China

Over the last 15 years, China has been the world's fastest growing regional market for diesel generator sets, growing just slightly faster than North America over that timeframe. 

It's a market that has evolved considerably.

In the early 1990s, diesel generator sets operating continuously were a common sight in China: at that time, the economy was growing so rapidly that new factories were often built long before being connected to the grid, relying completely on diesel generator sets for electricity. 

Today, it's different.  Across most of the electricity network, stability and reliability are usually at Western levels.  China is predominantly a low-hours standby market with most diesel generator sets operating well below 500 hours a year and in normal circumstances, many units are barely used at all.  

There were some well-publicized outages in 2021, caused by a mismatch between demand and supply, and magnified as the economy rebounded after a weaker 2020.  In mid 2022, further widespread outages were caused by an unusually long heatwave, lasting around two months, impacting China’s hydro power plants, which account for almost 20% of the grid supply.  These created a surge in the market for diesel generator sets, both to buy and to rent. 

But taken over the longer term, the recent outages represent more of a blip than a trend and the China market at its core remains predominantly a low-hours standby market.

The diesel generator set market in China is large and highly fragmented with at least 150 local producers in the market.  

Below ~ 1,500 kVA

At lower power ratings, the market is competitive, very crowded and dominated by local OEMs, often using components with local brands and selling directly from the factory via internet sales channels.  

Particularly below 1,000 kVA, established global OEMs have a very small presence and export most of the units that they produce.  

Above ~ 1,500 kVA

Premium global players have a strong presence at higher power ratings, particularly above around 2,000 kVA, and account for around two thirds of the market.  At these higher ratings, critical applications, particularly data centers, are key sectors.  Most diesel generator sets at these higher ratings (around 90%) are produced in China.

With many of the global OEMs facing capacity constraints in the next 2 - 3 years, expect to see more Chinese OEMs develop stronger positions in this space.  

China: The World's Production Powerhouse

In the scheme of things, the costs involved in assembling a standard diesel generator set are relatively low as a percentage of total product costs.  

Most costs are accounted for by components, particularly engines and alternators.  

Over the last 10 - 20 years as major component suppliers have relocated to China, it has made increasing commercial sense for manufacturers of diesel generator sets to follow.  All of the world's major players now have a manufacturing footprint in the country.  

Today exports of diesel generating sets from China make up around 20% of the entire global market above 7.5 kVA and account for:

• Around 50% of the market in Africa, Middle East and Asia Pacific.

• Around 60% in CIS and Central Asia.

• Around 40% in Latin America.

• Around 20% in Europe.

Most exports are by global players with manufacturing facilities in China but they also include a growing number of Chinese OEMs often working with established "Western" component brands  produced in China.  Often these are exported as part of Chinese investment in overseas regions for infrastructure or construction.

Only North America and India, where there is a very strong tradition and preference for local manufacture, have remained immune to the advance of diesel generator sets made in China.