United States Diesel Genset Market By Capacity (0-100 kVA, 101-350 kVA, 351-1000 kVA, Above 1000 kVA), By Application (Standby Power, Prime Power, Peak Shaving, Cogeneration), By End-User (Residential, Commercial, Industrial, Government), By Fuel Type (Diesel, Biodiesel, Hybrid), By Region, Competition, Forecast and Opportunities, 2021-2031F

Forecast Period	2027-2031
Market Size (2025)	USD 4.56 Billion
CAGR (2026-2031)	5.78%
Fastest Growing Segment	Hybrid
Largest Market	Northeast
Market Size (2031)	USD 6.39 Billion

Market Overview

The United States Diesel Genset Market will grow from USD 4.56 Billion in 2025 to USD 6.39 Billion by 2031 at a 5.78% CAGR. A diesel generator set, or genset, is a piece of equipment that combines a diesel internal combustion engine with an electric generator to produce electrical energy, serving as a critical source of prime or backup power. The market in the United States is primarily bolstered by the escalating need for reliable power resilience across data centers, healthcare institutions, and industrial facilities, particularly as grid instability and severe weather events become more frequent. This robust demand for heavy-duty machinery is reflected in broader equipment trends; according to the Association of Equipment Manufacturers, in 2024, sales of large four-wheel-drive tractors in the United States increased by 9.4% compared to the previous year, indicating strong ongoing investment in diesel-powered capital goods.

However, a significant challenge impeding market expansion is the tightening regulatory landscape regarding emissions. The United States Environmental Protection Agency enforces stringent Tier 4 Final standards that mandate substantial reductions in particulate matter and nitrogen oxides, thereby increasing the technical complexity and production costs of diesel units while accelerating the competitive adoption of battery energy storage systems and renewable alternatives.

Key Market Drivers

The rapid expansion of hyperscale data centers and artificial intelligence infrastructure constitutes the primary driver propelling the United States diesel genset market. As technology firms scale operations to support high-performance computing, the requirement for uninterrupted power positions diesel generators as the essential failsafe against downtime. These facilities demand massive on-site power generation capacities to bridge the gap during utility failures. The scale of this demand is illustrated by the projected load on national infrastructure. According to the Electric Power Research Institute, May 2024, in the 'Powering Intelligence: Analyzing the Impacts of AI and Data Center Growth on the Grid' white paper, data centers are projected to consume up to 9.1% of total United States electricity generation by 2030, a surge directly correlating with increased procurement of high-capacity backup systems.

Simultaneously, the market is sustained by the aging electrical grid and rising power instability, which compels commercial and industrial sectors to invest in independent energy security. The deterioration of transmission infrastructure, compounded by severe weather events, has heightened the vulnerability of central utility supply, making standby generators a prerequisite for operational resilience. This precarious landscape is highlighted by reliability forecasts. According to the North American Electric Reliability Corporation, May 2024, in the '2024 Summer Reliability Assessment', seven areas in North America faced an elevated risk of energy shortfalls during peak summer conditions. Consequently, manufacturers are witnessing substantial growth; according to Cummins Inc., in 2024, Power Systems segment sales increased 17% in the third quarter compared to the prior year, driven largely by robust demand for power generation equipment.

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Key Market Challenges

The enforcement of stringent environmental regulations, particularly the United States Environmental Protection Agency’s Tier 4 Final standards, stands as a formidable obstacle to the expansion of the diesel genset market. Manufacturers are compelled to engineer units with complex after-treatment systems, such as selective catalytic reduction and diesel particulate filters, to meet these rigorous emissions mandates. This technical necessity significantly increases production costs and operational complexity, forcing manufacturers to raise prices. Consequently, the diminished cost-competitiveness of diesel generators deters potential buyers, who increasingly view these units as financial liabilities compared to cleaner technologies that do not carry the same regulatory compliance burdens.

This price escalation and regulatory pressure are directly accelerating the displacement of diesel units by alternative power solutions. As capital costs for compliant diesel engines rise, industrial and commercial facilities are aggressively transitioning toward battery energy storage systems to ensure power resilience. According to the American Public Power Association, in 2025, approximately 15,306 megawatts of energy storage were scheduled to come online, reflecting a substantial market pivot away from traditional fossil-fuel-based backup power. This rapid adoption of storage technologies underscores how regulatory compliance costs are actively eroding the market share previously held by diesel generators.

Key Market Trends

The transition to Hydrotreated Vegetable Oil (HVO) compatible engines is reshaping the market as a critical bridge solution for decarbonization. Unlike traditional biodiesel, HVO serves as a drop-in replacement that requires no mechanical modifications to existing diesel engines, allowing facility operators to immediately reduce lifecycle greenhouse gas emissions while maintaining the reliability of established infrastructure. This shift is particularly evident in the rental and mobile power sectors, where fleets are aggressively adopting renewable fuels to meet temporary power needs sustainably. According to Caterpillar Inc., May 2025, in the '2024 Sustainability Report', customers utilizing the company's rental power solutions have generated power using more than 8 million gallons of hydrotreated vegetable oil since 2022, underscoring the rapid operational integration of this renewable fuel alternative.

Simultaneously, the implementation of IoT-enabled remote monitoring and telematics is fundamentally altering fleet management and maintenance strategies. Operators are moving beyond reactive service models to predictive maintenance frameworks, utilizing real-time data analytics to identify potential engine failures before they result in critical downtime. This technological integration enhances asset utilization rates and lowers total cost of ownership by optimizing fuel consumption and service schedules across distributed generation assets. The scale of this digital transformation is highlighted by major equipment manufacturers; according to Caterpillar Inc., May 2025, in the '2024 Sustainability Report', the company has successfully integrated approximately 1.5 million connected assets into its telematics ecosystem, reflecting the widespread industry reliance on data-driven operational oversight.

Segmental Insights

The Hybrid segment constitutes the fastest growing category within the United States Diesel Genset Market, driven principally by rigorous emission protocols enforced by the United States Environmental Protection Agency. These systems combine diesel engines with battery storage or renewable energy, which optimizes fuel usage and significantly lowers carbon output compared to standard units. Industrial sectors are increasingly selecting hybrid configurations to reduce operating expenses and meet strict sustainability mandates. Additionally, the need for reliable power in remote locations encourages the adoption of these efficient units, as they effectively balance intermittent renewable supply with the stability of traditional fuel generation.

Regional Insights

The Northeast region maintains a dominant position in the United States Diesel Genset Market, primarily driven by the critical need for grid reliability amidst frequent weather-induced outages. An aging power infrastructure in densely populated states compels commercial and industrial establishments to invest heavily in backup power solutions to ensure operational continuity. The high concentration of financial centers and healthcare facilities in this area further necessitates uninterrupted energy supply. Consequently, the demand is sustained by strict safety regulations and the essential requirement for energy security against the backdrop of regional grid instability.

Recent Developments

• In August 2025, Caterpillar Inc. introduced the Cat D1500 diesel generator set, a new model capable of delivering 1.5 MW of standby power. The generator utilizes a compact 32.1-liter Cat C32B engine, which allows the unit to occupy significantly less floor space compared to previous models with similar power ratings. The equipment was designed to meet U.S. EPA Tier 2 emission standards for stationary emergency use and obtained UL 2200 listing for the United States and Canada. Caterpillar highlighted that the reduced weight and footprint of the D1500 provide economic benefits by lowering shipping and installation costs for customers with space-constrained sites.
• In June 2025, Rolls-Royce announced a $24 million investment to expand its manufacturing operations in Mankato, Minnesota. The capital was allocated for a new Logistics Operations Center and to increase the production capacity of mtu Series 4000 diesel generator sets. The company stated that this expansion was driven by the rapidly growing demand from the data center industry in the United States. The facility upgrade was designed to double the production output of these backup power systems, creating additional jobs and enhancing the local supply chain for critical power infrastructure.
• In October 2024, Himoinsa launched the HGY Series of diesel generator sets, which was developed in collaboration with Yanmar Power Technology. The new range features power outputs between 1250 kVA and 3500 kVA and includes a specific version certified to Environmental Protection Agency (EPA) Tier 2 standards for emergency applications in the United States. The generators are powered by the new Yanmar GY engine family, which is electronically controlled and prepared for future adoption of alternative fuels such as HVO, gas, and hydrogen. This launch aimed to strengthen the company's position in the critical power market for infrastructure and data centers.
• In April 2024, Cummins Inc. expanded its Centum Series product line with the launch of four new diesel generator sets: the C1750D6E, C2000D6E, C2750D6E, and C3000D6EB. Unveiled at an event in Fridley, Minnesota, these models are designed for mission-critical applications such as data centers and healthcare facilities. The generators are powered by the QSK50 and QSK78 engine platforms and were developed to deliver high power density, assured reliability, and lower emissions. The company emphasized that these new units are approved for use with renewable fuels, including hydrotreated vegetable oil (HVO), supporting sustainability goals in the power generation sector.

Key Market Players

• Caterpillar Inc.
• Cummins Inc.
• Rolls-Royce plc
• Generac Holdings Inc.
• Kohler Co.
• Mitsubishi Heavy Industries, Ltd.
• Perkins Engines Company Limited
• Yanmar Holdings Co., Ltd.
• Kirloskar Oil Engines Limited
• Wärtsilä Corporation
• Doosan Corporation
• Deere & Company

By Capacity	By Application	By End-User	By Fuel Type	By Region
0-100 kVA 101-350 kVA 351-1000 kVA Above 1000 kVA	Standby Power Prime Power Peak Shaving Cogeneration	Residential Commercial Industrial Government	Diesel Biodiesel Hybrid	Northeast Midwest South West

Report Scope:

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

• United States Diesel Genset Market, By Capacity:

• 0-100 kVA
• 101-350 kVA
• 351-1000 kVA
• Above 1000 kVA

• United States Diesel Genset Market, By Application:

• Standby Power
• Prime Power
• Peak Shaving
• Cogeneration

• United States Diesel Genset Market, By End-User:

• Residential
• Commercial
• Industrial
• Government

• United States Diesel Genset Market, By Fuel Type:

• Diesel
• Biodiesel
• Hybrid

• United States Diesel Genset Market, By Region:

• Northeast
• Midwest
• South
• West