Genset Market - Global Industry Size, Share, Trends, Opportunity, and Forecast, Segmented By Fuel Type (Diesel Gensets, Natural Gas Gensets, Gasoline Gensets), By Power Rating (Up to 100 kVA, 100-350 kVA, 350-1000 kVA, Above 1000 kVA), By Portability (Portable Gensets, Stationary Gensets), By Application (Standby Power, Prime Power, Peak Shaving) By Region & Competition, 2021-2031F

Forecast Period	2027-2031
Market Size (2025)	USD 38.61 Billion
CAGR (2026-2031)	7.32%
Fastest Growing Segment	100-350 kVA
Largest Market	Asia Pacific
Market Size (2031)	USD 58.99 Billion

Market Overview

The Global Genset Market will grow from USD 38.61 Billion in 2025 to USD 58.99 Billion by 2031 at a 7.32% CAGR. A genset is an integrated system combining an internal combustion engine with an electrical generator to produce backup or continuous power. The primary drivers supporting market growth include the deteriorating reliability of aging utility grids and the critical uptime requirements of expanding data centers which demand uninterrupted service. Furthermore, the global transition toward variable renewable energy sources has amplified the necessity for dependable backup power to ensure grid resilience. According to Eurelectric, in 2024, renewable energy sources contributed 48% to the European Union's power generation mix.

One significant challenge impeding market expansion is the enforcement of stringent environmental regulations aimed at reducing carbon emissions from diesel engines. Compliance with these rigorous standards necessitates the adoption of costly exhaust after-treatment technologies which significantly increases the initial capital expenditure for end users. This financial burden creates a substantial barrier to growth particularly in cost sensitive global markets where budget constraints limit the adoption of compliant technologies.

Key Market Drivers

The Exponential Growth of Data Center Infrastructure and Cloud Computing is fundamentally reshaping the global genset market as hyper-scale operators prioritize uninterruptible power for artificial intelligence and storage workloads. Modern facilities require immense energy capacities that often exceed local utility thresholds, necessitating on-site power generation systems to guarantee 100% uptime. This surge in energy consumption is creating a sustained dependency on high-capacity diesel and gas generator sets as critical safety nets against downtime. According to Goldman Sachs, May 2024, in the 'AI Set to Propel 160% Surge in Data Center Power Demand' analysis, data center power demand is projected to grow 160% by 2030, driven largely by AI implementation. Consequently, manufacturers are witnessing a sharp uptake in orders for large-scale backup power systems specifically engineered for these energy-intensive environments.

Simultaneously, the Increasing Frequency of Severe Weather-Related Power Outages is accelerating the adoption of backup power solutions across residential and commercial sectors. As climate change intensifies storm severity, aging utility grids are increasingly failing to maintain service continuity, compelling end-users to invest in decentralized power assets to mitigate operational risks. According to Climate Central, April 2024, in the 'Weather-related Power Outages Rising' report, 80% of all major U.S. power outages reported between 2000 and 2023 were caused by weather-related events. This volatility has directly translated into financial gains for equipment providers; for instance, according to Cummins, in 2024, power generation revenues in the third quarter increased 24% primarily due to robust global demand for backup applications.

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Key Market Challenges

The enforcement of stringent environmental regulations aimed at reducing carbon emissions from diesel engines presents a substantial obstacle to the growth of the global genset market. To comply with these rigorous standards, manufacturers must integrate complex exhaust after-treatment systems, such as selective catalytic reduction and diesel particulate filters. This integration drastically raises the production cost of standard diesel generator sets, subsequently inflating the initial capital expenditure required from end users. In cost-sensitive regions where budget constraints are paramount, this price escalation effectively prices out a significant portion of the potential customer base, thereby stalling widespread adoption and infrastructure upgrades.

This financial pressure on traditional fuel-based power systems is evident in recent industrial manufacturing output data. According to the China Internal Combustion Engine Industry Association, in the first half of 2024, the cumulative sales of diesel engines decreased by 2.08% compared to the same period in the previous year. This contraction in the sales volume of the core prime mover component highlights the direct market dampening effect caused by the increased costs and technical complexities associated with regulatory compliance. As these financial barriers persist, they continue to restrict the expansion of the conventional diesel genset segment.

Key Market Trends

The utilization of Hydrotreated Vegetable Oil and sustainable biofuels is gaining momentum as a practical strategy for immediate decarbonization. As a drop-in replacement for mineral diesel, HVO enables existing internal combustion engines to achieve substantial carbon reductions without requiring expensive hardware modifications or infrastructure overhauls. This capability is driving adoption among heavy power users who must align operations with strict corporate environmental goals while maintaining the performance characteristics of traditional engines. According to DataCentreNews UK, December 2024, in the 'AVK & Rolls-Royce see sales surge for HVO generators' article, the collaboration between AVK and Rolls-Royce Power Systems delivered over 500 HVO-powered mtu generators to the data center sector in 2024.

The expansion of decentralized power generation and microgrid architectures is redefining the market by reducing reliance on centralized utility providers. Commercial consumers are increasingly integrating generator sets with battery energy storage and renewable assets to create autonomous on-site ecosystems that ensure continuity during grid instability. This structural shift allows businesses to actively manage power reliability and optimize energy costs independent of public infrastructure performance. According to Aggreko, October 2024, in the 'Rebalancing the Energy Transition' report, 87% of surveyed European business leaders have already implemented decentralized energy solutions, including on-site generation, to secure their operations against volatility.

Segmental Insights

The 100-350 kVA power rating represents the fastest growing segment within the Global Genset Market due to accelerated demand across commercial and light industrial sectors. This expansion is primarily driven by increasing investments in construction infrastructure, including office complexes, hotels, and healthcare facilities that require reliable backup power. Additionally, stringent emission regulations enforced by agencies such as the United States Environmental Protection Agency encourage the adoption of compliant generators in this capacity range. Consequently, the necessity for continuous operations combined with regulatory adherence sustains the rapid development of this market category.

Regional Insights

Asia Pacific commands the leading position in the global genset market, driven primarily by rapid industrialization and extensive infrastructure development. The region experiences high demand from expanding manufacturing and construction sectors, particularly in major economies like China and India. Furthermore, frequent power deficits and grid instability in emerging markets necessitate reliable backup energy solutions to ensure operational continuity. This dominance is supported by increasing investments in commercial and residential projects, which consistently drive the requirement for power generation equipment to bridge the gap between energy supply and consumption.

Recent Developments

• In August 2025, Caterpillar Inc. introduced the Cat D1500 diesel generator set, a new power solution designed for standby applications requiring high power density in a compact footprint. This model delivers 1.5 MW of power using a 32.1-liter C32B engine and was engineered to occupy significantly less floor space than previous units of similar capacity. The generator set was developed to meet ISO 8528-5 transient response requirements and NFPA 110 Level 1 standards, ensuring rapid load acceptance during power outages. It also featured remote monitoring capabilities, allowing operators to track performance and troubleshoot issues via a web interface or mobile application.
• In February 2025, Rolls-Royce announced the launch of an upgraded version of its mtu Series 1600 generator sets specifically for the 50 Hertz market. The new power generation units were designed to deliver up to 40 percent more power than predecessor models, achieving electrical outputs between 590 kVA and 996 kVA. These generator sets utilized the 12V1600 Gx1 engine, which the company claimed offered the highest power density in its class. The product launch targeted critical applications such as data centers and healthcare facilities, with the units being approved for use with sustainable fuels like hydrotreated vegetable oil to reduce carbon emissions.
• In October 2024, HIMOINSA launched the HGY Series, a new range of heavy-duty generator sets powered by engines developed in collaboration with Yanmar. This product line was introduced to support mission-critical infrastructure such as data centers, hospitals, and mining operations, with power outputs ranging from 1250 kVA to 3500 kVA. The development of this series involved a reported investment of approximately $100 million and included the construction of a new production facility. The generators were designed to operate with reduced fuel consumption and emissions, featuring compatibility with alternative fuels like HVO, gas, and hydrogen to meet future sustainability requirements.
• In September 2024, Kohler Energy officially rebranded as Rehlko, establishing itself as an independent entity following its acquisition by investment firm Platinum Equity. This corporate transformation marked a significant shift in the global energy market, with the newly named company focusing on delivering resilient energy solutions including power generation, energy storage, and renewable technologies. The rebrand encompassed the company's entire portfolio of businesses, including Power Systems and Engines, which were scheduled to transition to the new identity by the end of the year. The organization emphasized its continued commitment to addressing complex distributed energy challenges and maintaining its legacy of reliability and innovation.

Key Market Players

• Caterpillar Inc.
• Cummins Inc.
• Kohler Co.
• Generac Power Systems, Inc
• Rolls-Royce plc
• Wartsila Corporation
• Aggreko Ltd
• Kirloskar Oil Engines Limited
• Honda Motor Co., Ltd
• Atlas Copco AB

By Fuel Type	By Power Rating	By Portability	By Application	By Region
Diesel Gensets Natural Gas Gensets Gasoline Gensets	Up to 100 kVA 100-350 kVA 350-1000 kVA Above 1000 kVA	Portable Gensets Stationary Gensets	Standby Power Prime Power Peak Shaving	North America Europe Asia Pacific South America Middle East & Africa

Report Scope:

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

• Genset Market, By Fuel Type:

• Diesel Gensets
• Natural Gas Gensets
• Gasoline Gensets

• Genset Market, By Power Rating:

• Up to 100 kVA
• 100-350 kVA
• 350-1000 kVA
• Above 1000 kVA

• Genset Market, By Portability:

• Portable Gensets
• Stationary Gensets

• Genset Market, By Application:

• Standby Power
• Prime Power
• Peak Shaving

• 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