2024

At one time, forecasting the market for diesel generator sets used to be relatively straightforward.  There were always unknowns, but over a 5 - 10 year forecast period, there was usually a general correlation with economic growth projections.

Today it's different.  To a great extent, the market has de-coupled from economic indicators.  And "events", both natural and human-caused, have a much bigger influence than 10 or 15 years ago.  

Our approach to market forecasting is to start in the detail and build up, applying any higher level assumptions as we go.  This means looking at industry data for 12 power bands in every country over a long period of time and building it up into a global forecast.  We look for patterns in the data and incorporate what we see ourselves in the industry.  This allows us to slice the forecast in many ways and the detail can be scrutinized and reviewed when quarterly numbers come in.  Genstat subscribers also benefit from this detail.  

In this article, we'll share our first high level view of 2024.

After 23% worldwide growth in 2023, of which around a third was price inflation, we're forecasting 4% market growth in 2024, of which around 4% is likely to be price inflation.  Essentially, we're saying we believe the global market will be flat in value terms, excluding price inflation.

But that's not the complete story.  

Firstly, the forecast still places the 2024 market at a new historic high:  the overall opportunity remains very substantial.  

Secondly, parts of the playing field are likely to be far from flat: there is significant growth potential in some regions and across some power bands.  And we'll look at these below.  

A Two-Speed Market

The market for diesel generator sets always had a demarcation point, somewhere around 1,500 - 2,000 kVA.

At ratings below this level, there has always been a multitude of producers, with independent packagers and low cost country producers accounting for around two thirds of the global market, and more at the lower power ratings.  

At ratings above the demarcation, there's a complete switch-around in the competitive structure of the industry.  Premium global vertically-integrated players have normally accounted for around three quarters of the market at these higher ratings.   

And today that demarcation point is the line between where the market is growing strongly and where it is likely to fall back in 2024.  

Below 1,500 kVA

Globally, in 2024 we forecast the market below 1,500 kVA to drop back by 2 - 4%.  Take away the estimate for 2024 price inflation and the real drop is 6 - 8%. 

We see this as more of an adjustment, after a remarkable 2023.  It's worth noting that the 2024 forecast for ratings below 1,500 kVA is still the second highest industry number that we've seen and is second only to 2023.  And there are plenty of factors that could still drive growth.  

Above 1,500 kVA

Globally we forecast the market above 1,500 kVA to grow 16 - 17% in 2024. This part of the market is riding a wave of data center growth, with surging demand for diesel generator sets above 2,000 kVA and increasingly for much higher power ratings.  We believe the data center sector accounts for as much as 50% of the market at these higher ratings.   And demand from the data center sector is 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 our global view is 16 - 17% growth for the market above 1,500 kVA, some regions, particularly North America, will be substantially higher (more on this below).

2024 Around the Regions

North America continues to be the standout global region.  In 2024, we're forecasting the market below 1,500 kVA to be more or less flat.  If that sounds like nothing to cheer about, it's worth noting that this still places the market at a historic high.  And above 1,500 kVA, in 2024 we see the North American market continuing its upward climb, in line with new data center construction.  At these higher power ratings, we believe it could grow by around 30%.

Europe is likely to fall back in 2024, we believe by around 7% overall, but still weigh in at more than $2 billion.  Below 1,500 kVA, we're forecasting a market decline of around 17%:  in 2022 - 23, the European market was boosted by fears of power outages and the softening in 2024 reflects the easing of those fears.  The market in Ukraine is also a factor:  in our 2024 forecast we have scaled the Ukraine market back by 25 - 30%. Ukraine accounted for around 18,000 diesel generator sets in 2022 and 2023.  In 2024, we still see a substantial market in Ukraine at around 13,000 units / $200 million.  

If this picture in Europe below 1,500 kVA sounds gloomy, keep in mind that the 2024 forecast still represents the second highest year we have seen, more than 50% higher than the market in 2019. 

Counterbalancing this softening below 1,500 kVA, we see the European market growing by up to 25% from 1,500 - 4,000 kVA, largely due to data center construction.  

Turning to the Asia Pacific region, in China for 2024, we have factored in growth of 5 - 7% below 1,500 kVA and in the mid teens from 1,500 - 4,000 kVA, again bolstered by the data center sector.  In South East Asia we see the market below 1,500 kVA relatively flat but growth in higher power ratings, particularly from 3,000 - 4,000 kVA.  There are some factors that could change this, notably increasing pressure on utility grids,  and drive further growth across all power bands.

We believe Africa and Middle East are likely to be relatively flat in 2024, and in Latin America we have forecasted a decline.  In these regions, there remains a substantial opportunity but at lower power ratings we see renewable power generation nibbling away at diesel generator sets.  Although there is some regional data center construction, this is well below the scale seen elsewhere.