Distributed generation has the ability to generate electricity from different sources of energy such as solar, wind, and tide energy, which is fast emerging as an eco-friendly way for generating electricity. Increased global warming has led the governments to take several initiatives in order to reduce greenhouse gas emissions. This trend is anticipated to continue over the coming years as well, thereby boosting the growth of the global market for distributed generation.
Market overview
The global distributed generation market that was valued at USD 60.04 Billion in 2017 is projected to grow at a CAGR of 11.48% during the forecast period from 2017 to 2022, reaching a size of USD 103.38 Billion by 2022.
Among applications, the on-grid segment was the leading market in 2016, and is also expected to continue dominating the market over the forecast period as well. This growth can be attributed to its capability of providing apt and perfect solutions to various end-users and reducing harmful emissions from fossil fuel power plants.
Based on technology, the reciprocating engines held the largest market share in 2017, owing to the increased combined heat and power installations and growing demand for flexible and quick start-up technologies for power generation. However, the solar PV segment is expected to witness the highest growth in the coming years, due to the decreasing costs of solar installations, attractive incentives, and restrictions on greenhouse gas emissions.
Among end-users, the commercial segment is expected to experience the highest growth from 2017-2022. This growth is mainly because of the increased government initiatives toward green solutions, rising demand for reliable power, and easy availability of fuel.
How is the market progressing, geographically?
Among regions, the European market for distributed generation is expected to be the dominant market over the forecast period, owing to the increasing energy consumption, especially by the industrial and commercial sectors due to urbanization and industrialization, which has majorly contributed to the largest demand for distributed generation. Moreover, the rising government mandates in order to achieve sustainable goals is also fueling the market growth. Furthermore, the high demands from the IT and telecommunication sectors are also expected to drive the market to a great extent.
What is driving and restraining the market growth?
The growth of the global distribution generation market is being primarily driven by the following factors:
- Rising government mandates to reduce greenhouse gas emissions
- Increased share of renewable power generation
- Increasing global demand for electricity
- Shift to distribution generation from centralized generation
In addition to this, growing application in hybrid energy systems is expected to further offer ample growth opportunities for the growth of this market.
On the flip side, reluctance for spending on distributed generation technologies due to high investments, efforts, and time to alter and switch to decentralized business models in a traditional centralized way is the major deterrent for the growth of this market.
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Key players and strategies adopted for sustenance
The leading players in the global market for distributed generation include Siemens (Germany), GE (US), Schneider (France), Mitsubishi (Japan), Doosan (South Korea), and Capstone (US). These companies are adopting growth strategies such as new product launches, contracts & agreements, mergers & acquisitions, and expansions in order to increase their market share as well as expand their global presence.
