Diesel generator (DG) sets have been playing a crucial role in meeting the backup requirements of consumers across several segments of the power market, and are an important power source in remote areas, as well as in areas lacking grid connectivity. Despite high running costs, DG sets have been popular across segments owing to the ease of fuel availability, low capital cost, shorter installation period and high efficiency. Increase in urbanisation, automation and infrastructure development are some of the key drivers for the growth in this industry. Increased investments in infrastructure, data centres and commercial realty as well as the growing demand for reliable and quality power is expected to further drive the demand for backup power. DGs are the most commonly used captive power producers at liquid fuel-based plants. DGs are widely used by commercial and institutional users, as well as small and medium enterprises, due to short installation time, quick start-up and less upfront costs. However, the operational cost of gensets is high due to the cost of diesel. Besides, diesel gensets also pose environmental hazards owing to harmful emissions.
Roughly, diesel-based CPPs account for nearly 20 per cent of the total installed captive capacity. India Infrastructure Research has tracked over 3.2 GW of diesel- or liquid fuel-fired captive power capacity across industries such as metals and minerals, petrochemicals, fertilisers, and paper and pulp. The states of Tamil Nadu, Maharashtra, Haryana and Gujarat together account for 50 per cent of this tracked capacity.
Market trends
Over the past few years, the diesel engine and DG set market has undergone a substantial technology makeover due to the tightening of emission norms and customer requirements. For instance, mechanical controls have been replaced with electronically controlled technology for better fuel efficiency. Further, generator manufacturers are producing gensets conforming with central government regulations.
In addition to this, internet of things-based smart/digital DG sets are being favoured by consumers, as they allow remote monitoring of key parameters such as fuel level, fuel consumption, coolant level, engine temperature, abnormal noise level and power generated. The deployment of containerised DG sets, offering benefits such as silent operation as per strict acoustic standards, high temperature and weather resistance, and ease of maintenance, is another growing trend. Energy efficient DG sets are also gaining traction due to their ability to reduce the fuel requirement.
Challenges and future outlook
DG sets have been preferred owing to their low initial cost as well as precarious and scarce electricity supply throughout India. However, in recent years, electricity supply has been sufficient enough to meet electricity demand, in addition to a drop in outages. The quantity and quality of electricity supply has also increased remarkably, making it less necessary to install DG sets. In addition, the affordability of variable renewable energy su-ch as solar and wind incentivises commercial and industrial units to shift from DG sets to rooftop solar or other such sources of electricity.
Several environmental concerns continue to hinder the growth of the DG set industry. Emissions from DG sets, also known as diesel fumes, can be controlled by improving the combustion process of the diesel engine at the manufacturers’ end, improving the efficiency of combustion, and deploying emission control techniques. Some of these techniques depend on the availability of low sulphur diesel at oil retail distribution companies. At the consumer end, proper and regular operations and maintenance activities are vital to ensure that a DG set delivers performance closer to its design values. Rental power options are gaining traction as they benefit all participants, that is, individuals and businesses using generators as well as rental business owners. DG sets are rented to address frequent unscheduled and scheduled power cuts, and meet additional power necessities. Gas-based gensets are also gaining traction for capacities that have easy access to natural gas. These gensets are more compact than DG sets, have lower operating costs and noise levels, and are environment friendly. The narrowing power deficit and the shift from diesel usage owing to emission concerns are some of the key threats for DG set manufacturers. Growing environmental trepidations leading to a ban on the use of DG sets in cities, and better availability and quality of grid power, could result in lower utilisation of DG sets. To this end, the industry is also putting in research and development efforts for launching new products, catering to new end-use segments.