Insight into Operating Hours of Diesel Generator Sets

A Global View of Generator Set Usage

Diesel generator sets are ideal for short term emergency or standby power applications to avoid costs or risks associated with power outages.  

This means that many are bought for risk mitigation, “just in case”, with a possibility that they will see valuable use at some point.

So it's no surprise to find that most diesel generator sets are used quite lightly. 

Worldwide, by volume almost 60% of generator sets fall within the common standby definition of 500 hours a year, with around a third used for less than 150 hours a year (most of these will barely operate at all).

In value terms, however, around 80% of the $ market opportunity is accounted for by generator sets operating for less than 500 hours a year, with almost 60% of the $ opportunity accounted for by units operating fewer than 150 hours a year.  

This has been driven by the recent boom in generator sets at higher power ratings, which can sell at several hundred thousand dollars each. We'll look briefly at this below. 

Strongest Growth in Light Standby Usage

Over the last 4 - 5 years, most market growth has been in diesel generator sets purchased for light usage, in countries where utility power supply is reliable.  

This points to growth in critical power applications,  market sectors where the cost of a generator set is strongly justified by offsetting the risk of power loss.  

• 60% of $ market growth from 2020 - 2024 has been in units operating for less than 150 hours a year.

• And 80% of $ market growth from 2020 - 2024 has been in units operating for less than 500 hours a year.

Annual Usage 7.5 - 1500 kVA

Low Usage

At ratings between 7.5 - 1500 kVA, around 40% of the global market by value is accounted for by very low hours standby usage and 80% of this is in North America, Europe, Middle East and China. 

In cases where there is higher usage in these regions, it's usually seen in rental and construction sectors and power-intensive industries such as mining or oil & gas exploration in remote regions, where generator sets may operate for prime power. 

Higher Usage

Around 30% of the world market is accounted for by diesel generator sets operating for 1,000 hours a year or more.  A common denominator across these regions is demand for electricity far outstripping supply, often combined with long-term underinvestment in grid generation and transmission & distribution.

In many of these regions, particularly in parts of Africa or the Middle East, it's not unusual for diesel generator sets to operate two or three hours a day every day.  In extreme cases, for example in Lebanon, many generator sets operate almost continuously.

In these higher usage regions, brands of generator sets and engines are often well known.  There is a strong and profitable market for parts and service and most major brands have well-established distribution networks to support customers, who are usually businesses.  There's also a thriving market for will-fit parts, supported by a large number of independent service agents.

Annual Usage > 1500 kVA

At ratings above 1500 kVA, around 80% of the world market by value is accounted for by diesel generator sets operating for less than 150 hours a year. 

Almost three quarters of this light standby part of the market is accounted for by North America and Europe, both of which have relatively reliable utility power. 

Data centers, healthcare, banking and critical production processes or critical infrastructure are key sectors.  Diesel generator sets are bought to offset the risk of power outages of any kind, even if this risk is very low. 

This aversion towards power outages of any duration has driven very strong demand for diesel generator sets.  And this is likely to continue for the foreseeable future. 

Although this part of the market is dominated by the large premium global OEMs, with demand substantially exceeding supply, we're seeing evidence of other players seeking a foothold.  Suppliers of generator sets offering shorter lead times are attractive to many customers and some may even be able to attract a price premium.