The distributed generation market comprises small-scale power generating units like solar panels, wind turbines, reciprocating engines, gas turbines, fuel cells, and micro turbines installed at or near the end user location. Distributed generation offers advantages like reduced transmission and distribution losses, grid support during outages, fuel diversification, and lower overall cost compared to centralized power plants. With growing concerns around climate change and rising demand for clean energy, distributed generation provides a sustainable solution to meet energy needs in a decentralized manner. The Global Distributed Generation Market is estimated to be valued at US$ 364.46 Billion in 2024 and is expected to exhibit a CAGR of 14.% over the forecast period 2024 to 2031.
Key Takeaways
Key players operating in the distributed generation are Siemens AG, General Electric (U.S.), Schneider Electric SE, Mitsubishi Motors Corporation, and Capstone, Activ Solar GmbH, Ballard Power Systems Inc., Fortis Wind Energy, GE Power & Water, Juwi Inc., Sharp Corporation, Cummins Inc. (U.S.), Caterpillar Inc. (U.S.). Growing awareness about negative impact of conventional power sources along with supportive government policies and initiatives are expected to fuel the adoption of distributed renewable systems. Distributed generation capacity addition is also expected to grow significantly across regions to provide reliable power supply and meet nationally determined contribution targets under the Paris Agreement.
With increasing industrialization and population globally, the demand for sustainable energy is growing rapidly. This has paved opportunities for distributed generation companies to expand their footprint internationally through partnerships, mergers and acquisitions. Many major players are focusing on developing nations in Asia Pacific and Latin America with high renewable energy potential and policy push for clean energy. The global distributed generation market is anticipated to witness substantial growth over the coming years supported by rising investments and technological innovations.
Market key trends
Decentralization of energy resources is one of the major trends in the distributed generation market. Driven by factors like increased digitization, need for resilient power supply and global climate action, distributed renewable sources are increasingly replacing centralized fossil fuel based power plants. This is transforming the traditional configuration of electric grids towards more distributed, flexible and digital systems.
Porter’s Analysis
Threat of new entrants: High capital requirements for infrastructure and regulatory approvals pose significant barriers for new companies to enter this market. Bargaining power of buyers: Consumers have more options in terms of providers and technologies, increasing their bargaining power in price negotiations. Bargaining power of suppliers: The presence of many component and technology providers leads to lower costs and reliable supply. Threat of new substitutes: Alternative technologies like energy storage offer potential substitution, but reliability issues temper disruption in the short term. Competitive rivalry: With increasing adoption and diverse customer needs, competition among distributed generation companies is intensifying on the basis of performance, cost, durability and services.
The geographical regions where the value of distributed generation market is most concentrated currently include North America and Europe. These regions have adopted DG technologies for achieving energy independence, reducing emissions and enhancing grid reliability. Asia Pacific region is expected to be the fastest growing market for distributed generation during the forecast period. Rapid industrialization and growing investment in renewable energy infrastructure in countries such as China, India and Japan will drive high demand for distributed power sources in this region.
Geographical Regions
The distributed generation market in terms of value is most concentrated currently in North America and Europe. In North America, the US accounts for the bulk of demand led by renewable energy policy targets and technological advancements. Europe is also a major regional market with countries like Germany, UK and France deploying distributed energy resources on a large scale for mitigating power losses during transmission. Growing industrial and commercial energy needs combined with government incentives are fueling market expansion.
Asia Pacific is poised to emerge as the fastest growing market for distributed generation during the forecast period. Countries such as China, India and Japan are undertaking massive renewable capacity additions and modernizing their electric grids. Rapid industrialization and urbanization projects in Asia Pacific economies are increasing the deployment of distributed energy systems for meeting localized electricity demand. Distributed generation solutions provide reliable and cost-effective power solutions for this region's growing energy needs.
