120,000 new base stations are deployed to provide service for 400 million new mobile subscribers around the world. These base stations requires electrical power to work and provide service which will impact the DG market further. Similarly, diesel generators are experiencing growing demand from data centers owing to growing investment in data center market. The Tier4 Datacenter CtrlS is going to invest approx $300m to set up world’s largest tier-4 datacentre footprint by 2020, this company also plans to set up a 150-megawatt hyperscale data center in India. These data centers will increase significant demand for diesel power generators to provide efficient uptime, which will augment the DG market revenue.
Diesel Generator Market Segment Analysis – By Technology
Stationary Generators hold a majority of market share in diesel generator market globally, owing to its benefit of handling large power capacity. As commercial and industrial establishment consume large amount of power, most of the adoption of stationary generators are witnessed from these applications. According to the data provided by International Energy Agency (IEA), Industrial establishment alone consumes 35%-40% of total energy consumption globally in 2018. However, with the advancement of technology, new generation portable generator can now handle large power requirement. This will slow down the growth rate of stationary diesel generator during the forecast period, as the cost of portable generator is lesser as compared to stationary generators.
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Diesel Generator Market Segment Analysis – By End-User
Telecommunication application is one of the biggest growth factors for the diesel generators market and holds a major market share globally. The Telecommunication diesel generator market is poised to grow at a CAGR of 5.36% in the forecast period. Telecommunication, radios, and even television signals rely on telecom towers for functionality. The importance of telecom towers for everyday uses has increased the demand for standby generators. Countries like India are installing telecom towers to take care of the growing data and voice requirements for the customer base of approx 1.15 Billion. Moreover, based on the data of GSM Association, by 2020, estimates show that around 390,000 off-grid telecom towers and 790,000 off-grid places will be deployed by the worldwide telecom sector, which will simultaneously increase the demand for diesel generators which are used for power supply to these towers and ensure a continuous uptime in the remote areas. This growth in the telecom industry is likely to show a positive growth to the Diesel Generator Market.
Diesel Generator Market Segment Analysis – By Geography
APAC region is one of the biggest markets for diesel generator and it can be attributed to increasing number of investment in the telecom industry in this region. Telecom industry in APAC is witnessing significant investment owing to development of its 5G technology. For instance, China has invested $1.2billion in 2019 to build its 5G ecosystem. Likewise, in 2019, South Korea Government has announced plans to invest approximately $26 billion towards developing 5G infrastructure in next 4 years. Diesel generator being the cost effective solution for telecom network are likely to get benefited from this new investment.
Other than that, the construction of railway building projects in China has gained 5.9% growth during 2019, which is set to grow the demand for diesel generators for construction purpose. Construction industry in APAC are facing stringent regulatory norm to reduce the emission. In India, the emission standards for construction industry is regularly getting updated. Recently, Government are forcing construction companies to use BS-III or above standards for diesel machinery to control the emission. This leads to growing sale of diesel generators that are certified by these standards.
Data Center is another major end user industry for diesel generators. The growing data center investment in APAC is likely to bring new opportunity for diesel generator in this region. In 2018, few giant companies such as Google, Alibaba and Amazon proposed to pour nearly $1 billion to improve the data center infrastructure and its capacity in Indonesia. Similarly, in 2019, Oracle and Equinix proposed their plan to invest in data centers in South Korea.
Diesel Generator Market Drivers
Increased power outages in developing countries
In the developing countries the electricity crisis is quiet often due to the lack of infrastructure and resources availability. The presence of electricity in rural and industrial area will play an enormously positive role towards the growth of the country. Based on IEA statistics, about 84% of those without energy access live in rural regions and over 95% of those without energy reside in sub-Saharan African nations and developing Asia. Growing need for diesel generator to improve the outlook of developing countries and to address the challenges faced by rural areas will significantly increase the market growth.
Rising demand for diesel generators from data centers:
The rapid increase in data is creating constant demand for data centers. Diesel generator is one of the inevitable equipment in data centers as, it provides power back up during power outages. Based on the current trend estimated by Office of Scientific and Technical Information (OSTI), U.S. data centers are projected to consume approximately 73 billion kWh in 2020, which will acquire a significant number of diesel genset simultaneously with renewable energy resources to complete demand. Moreover, the hyperscale and colocation level data center operators spend millions of dollars on backup power-generation equipment to provide a tremendous and hassle-free service to their client. Thus, the critical need for power backup coupled with data storage demand is set to create huge potential for diesel generators in the forecast period 2019-2025.
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Diesel Generator Market Challenges
Risk of substitution by natural gas generators
The demand for natural gas generators that run on shale oil has been increasing steadily. This is due to advancements in technologies of engines, enclosures and various other components. The usage of two pole alternators instead of the traditional four pole alternators in natural gas generators has increased their performance significantly. Manufacturers of natural gas generators have also incorporated resilient engine parts such as hardened valves to increase efficiency and performance. Natural gas generators are less expensive than diesel generators below 150kW and are cost-effective.
Partnerships and acquisitions along with product development and up gradation are the key strategies of the players in the Diesel Generator market. As of 2018, the market for the Diesel Generator is consolidated with the top 5 players accounting for 40.6% of the market share. The major players in the Diesel Generator Market include Caterpillar Inc., Cummins Inc., MTU Onsite Energy GmbH, Kohler Co, Generac Power Systems, Inc., and Southwest Products among others.
In May 2019, Cummins Inc. and Isuzu Motors Ltd announced their partnership by entering into the Isuzu Cummins Powertrain Partnership agreement. The strategic partnership will help evaluate and develop new diesel and diesel-based powertrains to global markets.
In Apr 2019, MTU Onsite Energy Corporation which offers diesel and gas-based power solution under Rolls-Royce brand, has merged with its parent company, MTU America Inc., to form single legal entity. This agreement formalizes a business structure to do its power generation business under the brand name “MTU Onsite Energy”.
In Dec 2018, Vertiv acquired MEMS UK genset, maintenance division. MEMS specializes in diesel generator hire, delivery and maintenance including an emergency generator service. This actuation will help strengthen the capability in generator maintenance, and expanding the service offerings in critical infrastructure in EMEA region.
Clarke Energy in August 2019 invested in the assembly plant for Kohler SDMO’s Generating Sets in Lagos. This construction of new assembly plant will be for diesel generators with the investment of approx $734.5k.
Mahindra Powerol has ventured into high power diesel generators and invested approximately $23.5m in the development of industrial diesel generators. This diesel generator are powered by the Mahindra mPower series of engines, and designed at Mahindra Research Valley.
Diesel Generator Market Research Scope:
The base year of the study is 2018, with a forecast done up to 2025. The study presents a thorough analysis of the competitive landscape, taking into account the market shares of the leading companies. It also provides information on unit shipments. These provide the key market participants with the necessary business intelligence and help them understand the future of the diesel generator market. The assessment includes the forecast, an overview of the competitive structure, the market shares of the competitors, as well as the market trends, market demands, market drivers, market challenges, and product analysis. The market drivers and restraints have been assessed to fathom their impact over the forecast period. This report further identifies the key opportunities for growth while also detailing the key challenges and possible threats. The key areas of focus include the power and portability type of diesel generator market, and their end-users such as construction, telecommunication, data center, hospitality, and so on.
Key players including Caterpillar Inc., Cummins Inc., MTU Onsite Energy GmbH, Kohler Co, Generac Power Systems, Inc., and Southwest Products accounted to around 40.6% of the total market share in 2018 with the key strategy as contracts and partnerships.
The major driving factor in Diesel Generator Market is the increased power outages in developing countries during the forecast period 2019-2025. In this case, the diesel generator are being deployed in rural areas to provide sufficient electricity as per the need. Moreover, developing countries like India quickly scale up their production and launch diverse products for diesel generators for building power supply and construction industry. It is estimated that the construction of approx 9 crore houses needed to be built in India and the estimated investment is of $ 2 trillion by 2022. These investments are likely to set the growth of DG market.
The stationary generators are majorly being deployed for telecommunication, housing, huge infrastructure such as mall, offices or corporate buildings, and condo residents to provide sufficient energy as a backup and as primary solution of electricity as well. The stationary generators hold the largest market share of around 72% in the portability segment.
APAC is the largest market for Diesel Generator calculating around 37% of the global market share owing to increased demand for power supply in rural areas in developing countries. Other growing factor of diesel generator in APAC region include ongoing construction, telecommunication development, and growth in data center.
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