Continued Growth

A preliminary view of the 2023 global market for diesel generator sets

February 2024

For many producers of diesel generator sets, 2023 was a record year for revenue with ground-breaking quarterly results. Here, we take a look at the industry with a full year estimate based on the first three quarters of data.

A Record Year

With analysis of Q1 to Q3 industry data complete and some data becoming available for Q4, a picture of the industry in 2023 is beginning to emerge.

Following 13% overall industry growth in 2022, our current full year forecast is for growth of slightly more than 20% in 2023, taking the overall market to an all-time high of $15.5 billion.

Strongest performing regions are likely to be:

North America: particularly strong growth at higher ratings above 2,000 kVA, driven by the data center sector, and also strong performance below 250 kVA, driven by a relatively resilient economy and also businesses staying prepared for grid outages.
Europe: the market for diesel generator sets was boosted considerably in Q1 by concerns over potential power outages caused by gas shortages and also by vast quantities of generator sets shipped into Ukraine, which is likely to be the largest market in Europe in 2023 and rank as one of the world's top 10 markets.
South East Asia: we've seen significant industry growth in ratings above 2,000 kVA (also in Australia) which points to a growing data center sector. And several heatwaves across the region have led to strong demand for smaller generator sets.

Figure 1: Global Diesel Generator Set Opportunity

All Power Bands > 7.5 kVA (US$ Billions)

Source: Genstat from Parkinson Associates. Values based on OEM ex-works.

Figure 2: Global Diesel Generator Set Opportunity

by Power Band (US$ Billions)

Source: Genstat from Parkinson Associates. Values based on OEM ex-works.

Drivers of demand are relatively secure for the short to medium term.

Looking Ahead

Today many producers of diesel generator sets have order books well into 2024 and so already have good short-term visibility of the industry.

While there is evidence of some data center operators ordering generator sets in advance and also stockpiling to avoid supply chain issues, the industry today is in a different phase from where it has been in the past, certainly very different from the dotcom boom at the turn of the century.

With a growing need for reliable electricity worldwide, power grids struggling to keep up with demand and an insatiable and rapidly growing need for power from data centers, drivers of demand are likely to be in a good place for the short to medium term and at least through the 2020s.

Figure 3: Quarterly Global Opportunity for Diesel Generator Sets by Power Band (US$ Millions)

Source: Genstat from Parkinson Associates. Values based on OEM ex-works.

Demand Drivers

The data center sector is booming, likely to continue growing at current, or even higher, levels for the foreseeable future as it works to meet growing demand from AI-driven applications.

While the sector is experimenting with other sources of standby power generation, for the short to medium term, diesel generator sets are likely to continue to meet data center needs. Even beyond, well into the 2030s, expect generator sets, powered by cleaner, more sustainable fuels, to continue playing a role.

The world is vastly more electrified and digital than it was ten or twenty years ago and for many businesses and consumers there is zero tolerance of outages of any kind.

Place this alongside aging power grids that are at or near capacity and in need of investment and you have a strong growth platform for generator sets for the short to medium term.

At smaller ratings, this has been a definite growth driver in North America and has also been seen in the Asia Pacific region and Europe in 2023.

The world is vastly more electrified and digital than it was ten or twenty years ago

But Still Prudent to Prepare...

For anyone engaged in forward planning, the wildcard factor is financial, or economic.

Few manufacturers or economists completely foresaw the financial crises of 1997 and 2008, at least not their extent, and both crises came after a market peak.

History and market data tell us that, as the old saying goes, the time to repair the roof is when the sun is shining. Today, even when orders are well in excess of capacity, some OEMs in the generator set industry are looking closely at operating models and costs and thinking carefully about where to invest.

This is both prudent and far-sighted: informed and pragmatic decisions can be taken when not under pressure and even if a downturn doesn't materialize, the business is in good shape.

It also becomes a time to explore the industry and seek out the most valuable sectors and segments.

And in a mature, though growing industry, this makes a lot of sense.

Insights on Opportunity for Producers of Diesel Generator Sets

To find out more about this study, contact us at at enquiries@parkinsonassociates.com

Parkinson Associates publish an opportunity database, Genstat, available quarterly and annually, for diesel generator sets, split by 12 power bands for every country. Click here to find out more.

To find out more about our research in the diesel generator set industry, click here

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2023 Preliminary Feb 24.pdf