Frequent power outages due to weather and aging grids are the main drivers for the portable generator market. Increasing adoption of dual fuel and inverter portable generators are expected to offer lucrative opportunities for the portable generator market during the forecast period.
The portable generator market is expected to grow from an estimated USD 1.8 billion in 2021 to USD 2.5 billion by 2026, at a CAGR of 6.7% during the forecast period.
A few major players that have a wide regional presence and dominate the portable generator market. The leading players in the portable generator market include Honda (Japan), Generac (US), Caterpillar (US), Atlas Copco (Sweden), and Yamaha (Japan).
The major strategies adopted by these players include new product launches, contracts & agreements, investments & expansions, mergers & acquisitions, joint ventures, and partnerships & collaborations. New product launches was the most commonly adopted strategy from January 2017 to February 2021.
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Driver: Increasing instances of power outages owing to aging grid infrastructure and extreme weather conditions
Aging grid infrastructure is more vulnerable to power outages as electricity transmission and distribution infrastructure is the backbone of the power sector in any country. Transmission systems that are not properly upgraded cannot sustain additional power burden and, in some cases, can also lead to the failure of the system, causing power outage. Transmission and distribution networks in developed countries were laid out quite a while ago, and even with regular maintenance, after a certain age, the infrastructure is bound to weaken. According to the National Association of Regulatory Utility Commissioners US, coal, gas, and nuclear power plants can work efficiently for a span of approximately 40 years. The life span of these power generation sources is reaching the end of their life cycle due to which countries such as the US, the UK, and Germany have been focusing on replacing their aging power generation, transmission, and distribution infrastructure.
Moreover, extreme weather conditions are also likely to boost the demand for portable generators units. The US electrical infrastructure is vulnerable to unpredictable and frequent power failures. Hence, rising investments in backup power solutions, along with growing consumer awareness toward emergency preparedness, will further favor market growth. According to the Department of Energy (DoE) and the North American Electric Reliability Corp. (NERC), uninterrupted power can only be ensured through a system capable of handling sudden power shots and drops. The US endures more blackouts than any other developed country as the duration of US power outages lasts more than an hour, and the number has increased steadily over the past few years. These blackouts cost American businesses about USD 150 billion per year.
Restraints: Limited power generation capacity of portable generators
Power generation through portable generators is limited and can only be used as an alternative to regular power supply. The power generated through gensets can be used for temporary and emergency purposes and cannot replace the power supply from utilities. Generators can handle only a limited load; for increased loads, generators with higher power ratings or additional generators are required. With the increase in load, the corresponding size of the portable generator also increases, thus affecting mobility. According to the IEA, the global electricity demand grew by 4% in 2018 to more than 23,000 TWh. Also, the installed power generation capacity in China is expected to reach 400 GW by 2030.
Portable units are mainly designed for temporary use with an average run time of less than 12 hours. These portable generators provide power output ranging from 500 W to 20 kW. While stationary generators are mainly designed for long run times, they are capable of providing power output in the range of 3 kW to several hundred kilowatts.
Opportunities: Increasing adoption of dual fuel and inverter portable generators
Many OEMs are offering hybrid generators that are essentially internal combustion engines combined with a battery. These hybrid gensets provide power directly to the engine when the load is high, and the battery provides power when the load is less. They reduce the running time of generators, fuel consumption, and noise while offering several advantages over conventional gensets. They are also expected to make inroads into mobile gensets, which are mainly used in residential applications and construction sites.
Dual fuel generators offer advantages of both gas and diesel generators, thus improving the reliability of standby power systems. Dual fuel portable generators mostly run on gas; however, in emergencies, they can run completely on diesel. Several generator manufacturers are adopting dual fuel technology to address diesel engine emission standards and increased operational costs. Conventional diesel generator sets are, therefore, being replaced by dual fuel generators.
Inverter generators utilize advanced electronic circuits and high-tech magnets. Inverter generators deliver clean AC power as compared with traditional generators and are mainly used to run current-sensitive appliances. Inverter generators are making in-roads into the small residential generator segment.
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Challenges: Stringent government regulations pertaining to emission from diesel engines
Portable generators are used for a wide range of residential, commercial, and industrial applications. When diesel is burnt in a generator, it emits oxides of nitrogen, carbon monoxide, and particulate matter. These emissions are directly released into the atmosphere, and they deteriorate the environment as well as inhabitants. Several regulations have been implemented worldwide to reduce air and noise pollution by generator sets. With growing environmental concerns, each country has come up with its own set of regulations and policies to reduce air pollution.
According to CPCB, the emission of oxides of nitrogen and hydrocarbons in a diesel generator with up to 19 kW power should not exceed 7.5 g/kW h. The emission of carbon monoxide should not exceed 3.5 g/kW h, while that of particulate matter should not exceed 0.3 g/kW h. The smoke limit for such generators is kept at 0.7 m–1. In order to meet emission standards in various countries, generator sets are required to run on Ultra-Low Sulfur Diesel (ULSD). The US environmental regulations require a 97% reduction in the sulfur content of diesel fuel. ULSD is more expensive than standard diesel fuel as it requires additional processes to remove the sulfur content. The main challenge for generator manufacturers is reducing emissions levels while maintaining performance levels.