Generator Sets Market - Global Industry Size, Share, Trends, Opportunity, and Forecast, Segmented By Power Rating (Less than 50 kVA, 50-125 kVA, 125-200 kVA, 200-330 kVA, 330-750 kVA, Above 750 kVA), By Application (Standby, Peak Shaving, Prime/Continuous, Others), By End User (Residential, Commercial, Industrial, Infrastructure), By Fuel (Diesel, Gas, Hybrid), By Region, By Competition, 2018-2028

Market Overview

Global Generator Sets Market has valued at USD 27.08 billion in 2022 and is anticipated to project robust growth in the forecast period with a CAGR of 11.19% through 2028.

The global generator sets market refers to the industry encompassing the design, manufacturing, distribution, and utilization of generator sets, also known as gensets. These generator sets are versatile power generation systems that provide electricity during grid outages, emergencies, or in off-grid locations. They are found at in various sizes and configurations, utilizing internal combustion engines, such as diesel, natural gas, or biofuels, to produce electrical power.

Key components of the global generator sets market include generator units, engine systems, control panels, and ancillary equipment. Generator sets find extensive applications across a wide spectrum of industries, including healthcare, telecommunications, construction, manufacturing, data centers, and residential sectors, where uninterrupted power supply is critical for business continuity and essential services.

Factors driving the market's growth include the need for reliable backup power, infrastructure development, the expansion of data centers, the integration of renewable energy sources, and resilience planning for disaster preparedness. Additionally, environmental concerns and government regulations regarding emissions and energy efficiency standards play a significant role in shaping the market, driving innovation in cleaner and more efficient generator set technologies. The global generator sets market plays a vital role in ensuring consistent and uninterrupted power supply across various applications and industries worldwide.

Key Market Drivers

Increasing Demand for Reliable Backup Power

The global generator sets market is driven by the increasing demand for reliable backup power solutions across various industries and applications. In an era characterized by digitalization and an ever-growing reliance on electricity, any interruption in power supply can have significant consequences, leading to financial losses, data corruption, and operational downtime.

Businesses, healthcare facilities, data centers, and critical infrastructure sectors such as telecommunications and manufacturing all require uninterrupted power to ensure smooth operations. Generator sets provide a dependable source of backup power during grid outages, ensuring business continuity and preventing costly disruptions. This demand is further fueled by the rising frequency and severity of extreme weather events, which can disrupt power grids.

Generator sets come in various sizes and configurations, making them suitable for diverse applications. As industries become more digitally interconnected, the need for reliable standby power solutions continues to grow, driving the expansion of the global generator sets market.

Expanding Construction and Infrastructure Development

The global construction and infrastructure development boom is a significant driver of the generator sets market. Rapid urbanization, population growth, and economic expansion are driving substantial construction projects worldwide. These projects include residential and commercial buildings, industrial facilities, transportation networks, and energy infrastructure.

Construction sites, in particular, often lack a reliable power supply during the early stages of development. Generator sets play a critical role in powering construction equipment, lighting, and temporary facilities. Similarly, infrastructure projects such as airports, seaports, and railways require backup power for essential operations.

Emerging markets are witnessing extensive infrastructure development, including electrification projects in rural areas. In these regions, generator sets are essential for ensuring consistent electricity supply until grid infrastructure can be established.

As global construction and infrastructure projects continue to proliferate, the demand for generator sets to provide temporary and backup power will remain robust, driving growth in the market.

Expansion of Data Centers and IT Facilities

The proliferation of data centers and IT facilities worldwide is a significant driver of the generator sets market. Data centers are the backbone of the digital economy, supporting cloud computing, e-commerce, and data storage services. These facilities require continuous and reliable power to ensure data integrity and minimize downtime.

Generator sets are an integral component of data center infrastructure, providing immediate backup power in the event of grid failures or electrical disruptions. As data centers expand in size and number, the demand for generator sets with high reliability, scalability, and rapid response capabilities continues to rise.

Moreover, the growth of edge computing, which places data processing closer to end-users, necessitates smaller data centers and IT facilities in various locations. These distributed data centers rely heavily on generator sets to maintain uninterrupted operations.

The increasing reliance on digital services and the growth of the Internet of Things (IoT) further amplify the importance of generator sets in supporting the infrastructure of data-driven industries. This trend is expected to sustain the generator sets market's growth for the foreseeable future.

Energy Transition and Integration of Renewables

The global push for clean energy and the integration of renewable energy sources into the grid are driving the generator sets market. While renewable energy sources such as wind and solar are crucial for reducing greenhouse gas emissions and combating climate change, they are inherently intermittent. Generator sets complement renewable energy systems by providing backup power during renewable energy shortfalls.

Grid stability and reliability are essential as the share of intermittent renewables in the energy mix increases. Generator sets are deployed as grid support systems to address fluctuations in electricity generation and demand. They can rapidly start and provide power to stabilize the grid during sudden renewable energy output drops or peak demand periods.

Furthermore, generator sets fueled by cleaner alternatives, such as natural gas and biofuels, align with environmental sustainability goals. These units serve as a bridge between conventional fossil fuel-based power generation and a future dominated by renewable energy.

The energy transition and the need for grid flexibility are propelling the adoption of generator sets as a reliable and flexible source of backup and grid-support power, contributing to market growth.

Growth of Telecommunications and Connectivity

The growth of telecommunications and the demand for seamless connectivity are driving the generator sets market. Telecommunications networks are the backbone of modern communication, connecting people, devices, and data across the globe. These networks require continuous power to ensure uninterrupted communication services.

Generator sets are vital for ensuring the availability of telecommunications infrastructure, especially in remote or off-grid locations. They provide backup power during grid outages, equipment maintenance, or natural disasters, enabling networks to stay operational when reliability is paramount.

The deployment of 5G technology, which promises higher data speeds and lower latency, further underscores the need for reliable power sources. 5G networks support applications like autonomous vehicles, smart cities, and IoT devices, all of which depend on a stable and resilient telecommunications infrastructure.

As demand for connectivity continues to surge, the generator sets market benefits from its role in ensuring the reliability and uptime of telecommunications networks, particularly in regions with unreliable grid infrastructure or extreme weather conditions.

Resilience Planning and Disaster Preparedness

Resilience planning and disaster preparedness efforts are significant drivers of the generator sets market. Governments, businesses, and communities are increasingly recognizing the importance of being prepared for unexpected events, including natural disasters, cyberattacks, and other emergencies.

Generator sets are a cornerstone of resilience planning, offering a reliable source of backup power during emergencies. They are essential for critical facilities such as hospitals, emergency response centers, and water treatment plants, where uninterrupted power is a matter of life and safety.

The increasing frequency and severity of extreme weather events, such as hurricanes, wildfires, and winter storms, have highlighted the vulnerability of power grids. In such scenarios, generator sets become indispensable for maintaining essential services and safeguarding public health.

Additionally, businesses across various sectors are incorporating resilience strategies into their operations to minimize downtime and financial losses during disruptions. This trend further drives the adoption of generator sets as a critical component of resilience planning and disaster recovery.

In conclusion, the global generator sets market is influenced by a diverse set of drivers, including the demand for reliable backup power, infrastructure development, data center expansion, renewable energy integration, telecommunications growth, and resilience planning. These factors collectively contribute to the market's growth and underline the critical role that generator sets play in ensuring uninterrupted power supply and operational continuity in various applications and industries.

Government Policies are Likely to Propel the Market

Emission Standards and Environmental Regulations

One of the central government policies shaping the global generator sets market is the establishment of emission standards and environmental regulations. Governments worldwide are increasingly concerned about air quality and greenhouse gas emissions, leading to the implementation of stringent emission standards for internal combustion engines used in generator sets.

These regulations aim to reduce harmful pollutants emitted by generator sets, including nitrogen oxides (NOx), particulate matter (PM), and carbon monoxide (CO). They also encourage the adoption of cleaner technologies, such as engines with advanced emission control systems, catalytic converters, and exhaust aftertreatment technologies.

For example, in the United States, the Environmental Protection Agency (EPA) has set emission standards for stationary diesel engines used in generator sets under the Clean Air Act. These standards require engine manufacturers to develop engines that emit significantly lower levels of pollutants. Compliance with these regulations has driven the market toward cleaner and more efficient generator sets.

Renewable Energy Incentives and Integration

Many governments worldwide are promoting the integration of renewable energy sources into their energy mix, which includes policies that incentivize the use of generator sets as backup or complementary power sources for renewable energy systems.

These policies often include feed-in tariffs (FiTs), tax credits, and incentives for renewable energy projects. Generator sets are essential components of hybrid energy systems that combine renewable sources like solar and wind with backup power generation. They provide stability to the grid during renewable energy intermittency, ensuring uninterrupted power supply.

For instance, in countries like Germany and Spain, where renewable energy adoption is high, generator sets are strategically deployed to complement renewable energy generation and maintain grid reliability during periods of low renewable energy output.

Energy Efficiency Standards and Labels

To promote energy efficiency and reduce overall energy consumption, governments implement energy efficiency standards and labeling programs for generator sets. These policies establish minimum efficiency requirements for generator sets, ensuring that they operate at optimal efficiency levels and consume less fuel per unit of power generated.

Energy efficiency standards typically set specific requirements for engine performance, emissions, and fuel consumption. Generator sets that meet or exceed these standards earn energy efficiency labels or certifications, which can be used for marketing purposes.

For example, the European Union (EU) has established energy efficiency standards for standby generator sets, encouraging manufacturers to produce more efficient and eco-friendly models. These policies drive innovation in generator set technology, leading to the development of advanced and energy-efficient products.

Grid Resilience and Reliability Mandates

To enhance grid resilience and reliability, governments may mandate the installation of backup power sources, including generator sets, in critical infrastructure and key facilities. These policies are particularly relevant in regions prone to severe weather events, natural disasters, or power grid vulnerabilities.

Government entities may require specific industries or sectors, such as healthcare, telecommunications, and emergency services, to install generator sets to ensure uninterrupted services during grid outages. These mandates help safeguard public safety and maintain essential services during emergencies.

For instance, in the United States, the Federal Emergency Management Agency (FEMA) provides grants and guidance to state and local governments to enhance resilience through the installation of generator sets in critical facilities. Compliance with such mandates drives the demand for generator sets in the market.

Incentives for Distributed Energy Resources

Governments often provide incentives and subsidies for distributed energy resources (DERs), which include generator sets, to support localized energy generation and grid resilience. These incentives aim to encourage businesses, communities, and households to invest in DERs and contribute to energy self-sufficiency.

Incentives may include tax credits, grants, or favorable tariffs for distributed generation projects. Generator sets play a crucial role in distributed generation by providing reliable backup power and supporting the integration of renewable energy systems at the local level.

Countries like Japan, which faced energy challenges after the Fukushima nuclear disaster, have implemented incentives to promote the adoption of generator sets and other DERs as part of their energy resilience strategies.

Export and Trade Regulations

Government policies related to export and trade regulations can significantly impact the global generator sets market. These policies may involve import tariffs, export restrictions, and trade agreements that influence the movement of generator sets across borders.

Trade policies can either facilitate or hinder the international trade of generator sets and their components. Favorable trade agreements can lead to increased market access and a broader customer base for manufacturers, while trade barriers can have the opposite effect, limiting market growth.

For example, changes in import tariffs imposed on generator sets or related components can affect pricing, market competitiveness, and the choice of suppliers for end-users in various regions.

In conclusion, government policies play a substantial role in shaping the global generator sets market. Policies related to emission standards, renewable energy incentives, energy efficiency, grid resilience mandates, DER incentives, and export and trade regulations collectively influence the demand, innovation, and market dynamics of generator sets across the world. Manufacturers and stakeholders in the generator sets industry closely monitor and adapt to these policies to navigate the evolving market landscape.

Key Market Challenges

Evolving Energy Landscape and Renewable Integration

One of the significant challenges facing the global generator sets market is the evolving energy landscape and the integration of renewable energy sources into the power grid. This transformation is driven by the imperative to reduce greenhouse gas emissions, combat climate change, and transition toward cleaner and more sustainable energy generation.

Competition with Renewable EnergyThe increasing adoption of renewable energy sources such as wind, solar, and hydropower poses a challenge to the generator sets market. Renewable energy technologies are becoming more cost-effective and are often preferred for their environmental benefits. This reduces the need for backup power generation provided by generator sets, particularly in grid-connected applications.

Grid Stability and ReliabilityWhile renewable energy sources are a critical component of a greener energy mix, they are inherently intermittent and weather-dependent. Generator sets have traditionally played a role in providing grid stability and reliability by serving as backup power sources during periods of low renewable energy generation or grid disturbances. However, the integration of renewables with advanced grid management systems may lessen this reliance on generator sets.

Environmental ConcernsEnvironmental sustainability is a primary driver of energy policy and consumer preferences. Generator sets, especially those powered by fossil fuels, can be associated with air pollution and carbon emissions. Meeting environmental standards while competing with cleaner renewable energy sources presents a significant challenge for generator set manufacturers.

To address these challenges, manufacturers are exploring opportunities to adapt their product offerings. This may involve developing hybrid solutions that combine generator sets with energy storage systems or integrating advanced emissions control technologies to reduce environmental impacts. Moreover, collaboration with grid operators and renewable energy developers to provide seamless transitions between power sources can be a strategic approach to remain relevant in the evolving energy landscape.

Regulatory Compliance and Emission Standards

The generator sets market faces a persistent challenge in meeting evolving regulatory compliance and emission standards imposed by governments and environmental agencies worldwide. These regulations aim to reduce harmful emissions from generator sets, improve air quality, and mitigate the impact of internal combustion engines on public health and the environment.

Stringent Emission StandardsGovernments continually raise the bar for emission standards, requiring generator set manufacturers to develop engines that emit lower levels of pollutants, including nitrogen oxides (NOx), particulate matter (PM), and carbon monoxide (CO). Compliance with these standards necessitates significant investments in research and development.

Impact on Engine DesignMeeting stringent emission standards often requires fundamental changes in engine design. Manufacturers may need to incorporate advanced emission control systems, such as selective catalytic reduction (SCR) and diesel particulate filters (DPF), into their generator sets. These modifications can increase production costs and complexity.

Variability in RegulationsThe global nature of the generator sets market means that manufacturers must contend with varying emission standards and regulations across different regions and countries. Compliance can be challenging, particularly for companies operating in multiple markets with differing requirements.

To address this challenge, generator set manufacturers are investing in research and development to create cleaner-burning engines that meet or exceed regulatory standards. They are also exploring alternative fuels, such as natural gas and biofuels, which can offer lower emissions profiles. Collaboration with regulatory authorities and industry organizations to align emission standards can help streamline compliance efforts and reduce complexity for manufacturers operating in diverse markets.

Segmental Insights

50-125 kVA Insights

The 50-125 kVA segment had the largest market share in 2022 & expected to maintain it in the forecast period. Generator sets in the "50-125 kVA" range offer a versatile solution that can meet the power needs of a broad spectrum of applications. This power range is suitable for small to medium-sized businesses, residential buildings, healthcare facilities, educational institutions, telecommunications infrastructure, and various other commercial and industrial settings. This versatility ensures a wide customer base and high demand.

Many commercial establishments and small to medium-sized industrial operations rely on generator sets in the "50-125 kVA" range to ensure continuous and uninterrupted operations. Businesses, including retail retailers, restaurants, offices, and small manufacturing units, depend on these generator sets to mitigate the financial losses and disruptions caused by power outages. Generator sets within this power rating range are commonly employed to provide backup power for critical infrastructure, such as data centers, hospitals, and emergency services. These facilities cannot afford power interruptions and require dependable backup power solutions. The "50-125 kVA" range offers flexibility and scalability. Businesses and organizations can start with a generator set within this range to meet their current power needs and then expand their backup power capacity as they grow. This adaptability makes it an attractive choice for entities with evolving power requirements. In comparison to larger generator sets with higher power ratings, those in the "50-125 kVA" range are often more cost-effective both in terms of initial acquisition and operational costs. This affordability makes them accessible to a broader range of customers, including small and medium-sized enterprises. Generator sets in this power range are designed to be fuel-efficient, which is especially important for businesses and organizations concerned about operational costs and environmental impact. Efficient fuel consumption helps minimize ongoing expenses. Due to their popularity and widespread demand, manufacturers often prioritize the production and innovation of generator sets in the "50-125 kVA" range. This ensures a ready supply and a competitive market.

Diesel Insights

The Diesel segment had the largest market share in 2022 and is projected to experience rapid growth during the forecast period. Diesel engines are renowned for their reliability and durability. They are built to withstand heavy-duty applications and can operate continuously for extended periods without significant wear and tear. This reliability is critical for applications where uninterrupted power supply is essential.

Diesel engines offer a high power-to-weight ratio and excellent power density. They can provide a significant amount of electrical power relative to their size, making them suitable for various applications, including standby power generation and remote locations. Diesel fuel is one of the most widely found at fuels globally. It is accessible in most regions, and many businesses and organizations store diesel fuel on-site, ensuring a constant fuel supply in the event of power outages. This availability is crucial for ensuring continuous power. Diesel engines are known for their fuel efficiency. They can convert a high percentage of the energy in diesel fuel into electrical power, making them cost-effective for providing backup power. Properly maintained diesel generator sets have a long operational life, often exceeding 20 years. Their durability and longevity make them a valuable investment for businesses and organizations looking for reliable standby power solutions. Diesel generator sets are relatively easy to maintain. Routine maintenance tasks, such as oil changes and filter replacements, can be performed without specialized skills or equipment. Additionally, diesel engine components and spare parts are widely found at, reducing downtime for maintenance and repairs. Diesel generator sets are versatile and can be used in a wide range of applications, including industrial facilities, commercial buildings, healthcare institutions, data centers, construction sites, and telecommunications infrastructure. Diesel generators have rapid start-up times, which is crucial for applications where power needs to be restored quickly after an outage.

.

Regional Insights

Asia Pacific

Asia Pacific is the largest market for generator sets, accounting for over 40% of the global market share. China is the largest generator sets market in the Asia Pacific region, followed by India and Indonesia.

The growth of the generator sets market in Asia Pacific is being driven by a number of factors, including

Rapid industrializationIndustrialization is taking place rapidly in many developing countries in Asia Pacific. This is leading to an increase in the demand for generator sets, as they are used to power factories, mines, and other industrial facilities.

Growing infrastructure investmentsGovernments in Asia Pacific are investing heavily in infrastructure development projects. This is also creating demand for generator sets, as they are used to power construction sites and other infrastructure projects.

Natural disastersNatural disasters such as typhoons, floods, and earthquakes are common in Asia Pacific. Generator sets are used to provide backup power during these outages.

North America

North America is the second-largest market for generator sets. The United States is the largest generator sets market in North America, followed by Canada.

The growth of the generator sets market in North America is being driven by a number of factors, including

Increasing demand for electricityThe demand for electricity is growing in North America, due to population growth and economic development. Generator sets are well-suited to meet this growing demand, as they can provide a reliable source of power even in remote areas or during power outages.

Natural disastersNatural disasters such as hurricanes, floods, and ice storms are common in North America. Generator sets are used to provide backup power during these outages.

Recent Developments

• In June 2022, Kirloskar Oil Engines Ltd., a prominent manufacturer of diesel generator sets, introduced a novel version of their fuel-efficient power generators. The R550 engine series, powering the iGreen Version 2.0, offers a combination of compact design, fuel efficiency, and superior power quality.
• In response to the energy crisis triggered by the Russia-Ukraine conflict, Equinix and Digital Realty data centers took measures in August 2022 to enhance their backup power capabilities. These measures included bolstering their backup power sources, including the deployment of diesel generators.

Key Market Players

• Caterpillar Inc
• Cummins Inc
• Generac Holdings Inc.
• Kohler Co.
• Atlas Copco
• Ingersoll Rand
• MAN Energy Solutions SE
• Volvo Penta
• Wacker Neuson SE
• AKSA Power Generation