Distributed Natural Gas-Fueled Generation Market Report 2026

The distributed natural gas-fueled generation market size has grown rapidly in recent years. It will grow from $36.59 billion in 2025 to $40.75 billion in 2026 at a compound annual growth rate (CAGR) of 11.4%. The growth in the historic period can be attributed to expansion of natural gas distribution networks, need for reliable local power generation, growth in commercial infrastructure, favorable natural gas pricing, urbanization trends.

The distributed natural gas-fueled generation market size is expected to see rapid growth in the next few years. It will grow to $64.3 billion in 2030 at a compound annual growth rate (CAGR) of 12.1%. The growth in the forecast period can be attributed to decentralization of power systems, investments in clean energy transition, demand for backup power solutions, modernization of aging grids, growth in smart city projects. Major trends in the forecast period include rising adoption of distributed power systems, growing use of natural gas gensets, expansion of micro and small scale generation, increased focus on grid resilience, higher deployment in urban infrastructure.

Rising usage of natural gas is expected to drive the growth of the distributed natural gas-fueled generation market going forward. Natural gas usage refers to the consumption of naturally occurring flammable gas as a fuel or energy source for applications such as heating, cooking, transportation, and power generation. This increase is fueled by growing energy demand and the efficiency of natural gas in producing electricity and thermal output. The distributed natural gas-fueled generation market supports this usage by providing localized, efficient, and reliable power generation solutions that reduce reliance on centralized power plants. For instance, in June 2025, the U.S. Energy Information Administration (EIA) reported that natural gas accounted for about 38% of total U.S. energy production in 2024, while natural gas plant liquids (NGPL), including ethane and propane, reached a record 4 trillion cubic feet, representing a 7% increase compared to 2023. Consequently, rising natural gas usage is driving the growth of the distributed natural gas-fueled generation market.

Major companies in the distributed natural gas-fueled generation sector are developing advanced gas engine solutions to improve efficiency, enable fuel flexibility, and meet stricter emissions regulations. Advanced gas engines are power generation systems capable of running on natural gas while accommodating alternative fuels, such as hydrogen, without technical modifications, facilitating a smoother transition to greener energy sources. For example, in September 2023, Motoren Werke Mannheim AG, a Germany-based gas engines company, launched the TCG 3020 gas engine series along with retrofit kits for hydrogen operation, allowing an admixture of up to 25% hydrogen by volume. This feature enhances operational versatility, supporting sustainable energy adoption while maintaining high performance and reliability.

In October 2025, Vistra Corp., a U.S.-based electricity generation and energy solutions provider, acquired seven advanced natural gas power plants from Lotus Infrastructure Partners for an undisclosed amount. Through this acquisition, Vistra aims to expand its power generation portfolio, improve energy supply reliability, and strengthen its presence in the U.S. natural gas power market. Lotus Infrastructure Partners is a U.S.-based electricity generation provider with significant operational capacity across its portfolio.

Major companies operating in the distributed natural gas-fueled generation market are General Electric Company, MWM GmbH, Cummins Inc., Shandong Lvhuan Power Equipment Co. Ltd., Redox Power Systems, Caterpillar Inc., Generac Power Systems, Mitsubishi Heavy Industries Ltd., Kohler Co. Inc., MTU Onsite Energy GmbH, Mahindra Powerol Ltd., Yanmar Co. Ltd., Coopercorp Generators, Siemens AG, Rolls‑Royce Holdings PLC, Wärtsilä Corporation, MAN Energy Solutions SE, Kawasaki Heavy Industries Ltd., Bladon Micro Turbine, Capstone Turbine Corporation, Brayton Energy, FlexEnergy Inc., Doosan Corporation.

North America was the largest region in the distributed natural gas-fueled generation market in 2025. Asia-Pacific is expected to be the fastest-growing region in the global distributed natural gas-fueled generation market report during the forecast period. The regions covered in the distributed natural gas-fueled generation market report are Asia-Pacific, South East Asia, Western Europe, Eastern Europe, North America, South America, Middle East, Africa. The countries covered in the distributed natural gas-fueled generation market report are Australia, Brazil, China, France, Germany, India, Indonesia, Japan, Taiwan, Russia, South Korea, UK, USA, Canada, Italy, Spain.

The distributed natural gas-fueled generation market includes revenues earned by entities by providing services such as the combustion of gases to run the gas turbine and boiling of water by the exhaust gases of the gas turbine, to convert the water into steam and to drive the steam engine. The market value includes the value of related goods sold by the service provider or included within the service offering. Only goods and services traded between entities or sold to end consumers are included. The distributed natural gas-fueled generation market consists of sales of ethane, propane, butanes, pentanes, and higher molecular weight hydrocarbons, which are used in providing distributed natural gas-fueled generation services. Values in this market are ‘factory gate’ values, that is the value of goods sold by the manufacturers or creators of the goods, whether to other entities (including downstream manufacturers, wholesalers, distributors and retailers) or directly to end customers. The value of goods in this market includes related services sold by the creators of the goods.

The market value is defined as the revenues that enterprises gain from the sale of goods and/or services within the specified market and geography through sales, grants, or donations in terms of the currency (in USD unless otherwise specified).

The revenues for a specified geography are consumption values that are revenues generated by organizations in the specified geography within the market, irrespective of where they are produced. It does not include revenues from resales along the supply chain, either further along the supply chain or as part of other products.

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