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China to replace US as diesel generator set market leader by 2020

China is set to overtake the US as the global diesel generator set (genset) market leader, increasing its share from 26% in 2013 to 33% by 2020, according to a new report from research and consulting firm GlobalData.

The report—Diesel Generator Market – Global Market Size, Equipment Share and Competitive Analysis to 2020—forecasts that while the US, China and India are currently the top diesel genset players, only China and India’s market shares will improve by the end of the forecast period.

China and India each face a considerable gap between their power supply and demand, creating attractive markets for diesel genset manufacturers. High power deficits, coupled with significant economic growth potential, are expected to be the strongest drivers behind these markets’ expansion.

As a result, China will see its revenues jump from $2.7 billion in 2013 to approximately $5 billion by 2020, representing a Compound Annual Growth Rate (CAGR) of 9.6%. Meanwhile, the US can expect its market value to increase only moderately during the same period, from almost $3 billion to $3.8 billion, at a CAGR of 3.7%.

A number of barriers will hinder any further development in China’s diesel genset market by 2020, including the slow anticipated growth in the country’s industrial sector, according to the report.

Despite heavy industry being an important end-user for China’s genset market, as this sector consumes the majority of electricity nationally, GlobalData states that industrial output is expected to rise at a slower pace until 2015.

Furthermore, the Chinese government’s increased focus on the commercialization of renewable sources for electricity generation will also affect further expansion in this arena.

The government plans to strengthen and modernize China’s transmission and distribution network, in order to enable the system to accommodate renewable power. Major investments in the smart grid over the next five years are expected to make electricity supplies in China more reliable, which will in turn have an adverse effect on the diesel genset space during the forecast period.

The report was built using data and information sourced from proprietary databases, primary and secondary research, and in-house analysis conducted by GlobalData’s team of industry experts.