The COVID-19 pandemic has led to a reduction in electricity consumption, impeded economic growth in major countries across the world, and has led to large-scale disruptions in supply chain which have resulted in a production decline in Q1 and Q2 2020. Factors such as increasing demand for uninterrupted and reliable power supply coupled with 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.
Industrial sector is estimated to account 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 of emerging economies, the residential sector of 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 2019, with majority of the demand coming from countries such as China and India.
Key Market Trends
Industrial Sector to Dominate the Market
In 2019, the industrial sector has 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-use sector. 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 in the world especially as the world’s growth picks up after the receding coronavirus, the demand for backup generators is expected to increase further in the forecast period.
China and India are expected to witness robust industrial growth in the coming years on account of the sharp increase in 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 has dominated the global diesel generator market in 2019 and is expected to continue its dominance during the forecast period as well.
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 nation, 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 back-up devices
Also, the rapid growth in various end-use sectors, such as infrastructure, telecommunication, and information technology (IT) & 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.
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 the frequent power blackouts in these areas.
Hence, Asia-Pacific is expected to dominate the market due to its large population and low transmission capabilities leading to an increase in demand for diesel generators in the country.
Competitive Landscape
The global diesel generator market is moderately fragmented. Some of the major players operating in this market include Atlas Copco AB, Caterpillar Inc., Cummins Inc., Kohler Co., and Generac Holdings Inc.
