The diesel engine and generator set (genset) industry has played a pivotal role in ensuring uninterrupted power supply across various sectors in India. From industrial operations to rural electrification, diesel gensets have been a reliable source of power, especially in regions experiencing intermittent electricity supply. In recent years, the sector has witnessed significant advancements and shifts in response to environmental concerns, technological innovations and changing market dynamics. In 2023, in a key development, the Central Pollution Control Board (CPCB), recognising the importance of environmental conservation, established stringent guidelines for DG set emissions, especially in the Delhi/NCR region.
Power Line presents a round-up of key trends and developments in the diesel engine and genset space…
Market size and growth
According to the Central Electricity Authority, the diesel-based generating capacity of utilities across the country aggregates to 589.2 MW as of November 2023, which is just 0.14 per cent of the total installed capacity. Approximately 36 per cent (212 MW) of diesel-based capacity is concentrated in Tamil Nadu, 27 per cent (160 MW) in Kerala, and the remaining in the Andaman & Nicobar Islands (93 MW), Andhra Pradesh (37 MW), Manipur (36 MW), Lakshadweep (27 MW) and Karnataka (25 MW).
The Indian diesel genset market is well-organised and marked by intense competition. It can be broadly categorised into three groups – small diesel generators (up to 75 kVA) medium diesel generators (75-375 kVA) and large diesel generators (over 375 kVA). The Indian diesel genset market, when segmented by application, can further be classified into the industrial, commercial and residential categories. Among these, the commercial segment dominates the market in terms of application. This is primarily attributed to the robust expansion of the service sector, which is expected to continue its growth trajectory. Over the past decade, the diesel genset market has experienced consistent growth due to persistent power shortages and rapid advancements in various sectors, playing a pivotal role in ensuring uninterrupted power supply within the commercial domain, spanning vital sectors such as hospitals, hotels, restaurants, IT hubs and financial institutions.
In the next few years, it is expected that growth in sectors such as roads, real estate and data centres will drive the demand for mid- to high-horsepower diesel gensets.
Technology trends
In the Indian diesel engine and genset space, several trends are shaping the industry’s landscape. One noteworthy development is the escalating demand for sustainable power solutions, driven by a heightened awareness of climate change. This has prompted a shift towards cleaner and more efficient power generation technologies, leading to the integration of alternative fuels, improved engine designs and enhanced exhaust treatment systems to adhere to stringent emission norms. From advanced diesel and natural gas to the latest hybrid, battery electric and fuel cell options, industry players are launching several alternatives.
Concurrently, there is a gradual transition from conventional diesel to cleaner alternatives such as biofuels, compressed natural gas and liquefied natural gas, aligning with the government’s initiatives to reduce reliance on fossil fuels. Natural gas generators offer a quieter and cleaner alternative compared to diesel-powered generators. The abundant availability of natural gas, its relatively lower cost and the escalating concerns regarding carbon footprint and emissions have contributed to a rising demand for these generators. Natural gas-powered gensets boast significantly extended runtimes and emit 90 per cent fewer pollutants than their diesel counterparts. They are well suited for both residential and commercial applications, serving purposes ranging from emergency backup to portable energy solutions. Natural gas gensets reduce nitrogen oxide and carbon dioxide emissions by 35-40 per cent. They do not emit harmful particulate matter and smoke. In addition, natural gas does not produce the pungent odour that is fairly common in diesel generators. The noise level of gas gensets is also lower than that of conventional gensets. With the increasing environmental concerns associated with diesel generators and the upward trend in diesel prices, the market share of natural gas-based generators is anticipated to expand in the foreseeable future.
Moreover, technological advancements, including advanced control systems and internet of things solutions, are driving innovation in the sector, improving efficiency and reliability. Further, diesel genset manufacturers are focusing on improving fuel efficiency and load-taking capability while ensuring adherence to stringent emission norms. Engines are also being equipped with innovative remote monitoring and advanced engine control capabilities, empowering users to monitor crucial engine performance metrics and parameters in real time from anywhere.
Further, industries prefer energy-efficient products as power constitutes a major cost input for their products. Energy efficiency in generator manufacturing is the need of the hour to counter the hike in fuel prices. Moreover, consumers prefer gensets with higher fuel efficiency. In addition to this, higher-efficiency alternators are beneficial for reducing power generation costs.
Demand segments
The diesel genset industry is witnessing increased demand from key sectors such as data centres, telecom, healthcare, manufacturing, construction and real estate, emphasising the crucial need for reliable backup power.
Notably, with the exponential growth in the number of data centres, these emerging hyperscale facilities demand substantial power. Designed with Tier IV levels of uptime assurance, they rely heavily on diesel gensets for backup.
Simultaneously, the deployment of diesel generators in agriculture for irrigation is contributing to market growth. Diesel gensets play a pivotal role in rural electrification in India, addressing the challenge of unreliable access to the electricity grid. Microgrids powered by diesel generators have emerged as a feasible solution, enhancing energy accessibility and fostering socio-economic development in remote areas.
Furthermore, market consolidation is under way as key players forge strategic partnerships and collaborations, enabling access to cutting-edge technologies, supporting the industry’s overall growth by meeting international quality standards, and facilitating the exchange of best practices.
Government initiatives
The government has put forth a series of initiatives aimed at catalysing the development of various sectors in the coming years. Initiatives such as the Make in India campaign, the development of smart cities, the Saubhagya scheme, and the Power for All programme are significant plans anticipated to contribute favourably to the advancement of power utilities and the development of manufacturing infrastructure verticals in the country. The diesel genset market is poised to become an integral vertical, anticipating robust growth driven by a substantial rise in these business categories.
Generators play a pivotal role in fuelling India’s economic growth and transformation. Their reliability and adaptability ensure a consistent and uninterrupted power supply, thereby mitigating risks, enhancing productivity and driving sustainable development.
Recognising the importance of generators, the government implemented CPCB IV+ emission regulations for gensets on July 1, 2023. India has since transitioned to CPCB IV+ emission standards for gensets up to 800 kW from the previous CPCB II standards. These updated regulations are expected to have a major impact on the entire genset industry. The announcement of the CPCB IV+ emission standard in November 2022 underscores the government’s commitment to reducing air pollution. In response to these stringent regulations, genset original equipment manufacturers are ready to offer the entire range of gensets (up to 800 kWh) that are fully compliant with the latest CPCB IV+ emission norms.
Challenges and the way forward
The diesel engine and genset industry plays a vital role in powering India’s industrial and energy sectors, serving as a reliable backup power source. Despite their importance, these technologies encounter various challenges that impact efficiency, environmental sustainability and overall performance. Environmental concerns, including emissions of pollutants such as nitrogen oxides and particulate matter, are paramount challenges. However, opportunities emerge through innovations in emission control technologies and the adoption of cleaner fuels and alternative power sources. Stringent emission standards set by the Indian government pose a significant hurdle, necessitating investments in research and development to ensure compliance and enhance market competitiveness. Challenges related go fuel quality and availability, technological advancements, rising fuel prices and intense market competition further exacerbate the challenges.
Nonetheless, opportunities exist for collaboration, infrastructure improvements, technological investments and the exploration of alternative fuels. Embracing these challenges as opportunities for improvement can pave the way for a more sustainable and efficient power generation ecosystem in India.