Europe

Crowded, competitive and growing

March 2024

For most of the last decade, Europe has been a mature market for diesel generator sets: flat to declining.  But the last two years have seen strong growth as diesel generator sets have proved their value in uncertain times.  

The Europe Diesel Generator Sets Market

Europe is predominantly a low-hours standby market,  well served by suppliers.  With power outages across the region averaging around 20 hours a year, diesel generator sets are owned or operated by just over 10% of businesses or public sector facilities, mainly for critical power applications or to meet a legislative requirement. 

For most of the last ten years, until 2019, the European market for diesel generator sets was flat to declining, even with some help from the growing data center sector.  

To anyone studying the data, Europe would have appeared as a declining and very competitive market and not very attractive, apart from the data center and rental sectors.

But the last couple of years have seen phenomenal growth, reaching a likely total of around $2.5 billion in 2023. 

There have been three major drivers:

Europe Opportunity for Diesel Generator Sets 

By Quarter (US$ m)

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

Ukraine

Generator sets shipped to Ukraine to cover for damage to the supply grid have substantially boosted the European market.  And at around $350 million, in 2023 Ukraine is likely to be the largest market in the region and one of the world's top 10 markets.  

At some point in the future, a massive rebuilding program will initiate further demand for generator sets over a period of years.    

Grid Supply Concerns

Uncertainty created by the situation in Ukraine also spilled over into the rest of Europe.

Across the region, particularly during 2022 and early 2023, fears of electricity outages driven by shortages of natural gas drove many businesses and government facilities to buy generator sets.  And the result was a spike in demand in otherwise mature market sectors, across all power bands.  

Data Center Sector

Although smaller than the US, the European data center sector is growing rapidly, as high as 15 - 20% in 2023.  

The European market for diesel generator sets above 2,000 kVA is likely to have grown more, around 40% (our estimate based on Q1 - Q3 data).  Most of this growth has come from the data center sector as order backlogs and supply chain issues have cleared.  And we believe some data center operators are stockpiling or advance-ordering generator sets in case of future supply issues.  

Amid uncertainty and fear of power outages, once again generator sets have proved their value.

With a thriving data center sector, Ireland is now among Europe's top 10 markets for diesel generator sets.

Players in the Market

The diesel generator set industry in Europe is mature and well-established and no single player dominates the entire region.  

Driven partly by regional geography and history, each major country has its own dominant player, or players.

Below 1,500 kVA

At lower power ratings, especially below 250 kVA but also up to around 1,500 kVA, the market is extremely competitive.  Most, around three quarters of the market is served by a multitude of smaller regional independent packagers, operating on tight costs and margins.  Some of them are close partners of engine OEMs, others simply shop around for the best deals on major components.  At these lower ratings, there is a small premium sector of the market, mostly accounted for by critical applications and the rental sector.  

Above 1,500 kVA

At higher ratings, particularly above 2,000 kVA, the picture is reversed completely.  Much of the European market at this size (we believe half to two-thirds) is accounted for by the data center sector and most of the rest is occupied by other critical power sectors.   

Around three quarters of the market at these higher ratings is held by premium global OEMs.  Competition thins out to a few players with strong project management and support capabilities and the ability to manage or underwrite substantial risk, both technical and financial.  

Europe Opportunity by OEM Type 7.5 - 1,500 kVA

Europe Opportunity by OEM Type Above 1,500 kVA

, Source:  Genstat+ from Parkinson Associates

Major Markets

Like many regions, the major markets in Europe exhibit a near-Pareto effect.

Around 25% of countries account for 75% of the overall market value:  Ukraine, Germany, UK, Belgium, Netherlands, France, Poland, Italy, Spain, Irish Republic.



Europe Diesel Generator Set Opportunity by Major Markets

(US$ B)

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

The Future

Generator Sets Demonstrate their Usefulness

The crisis in Ukraine and concerns over grid resilience have demonstrated once again that when it comes to guaranteeing standby or emergency electrical power, in terms of cost, flexibility and responsiveness, a diesel generator set is a solid and reliable option.  

Short term concerns over natural gas availability for power generation at grid level are over now, but around the region, there remain some concerns over grid capacity and resilience.  And demand for reliable, quality power will continue to grow, with zero tolerance of power outages. 


Co-existing with New Power Generation Technology

At lower power ratings, the construction and rental sectors which account for slightly less than 20% of the market below 1,500 kVA, are showing more sensitivity to carbon footprints.  There is evidence that both are interested in alternatives to diesel generator sets and both are trying to reduce usage of diesel.  Both sectors are showing interest in energy storage and hydrogen fuel cells.  

However, the likelihood for the foreseeable future is that in these sectors and others, generator sets will co-exist with other renewable power generation technology as part of a balanced solution.  

At higher power ratings and where the application is more critical, for the foreseeable future it's likely that diesel generator sets will continue to grow almost undisturbed in Europe at least through the rest of the 2020s and probably well into the 2030s.  

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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Europe Market Mar 24.pdf