Diesel Generator Market - Growth, Trends, and Forecasts (2023 - 2028)

The diesel generator market is expected to register a CAGR of more than 6% during the forecast period of 2022 - 2027. The COVID-19 pandemic led to a reduction in electricity consumption, impeded economic growth in major countries across the world, and large-scale disruptions in the supply chain. Factors, such as the increasing demand for uninterrupted and reliable power supply and the increase in demand from the commercial sector, including the healthcare industry, are expected to drive the market. However, the growing demand for generators based on alternative fuels, such as natural gas and biofuels, is expected to restrain the growth of the market.

Key Highlights

• The industrial sector accounted for the largest share of the revenue from the sales of diesel generators in 2020, owing to the increasing demand for continuous and reliable power supply in the industrial and manufacturing facilities.
• The commercial and industrial sectors in emerging economies, the residential sector in developed economies, and the increasing need for power in defense operations are expected to create significant opportunities for market participants in the near future.
• Asia-Pacific accounted for the largest share in the market in 2020, with a majority of the demand coming from countries such as China and India.

Key Market Trends

The Industrial Sector to Dominate the Market

• The industrial sector accounted for the largest share in the diesel generator market. Industrial operations are mainly dependent on electricity generated from diesel generators during power outages (to avoid production risks) and in regions where grid access is limited.
• The industrial sector, which includes mining, manufacturing, agriculture, and construction, accounts for the largest share of energy consumption of any end user. Therefore, the increasing demand for continuous and reliable power supply from these industries, especially from healthcare facilities, pharmaceutical industries, and manufacturing facilities, is expected to escalate the demand for diesel generators.
• Many different industries, like the construction industry, require a reliable source of electricity. Such industries make up a large user base for backup generators. With the growth of such sectors globally, the demand for backup generators is expected to increase further during the forecast period.
• China and India are expected to witness robust industrial growth in the coming years because of the sharp increase in the manufacturing sectors, which is expected to drive the demand for diesel generators in the industrial sector.
• As of 2020, steel production in China accounted for approximately 50% of the global steel production, which makes it a huge market for diesel generators, as the steel industry is extremely energy-intensive and its operations are highly dependent on power generated from diesel generators during power outages.
• Furthermore, government initiatives to expand the industrial sector, especially in China and India, are expected to continue propelling the demand for diesel generators over the forecast period.

Asia-Pacific to Dominate the Market

• Asia-Pacific dominated the global diesel generator market in 2020, and it is expected to continue its dominance during the forecast period.
• China is the leading diesel generator market in the Asia-Pacific region, owing to increasing infrastructure projects, widening power demand-supply gap, expansion of manufacturing facilities across the country, and rising commercial office spaces. The country benefits from the cost and effectiveness of diesel generators, with improved living standards increasing the demand for power backup devices.
• Moreover, the rapid growth in various end-use sectors, such as infrastructure, telecommunication, and information technology (IT) and IT-enabled services, existing manufacturing units across the country, and the dedicated 'Made in China' initiative launched by the Chinese central government, are expected to drive the diesel generator market in the country.
• The Indian government is focusing on improving the economy through increased infrastructure spending, mainly on roads, railways, and metro rail. With a new metro rail policy on the anvil and every large city in India looking to construct a metro rail network, diesel generators have immense growth opportunities in metro rail projects.
• Furthermore, in August 2021, Cummins India Ltd unveiled its 'Made in India' QSK60 G23: 2500-2750 kVA Diesel Generator (DG). The diesel generator set, which is an integrated power solution, was launched to meet the increasing power requirements by industry segments like data centers and large-scale infrastructure projects, like railways, airports, and other commercial spaces in India.
• Also, in Indonesia, the increasing power blackouts have significantly hampered the manufacturing sectors, which has increased the adoption of diesel generators in the country to ensure a continuous and reliable power supply. South Sumatra and Jakarta are the key contributing areas for the growth of the diesel generators market in Indonesia, owing to frequent blackouts in these areas.
• Therefore, based on the above-mentioned factors, Asia-Pacific is expected to dominate the global diesel generator market during the forecast period.

Competitive Landscape

The diesel generator market is moderately fragmented. The key players in the market include Caterpillar Inc., Generac Holdings Inc., Kohler Co., Cummins Inc., and Atlas Copco AB, among others.

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