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Latest Developments and Forecasts for the European Diesel Gen-Sets Market

  • June 2014
  • 41 pages
  • Frost & Sullivan
Report ID: 2171952

Summary

Table of Contents

Emergence of New Technologies and Resurgence of the Construction Sector Will Further Drive Stand-by Power Demand

Energy security is the key demand driver for onsite stand-by power needs in the European region. Grid instability and power outages due to the capacity overload in the Eastern countries along with the stand-by demand for intermittent renewable power sources in Western regions continue to drive the need for onsite power generation technology such as diesel generator sets. While the demand and supply power gap is a key driver across developing markets, the focus on energy efficiency and power generation from renewables will sustain growth for diesel generator-sets in mature markets.

Key Findings

-Diesel gen-sets are perceived as expensive in terms of cost per power output; therefore, their main applications continue to be in the stand-by power demand. Energy security is the key demand driver for diesel gen-sets both in Eastern and Western Europe. Grid instability and power outages due to capacity overload in the eastern countries and stand-by demand for intermittent renewable power source in the west continue to drive the need for such onsite power generation technologies including diesel gen-sets.
-As a result of global warming and climatic change, the government agendas across major European countries have been stressing the need to reduce emissions. One of the most important methods of carbon reduction is to increase the amount of electricity produced by highly efficient and distributed generation technologies.
-The clean characteristic of de-centralised gen-sets meet energy-saving and cutting emission purposes. Diesel gen-set is a popular distributed generation technology and is preferred in countries that require frequent backup and stand-by power support due to an instable grid and low electrification ratios.
-Favourable government initiatives on the back of rising environmental consciousness would continue to propel the growth of the industry. A number of legislative initiatives are expected to boost the need for strict emissions, therefore the region is fast introducing renewable technologies into its power infrastructure, this further creates the need for backup and stand-by power support. Therefore, political willingness will be a key driver throughout the forecast period. In systems larger than kilowatt (kW), the installation costs are extremely high while power efficiency is low; hence, dual fuel gen-sets are fast becoming popular.
-Key growing application sectors include stand-by and emergency power, peak shaving, and other short-term demands especially in countries with a widening demand and supply power gap and higher power outages.
-Investments in technological developments will also ensure grid stability in the event of voltage dips and capacity overloads. Other advantages driving these gen-sets market include quicker permit obtention, lower purchase costs for smaller units, remote monitoring and control, and emergency restoration.
-The diesel gen-sets market was in a state of maturity about a decade ago, and the growth rate was expected to reduce. However, the change of legislation in some countries and innovations in technology have broadened the market; ensuring its modest growth in several European countries.
-The Large Combustion Plant Directive (2001/80/EC) mandates that by January 1, 2016, all existing combustion plants must meet new emission standards or risk closure. Therefore, these plants would either have to be retrofitted or replaced by new ones such as combined coal- or gas-biomass power plants. The power supply gap created between the closure and erection and commissioning of new plants would have to be met by distributed generation technologies. Favourable policies on non-stationery emission reduction have also given the diesel gen-sets market a fresh perspective. As the International Energy Outlook forecasts carbon dioxide emissions to increase over the next few years, diesel gen-sets provide an efficient option for on-site power generation.
-The mature Western European markets have recently witnessed an increased share of renewable energy and has therefore moved to a decentralised power grid infrastructure. However, this has resulted in greater instability compared to a centralized power structure. Large diesel gen-sets are able to balance voltage dips and help stabilise power demand due to their short ramp up time. While the demand and supply power gap is a key market driver across developing markets, focus on energy efficiency and power generation from renewables is the driving factor in mature markets.
-Growing demand from specific end-user segments, such as telecom, data centres, and mission critical applications such as hospitals are some of the major end users for diesel gen-sets. While the environmentally conscious residential segments are more open to installing gas gen-sets, the commercial and industrial users are more open to accepting diesel gen-sets.

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