Diesel Genset Market – Global Industry Size, Share, Trends, Opportunity, and Forecast, Segmented By Power Rating (Low Power, Medium Power, High Power), By Portability (Stationary, Portable), By End User (Residential, Commercial, Industrial), By Application (Standby Backup Power, Prime Power, Peak Shaving Power), By Region, and By Competition 2021-2031F

Forecast Period	2027-2031
Market Size (2025)	USD 17.60 Billion
CAGR (2026-2031)	6.56%
Fastest Growing Segment	Portable
Largest Market	Asia Pacific
Market Size (2031)	USD 25.77 Billion

Market Overview

The Global Diesel Genset Market will grow from USD 17.60 Billion in 2025 to USD 25.77 Billion by 2031 at a 6.56% CAGR. A diesel generator set functions as an integrated power system combining a diesel engine with an electric alternator to convert chemical energy into electrical power. The market expansion is primarily driven by the critical necessity for reliable backup energy in healthcare facilities and data centers, alongside the rapid industrialization of developing nations where grid infrastructure remains inconsistent. Furthermore, the escalating demand for continuous power in remote construction and mining operations continues to bolster the adoption of these robust systems. According to the China Internal Combustion Engine Industry Association, in the first half of 2024, cumulative sales of diesel engines reached 2.62 million units, reflecting the substantial manufacturing scale supporting this sector.

However, the industry faces a significant challenge regarding increasingly stringent environmental regulations aimed at global decarbonization. Governments are enforcing rigorous emission standards to curb nitrogen oxide and particulate matter, compelling manufacturers to invest in complex exhaust after-treatment technologies which raise production costs. This regulatory pressure to transition toward cleaner energy alternatives poses a substantial impediment to the long-term growth of traditional diesel-based power generation solutions.

Key Market Drivers

The Rapid Expansion of Hyperscale Data Centers and AI Infrastructure serves as a foremost driver, creating an unprecedented requirement for high-capacity backup power to support energy-intensive artificial intelligence and cloud computing operations. As data center operators densify server infrastructure to handle complex processing loads, the reliance on industrial diesel generator sets to guarantee uptime has surged. This sector-wide momentum is evidenced by Cummins Inc.; according to the company, May 2025, in the 'First Quarter 2025 Results', Power Systems segment sales climbed 19% to reach $1.6 billion, reflecting the broader industrial demand. Highlighting the specific impact of the digital infrastructure vertical, according to Rolls-Royce Power Systems, March 2025, in the 'Financial Year 2024 Results', revenue from backup power systems for data centers registered a remarkable growth of 46% year-over-year.

Simultaneously, the Rising Need for Residential Backup Power Due to Remote Work Trends is significantly bolstering market demand, fueled by the fragility of aging utility grids and an increase in disruptive weather events. With the permanence of hybrid work models, households are prioritizing energy security to maintain connectivity and protect critical home systems during prolonged outages. This localized demand accumulation is tangible in recent industry performance; according to Generac Holdings Inc., April 2025, in the 'First Quarter 2025 Results', residential product sales increased by approximately 15% to $494 million. This trend illustrates a broader structural shift where end-users are proactively adopting independent power solutions to mitigate the risks associated with grid instability and ensure business continuity from home.

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Key Market Challenges

Based on the provided overview, the challenging factor hampering the market is stringent environmental regulations.

The Global Diesel Genset Market is currently facing significant headwinds due to increasingly rigorous environmental regulations aimed at decarbonization. Governments worldwide are implementing strict emission standards to lower nitrogen oxide and particulate matter levels, necessitating a fundamental shift in engine design. This regulatory landscape compels manufacturers to integrate expensive exhaust after-treatment systems, such as Selective Catalytic Reduction (SCR) and Diesel Particulate Filters (DPF), directly into their power generation units. The integration of these complex technologies drastically increases the initial capital expenditure (CAPEX) and operational maintenance costs for end-users. Consequently, this price escalation deters cost-sensitive buyers in developing regions, delaying fleet renewal and slowing the overall adoption rate of new diesel-based systems.

This contraction in demand is evident in recent trade statistics from major manufacturing hubs. According to the VDMA (Mechanical Engineering Industry Association), in 2025, machinery exports from Germany—a critical center for advanced power system manufacturing—recorded a decline of 3.1% year-on-year, reflecting the dampened investment climate and the adverse impact of these regulatory and economic pressures on the global industrial equipment trade. As manufacturers are forced to divert substantial resources toward compliance and R&D rather than capacity expansion, the market's growth potential remains constrained by the dual burden of rising production costs and hesitant consumer demand.

Key Market Trends

The Expansion of the Diesel Generator Rental Services Market is intensifying as industrial operators increasingly prioritize flexible operational expenditure (OPEX) models over capital-intensive asset ownership. This shift is driven by the necessity for temporary, scalable power in infrastructure projects where permanent grid connections are often delayed or insufficient. The sector's growth is evident in the performance of key market players capitalizing on this demand for mobile power. According to United Rentals, Inc., October 2024, in the 'Third Quarter 2024 Results', revenue from the specialty rentals segment—encompassing power and HVAC solutions—surged by 23.9% year-over-year to reach $1.13 billion, highlighting the critical reliance on rented infrastructure for industrial continuity.

Simultaneously, the Adoption of Hybrid Diesel-Renewable Energy Power Systems is reshaping the industry as end-users seek to optimize fuel efficiency and meet decarbonization targets. These hybrid configurations integrate diesel gensets with battery energy storage and renewable sources, allowing engines to operate only during peak loads to significantly reduce runtime and emissions. This transition toward flexible balancing solutions is gaining commercial traction as utilities and businesses modernize their grids. According to Wärtsilä, February 2025, in the 'Financial Statements Bulletin 2024', order intake for the Energy segment, which includes thermal balancing engines and energy storage systems, increased by 14% to EUR 8.07 billion, underscoring the growing investment in technologies that bridge the gap between traditional power and a renewable future.

Segmental Insights

The portable segment is recognized as the fastest-growing category in the global diesel genset market due to rising demand for mobile power solutions across residential and commercial sectors. This growth is largely fueled by the expanding construction industry in emerging economies, where off-grid sites require consistent yet movable energy sources. Additionally, small business owners increasingly rely on these units for affordable backup power during infrastructure instability. Compliance with emission standards set by organizations like the Environmental Protection Agency ensures these generators meet environmental requirements, further supporting their widespread adoption in regulated markets.

Regional Insights

Asia Pacific dominates the Global Diesel Genset Market, driven primarily by rapid industrialization and extensive infrastructure development. As the global manufacturing epicenter, major economies like China and India generate substantial demand for reliable power solutions to ensure continuous production. Furthermore, persistent grid instability and frequent power outages in developing nations compel the industrial and commercial sectors to rely heavily on backup generators for operational continuity. The expansion of critical infrastructure, including data centers and telecommunication networks, further cements the region's leading position in the global market landscape.

Recent Developments

• In October 2024, Himoinsa launched the HGY Series of diesel generator sets, a product line resulting from a strategic collaboration with Yanmar Power Technology. These generators are equipped with new Yanmar engines and were designed to meet the rigorous demands of mission-critical infrastructure, including data centers and hospitals. The company announced that the series encompasses power outputs suitable for emergency and continuous supply applications, featuring advanced emissions control systems to comply with international regulations. Himoinsa emphasized that this launch reinforces its industrial capacity, supported by a new production facility dedicated to these high-performance power solutions.
• In September 2024, Perkins Engines Company unveiled the new Perkins 2606 diesel engine, explicitly developed for the electric power generation market. This 13-liter, six-cylinder engine was built to deliver between 321 and 523 kW of prime power, offering high power density and fuel efficiency. The company stated that the engine is scheduled for commercial production in the second half of 2025 and is designed to operate flexibly between 50 Hz and 60 Hz frequencies. The unit is compatible with renewable liquid fuels, supporting the industry's transition toward lower-carbon operations in sectors like real estate and industrial power.
• In April 2024, Cummins Power Generation expanded its Centum Series with the launch of two new diesel generator set models, the C2750D6E and C3000D6EB. Powered by the robust QSK78 engine, these units were engineered to deliver 2750kW and 3000kW of standby power, respectively. The company designed these high-output generators specifically for mission-critical sectors such as healthcare facilities, wastewater treatment plants, and large data centers. These new models featured a reduced footprint for space optimization and were approved for use with paraffinic fuels, allowing operators to lower their carbon impact without requiring engine modifications.
• In January 2024, Rolls-Royce Power Systems announced a significant update to its mtu Series 1600 diesel generator sets, delivering a performance increase of up to 49 percent compared to previous models. The enhanced 12-cylinder Gx1 engines were designed to provide higher power density and were optimized for critical applications such as data centers, hospitals, and airports. The company highlighted that these units are approved for use with renewable fuels, including hydrotreated vegetable oil (HVO), enabling a potential reduction in carbon emissions by up to 90 percent. This development aimed to offer sustainable and reliable power solutions for regions lacking stable grid connections.

Key Market Players

• Caterpillar Inc.
• Cummins Inc.
• Generac Holdings Inc.
• Kohler Power Systems, Inc.
• Yanmar Co., Ltd.
• Atlas Copco AB
• Wärtsilä Oyj
• Briggs & Stratton Corporation
• Honda Motor Co., Ltd.
• Mitsubishi Heavy Industries, Ltd.

By Power Rating	By Portability	By End User	By Application	By Region
Low Power Medium Power High Power	Stationary Portable	Residential Commercial Industrial	Standby Backup Power Prime Power Peak Shaving Power	North America Europe Asia Pacific South America Middle East & Africa

Report Scope:

In this report, the Global Diesel Genset Market has been segmented into the following categories, in addition to the industry trends which have also been detailed below:

• Diesel Genset Market, By Power Rating:

• Low Power
• Medium Power
• High Power

• Diesel Genset Market, By Portability:

• Stationary
• Portable

• Diesel Genset Market, By End User:

• Residential
• Commercial
• Industrial

• Diesel Genset Market, By Application:

• Standby Backup Power
• Prime Power
• Peak Shaving Power

• Diesel Genset Market, By Region:

• North America
• United States
• Canada
• Mexico
• Europe
• France
• United Kingdom
• Italy
• Germany
• Spain
• Asia Pacific
• China
• India
• Japan
• Australia
• South Korea
• South America
• Brazil
• Argentina
• Colombia
• Middle East & Africa
• South Africa
• Saudi Arabia
• UAE