The future of diesel gensets: what are the long term prospects?

With most of the big players posting healthy figures, revenues are showing continued growth throughout 2018. Are these results a sign of things to come or are they merely delaying an inevitable future decline?

Diesel gensets are currently the most reliable solution for temporary or mobile power due to their versatile, scalable and weather independent operation. Following several years of volatility and reduced demand driven by falling commodity prices, 2017 & 2018 has seen a return to profitability for the majority of manufactures and rental providers, with examples shown in the table below. Despite this strong performance increasingly stringent emission regulations, environmental concerns and fluctuating fuel prices can now make a compelling case for genset hybridisation with renewable technologies. IDTechEx 's upcoming report 'Diesel Generator Set Future Developments and Alternative Technologies 2019-2029' examines the future market in the context of the growing use of natural gas gensets as well as the various alternative low/zero emission technologies that are available.

With their low up-front costs and round the clock power availability, it is easy to see why diesel gensets have proliferated within sectors such as mining, oil & gas, telecoms and military. Recently the plummeting costs of solar means that replacing at least a portion of installed genset capacity with solar panels and/or battery storage systems can have payback periods as short as 2-3 years. In this report the growing future demand for diesel gensets is modelled alongside the market penetration of alternative power generating technologies such as solar, wind and fuel cells. Profiles and interviews with key genset manufacturers and renewable technology developers are included as well as market segmentation by region and genset size.

Caterpillar attribute the 2018 performance of their power generation group to strong sales in the EAMA region, although a large portion of this has come from increased natural gas (rather than diesel) genset sales. Cummins observed that much of their demand has come from resurgent mining and oil and gas markets, whilst for Generac the demand has come from across a variety of residential, commercial and industrial customers with the highest growth seen in telecoms and healthcare applications. Rental provider Aggreko also put their figures down to growing industrial sales, citing construction as a further key driver.

Source: IDTechEx

It is widely accepted that there is a growing energy supply - demand gap globally, which some estimate will be around 100GW by 2020. The report finds that this will create favourable conditions in the short term for diesel genset use which will see the market value continue to rebound, although not necessarily to pre-2014 levels. In the medium to longer term, a more complex mix of market drivers will ultimately determine installed capacity globally. For further information and more detailed analysis please refer to the upcoming report.