Genset Market - Global Industry Size, Share, Trends, Opportunity, and Forecast, 2021-2031

The Global Genset Market is projected to expand from USD 38.61 Billion in 2025 to USD 58.99 Billion by 2031, registering a CAGR of 7.32%. A generator set, or genset, functions as an integrated unit merging an internal combustion engine with an electrical generator to supply continuous or backup electricity. The market is primarily propelled by the declining reliability of aging utility infrastructure and the absolute uptime necessities of growing data centers, which require uninterrupted operations. Additionally, the global shift toward variable renewable energy has heightened the need for reliable backup systems to guarantee grid stability, a trend supported by Eurelectric data showing that renewable sources accounted for 48% of the European Union's power mix in 2024.

However, a major hurdle restricting market growth is the implementation of strict environmental regulations designed to lower carbon emissions from diesel engines. Adhering to these tough standards requires the use of expensive exhaust after-treatment technologies, which significantly raises the upfront capital costs for buyers. This increased financial burden poses a considerable obstacle to expansion, especially in price-sensitive international markets where budgetary limitations hinder the uptake of compliant power generation technologies.

Market Drivers

The rapid expansion of data center infrastructure and cloud computing is reshaping the global genset sector, as hyperscale operators demand uninterruptible power for artificial intelligence and storage applications. Modern facilities require massive energy capacities that frequently surpass local utility limits, necessitating on-site power generation to ensure absolute uptime. This surge in power consumption creates a continued reliance on high-capacity diesel and gas generators as essential safeguards against failure. According to a May 2024 analysis by Goldman Sachs titled "AI Set to Propel 160% Surge in Data Center Power Demand," power requirements for data centers are expected to jump 160% by 2030, largely due to AI adoption, leading manufacturers to see a sharp increase in orders for large-scale backup systems designed for these high-energy environments.

Concurrently, the rising incidence of severe weather-induced power outages is driving the uptake of backup solutions in both residential and commercial markets. As climate change increases storm intensity, aging utility grids are struggling to maintain service, prompting end-users to invest in decentralized power assets to reduce operational risks. A report by Climate Central in April 2024, "Weather-related Power Outages Rising," noted that weather events caused 80% of all major U.S. power outages between 2000 and 2023. This instability has generated financial growth for equipment suppliers; for example, Cummins reported a 24% rise in third-quarter power generation revenues in 2024, driven primarily by strong global demand for backup applications.

Market Challenges

The imposition of stringent environmental regulations intended to curb carbon emissions from diesel engines creates a significant barrier to the global genset market's development. To meet these exacting standards, manufacturers are compelled to incorporate sophisticated exhaust after-treatment systems, such as selective catalytic reduction and diesel particulate filters. This integration drastically increases the manufacturing costs of standard diesel generators, thereby inflating the initial capital investment required from end users. In regions where cost sensitivity is high and budgets are tight, this price surge effectively excludes a large segment of potential customers, impeding infrastructure upgrades and widespread market adoption.

The financial strain placed on traditional fuel-based power systems is clearly reflected in recent industrial manufacturing data. According to the China Internal Combustion Engine Industry Association, cumulative sales of diesel engines fell by 2.08% in the first half of 2024 compared to the prior year. This decline in sales volume for the core prime mover component underscores the direct market-dampening impact of the escalating costs and technical complexities linked to regulatory compliance. As these financial obstacles endure, they continue to limit the growth potential of the conventional diesel genset segment.

Market Trends

The adoption of Hydrotreated Vegetable Oil and sustainable biofuels is accelerating as a viable strategy for immediate decarbonization. Acting as a direct substitute for mineral diesel, HVO allows existing internal combustion engines to deliver significant carbon reductions without necessitating costly hardware changes or infrastructure overhauls. This ability is spurring adoption among heavy power users who need to meet strict corporate environmental targets while preserving the performance of traditional engines. For instance, DataCentreNews UK reported in December 2024 that a partnership between AVK and Rolls-Royce Power Systems resulted in the delivery of over 500 HVO-powered mtu generators to the data center industry during the year.

Meanwhile, the growth of decentralized power generation and microgrid architectures is transforming the market by lowering dependence on centralized utility providers. Commercial entities are increasingly combining generator sets with battery energy storage and renewable resources to build autonomous on-site ecosystems that guarantee continuity during grid instability. This structural evolution empowers businesses to actively control power reliability and manage energy costs independently of public infrastructure. According to Aggreko's October 2024 report, "Rebalancing the Energy Transition," 87% of surveyed European business leaders have already deployed decentralized energy solutions, such as on-site generation, to protect their operations against volatility.

Key Players Profiled in the Genset Market

• Caterpillar Inc.
• Cummins Inc.
• Kohler Co.
• Generac Power Systems, Inc.
• Rolls-Royce PLC
• Wartsila Corporation
• Aggreko Ltd.
• Kirloskar Oil Engines Limited
• Honda Motor Co., Ltd.
• Atlas Copco AB

Report Scope

In this report, the Global Genset Market has been segmented into the following categories:

Genset Market, by Fuel Type:

• Diesel Gensets
• Natural Gas Gensets
• Gasoline Gensets

Genset Market, by Power Rating:

• Up to 100 kVA
• 100-350 kVA
• 350-1000 kVA
• Above 1000 kVA

Genset Market, by Portability:

• Portable Gensets
• Stationary Gensets

Genset Market, by Application:

• Standby Power
• Prime Power
• Peak Shaving

Genset Market, by Region:

• North America
• Europe
• Asia-Pacific
• South America
• Middle East & Africa

Competitive Landscape

Company Profiles: Detailed analysis of the major companies present in the Global Genset Market.

Available Customization

The analyst offers customization according to your specific needs. The following customization options are available for the report:

• Detailed analysis and profiling of additional market players (up to five).

This product will be delivered within 1-3 business days.