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Distributed Power Generation Market - Growth, Trends, and Forecasts (2020 - 2025)

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  • 166 Pages
  • June 2020
  • Region: Global
  • Mordor Intelligence
  • ID: 4997278
UP TO OFF until Mar 31st 2024
The distributed power generation market is expected to record a CAGR of more than 7.57% over the period of 2020-2025. The market is driven by the increasing shift toward renewable distributed power generation, mainly distributed solar PV installation, owing to the declining renewable power generation and system costs, coupled with the supportive government policies across the world. Moreover, the rising investments in the installation of smart grids in several major countries, such as the United States, India, and Japan, are expected to increase the demand for distributed power generation. Additionally, supportive government policies and regulations are increasing the adoption of distributed power generation over centralized grids, in several cases. However, with the expansion and upgradation of centralized grids, the demand for electricity at remote locations can be fulfilled by withdrawing electricity from grids. Among grid and off-grid power, consumers are more likely to prefer grid power, owing to the low initial investment and as no space is required for the setup. This is expected to hamper the growth of the distributed power generation market over the forecast period.
  • By technology, diesel gensets are expected to be the largest segment of the market, owing to the easy availability of diesel, ease in transportation and handling, and capability of catering to the power demands of the residential, commercial, and industrial sectors during power cuts.
  • The adoption of distributed power generation in the low-electrified areas of the African region is expected to act as an opportunity for the market. The region’s household electrification rate averaged 45% in 2018. Moreover, there is a wide variation in electricity access across countries, with some countries having rates of less than 10%.
  • Asia-Pacific holds the largest share of the market, and it witnessed an increasing energy demand in countries, such as China, India, and ASEAN member states. China has a widespread manufacturing sector, which creates demand for power for operations. Thus, for the supply of uninterrupted power, distributed power generation is used in this region.

Key Market Trends

Diesel Gensets Expected to be the Largest Segment

Diesel gensets use diesel as a fuel to power the engine. Diesel gensets/generators are the most important, reliable, and least expensive power generation equipment in the world. These generators can serve as primary power sources, reliable secondary power sources, and as back-up or standby power sources for residential, industrial, and commercial customers across the world.

Though diesel is costlier compared to gas, it has a higher energy density, and more energy can be extracted from the same amount of fuel. Compared to gas and other fuels, diesel is less flammable, meaning that it is safer to store and handle. Moreover, diesel generators are more reliable, and the initialization of diesel generator sets is more economical, as compared to gas generator sets. Easy on-site fuel availability, due to the ease of transportation and storage of diesel, has also made diesel gensets more popular than gas generator sets.

Hence, distributed power generation via diesel generators is a growing application, not just for manufacturing sites where adequate power from utilities may be unreliable, but also at remote mining sites and even small utilities that need to supplement their centralized generation assets.

Additionally, distributed power generation using diesel gensets is capable of catering to the power demand of the residential, commercial, and industrial sectors during power cuts. The power sector infrastructure is still not fully developed in various countries, such as India, Nigeria, and Ethiopia. According to the World Bank’s report (2019), electricity access deficit is the highest in India, which alone accounted for a little less than half of the global deficit.

Hence, the increasing issues of power deficit and lack of access to power, along with the growing demand for uninterrupted and reliable power, are expected to drive the demand in the market.

Asia-Pacific to Dominate the Market

Asia-Pacific holds the largest share of the market, and it witnessed increasing energy demands in countries, such as China, India, and ASEAN member states. China has a widespread manufacturing sector, which creates demand for power for operations. Thus, for the supply of uninterrupted power, distributed power generation is used in this region.

Strong government support, technological progress, and awareness regarding the management of carbon emissions are the main drivers for the renewable energy market. This has facilitated the rapid development of China’s renewable energy sector. According to the Chinese Renewable Energy Industries Association, the country added 20.08 GW of solar PV distributed power generation in 2018. China’s distributed solar power is dominated by industrial and commercial enterprises, both of which mainly adopt the EMC (energy management contract) model to build DSPV power plants.

In March 2019, the National Development and Reform Commission (NDRC) of China approved 224 solar and wind energy projects to deliver a total combined capacity of 19.29 GW, as well as a further 1.47 GW of renewable distributed energy resources (DER) trading pilot programs.

However, the recent COVID-19 pandemic, which originated in China, has tremendously impacted the Chinese economy with trade disruptions. China, one of the largest exporters of goods, has witnessed a massive decline in trade, due to lockdowns in various parts of the world. This is likely to result in the government cutting down the subsidies and companies pulling out of new investments. The decline in investments is likely to restrain the growth of the market till 2021. Post 2021, the market is likely to grow for the rest of the forecast period.

In India, solar installation registered a record growth in FY 2019. Distributed renewables, which include off-grid power and rooftop solar, constituted only about 5% of India’s total installed renewable energy capacity and just about 1% of the total installed electricity capacity.

With India planning to add a massive 500 GW of renewable energy to its electric grid by 2030, it is critical to plan what kind of grid architecture will support this level of renewable integration, which is very likely unprecedented anywhere else in the world. Distributed renewables present a strong case to be a big part of the future grid.

Additionally, with various places located in remote parts of the country where grid expansion is not a feasible option, distributed generation can be of enormous benefit for businesses and owners.

Asia-Pacific holds vast potential for the expansion of distributed energy systems (DES), notably in the form of off-grid and residential solar. Inefficiencies in the power grid infrastructure, power supply shortages, and the scalability of decentralized technology are driving the deployment in the region, particularly in China and India.

Competitive Landscape

The distributed power generation market is fragmented. Almost all the major players in the market have a global presence, and the high geographical presence increases the intensity of competitive rivalry.

Some of the key players in this market include Ansaldo Energia SpA, Ballard Power Systems Inc., Caterpillar Inc., Siemens AG, and General Electric Company.

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Table of Contents

1.1 Scope of the Study
1.2 Market Definition
1.3 Study Assumptions
4.1 Introduction
4.2 Market Size and Demand Forecast in USD billion, till 2025
4.3 Recent Trends and Developments
4.4 Government Policies and Regulations
4.5 Market Dynamics
4.5.1 Drivers
4.5.2 Restraints
4.6 Supply Chain Analysis
4.7 Porter's Five Forces Analysis
4.7.1 Bargaining Power of Suppliers
4.7.2 Bargaining Power of Consumers
4.7.3 Threat of New Entrants
4.7.4 Threat of Substitutes Products and Services
4.7.5 Intensity of Competitive Rivalry
5.1 Technology
5.1.1 Solar PV
5.1.2 Diesel Gensets
5.1.3 Natural Gas Gensets
5.1.4 Microgrids
5.1.5 Other Technologies
5.2 Geography
5.2.1 North America
5.2.2 Europe
5.2.3 Asia-Pacific
5.2.4 South America
5.2.5 Middle-East and Africa
6.1 Mergers and Acquisitions, Joint Ventures, Collaborations, and Agreements
6.2 Strategies Adopted by Leading Players
6.3 Company Profiles
6.3.1 Ansaldo Energia SpA
6.3.2 Ballard Power Systems Inc.
6.3.3 Bloom Energy
6.3.4 Capstone Turbine Corporation
6.3.5 Caterpillar Inc.
6.3.6 Cummins Inc.
6.3.7 Fuelcell Energy Inc.
6.3.8 General Electric Co.
6.3.9 Schneider Electric SE
6.3.10 Siemens AG
6.3.11 Sunverge Energy
6.3.12 Canadian Solar Inc.

Companies Mentioned

A selection of companies mentioned in this report includes:

  • Ansaldo Energia SpA
  • Ballard Power Systems Inc.
  • Bloom Energy
  • Capstone Turbine Corporation
  • Caterpillar Inc.
  • Cummins Inc.
  • Fuelcell Energy Inc.
  • General Electric Co.
  • Schneider Electric SE
  • Siemens AG
  • Sunverge Energy
  • Canadian Solar Inc.