IndexBox has just published a new report: ‘World – Electric Generating Sets And Rotary Converters – Market Analysis, Forecast, Size, Trends and Insights’. Here is a summary of the report’s key findings.

The Increased Demand for Autonomous Electricity Supply for Business, Industrial Facilities, and IT Infrastructure Buoys Electric Generator Market

In 2019, the global market for electric generating sets and rotary converters was finally on the rise to reach $58.4B after two years of decline. Electric generating sets and rotary converters are equipment that is used for primary power generation and also serves as backup power supplies for infrastructure and residential buildings.

The key factors in the demand for generators are the growing demand for electricity, insufficient electrical infrastructure, especially in areas far from large cities, the need to provide a guaranteed power supply with a stable voltage, as well as backup power to important infrastructure facilities (hospitals, government agencies, business centers, airports, train stations, etc.) and technical equipment (communication towers, data centers, industrial enterprises, etc.).

In value terms, the largest electric generating set and rotary converter markets worldwide were the UK ($3.1B), China ($2.8B), and Russia ($2B), together comprising 14% of the global market (IndexBox estimates). Brazil, the U.S., India, Indonesia, Turkey, Japan, Nigeria, South Korea, and Angola lagged somewhat behind, together comprising a further 15%. The leadership of the UK in value terms is largely attributed to the high demand for wind generators in the country – such units are large, rather expensive, and their quantity is much less than, for example, portable gasoline generators.

In 2019, the highest levels of per capita consumption of electric generating sets and rotary converters were registered in Angola (30 units per 1000 persons), followed by South Korea (8.23 units per 1000 persons), Japan (7.40 units per 1000 persons), and Russia (6.79 units per 1000 persons), while the world average per capita consumption of electric generating set and rotary converter was estimated at 2.92 units per 1000 persons.

Since industrial and other high capacity generators constitute expensive equipment, their installation and use correspond with capital investments against the background of the general growth of industry and trade. The dynamics of construction also directly affects the generator market: business centers, retail outlets, infrastructure, and social facilities are increasingly being equipped with backup generator sets, while residential construction is driving the demand for portable generators for private homes, which are usually purchased in case of power outages.

Another fundamental factor of market growth is the growth of the IT sector, as well as the telecommunications sector: the coverage of the countries of the world with wireless networks and mobile Internet is increasing, the infrastructure for which requires a stable power supply.

The development of electric transport (especially electric vehicles) will require the creation of a large-scale network of charging stations, which may increase the demand for generators (local generators can become auxiliary or even the main sources of energy for charging stations in hard-to-reach areas).

The Pandemic Hampers Business Investment But Promotes the Equipment of Medical Facilities and the Demand for Portable Generators

In view of the above, the dynamics of the electric generating sets and rotary converters market as a whole reflects the overall GDP growth. In early 2020, the global economy entered a period of the crisis caused by the outbreak of the COVID-19 pandemic. In order to battle the spread of the virus, most countries in the world implemented quarantine measures that put on halt production and transport activity.

The combination of those factors disrupts economic growth heavily throughout the world. According to World Bank forecasts, despite the gradual relaxing of restrictive measures and unprecedented government support in countries that faced the pandemic in early 2020, the annual decline of global GDP could amount to -5.2%, which is the deepest global recession being seen over the past eight decades.

In Asian countries, especially China, which faced the pandemic earlier than others, the epidemic situation improved earlier, with the quarantine measures largely relaxed, and the economy is gradually recovering from the forced outage. Thus, in China, by the end of 2020, an increase of 1% is expected (while a year earlier it was 6.1%), and in general in Southeast Asia in 2020, an increase of 0.5% is expected. In the medium term, it is assumed that the economy will gradually recover over several years as the restrictions are finally lifted. The U.S., meanwhile, is struggling with a drastic short-term recession, with the expected contraction of GDP of approx. -6.1% in 2020, as the hit of the pandemic was harder than expected, and unemployment soared due to the shutdown and social isolation.

The industrial sector has proven vulnerable to the pandemic as due to quarantine measures, industrial facilities may be stopped, and the drop in incomes of the population makes the growth of end markets unfeasible, thereby hampering any expansion of the industrial manufacturing. Thus, the above economic prerequisites will have a negative impact on the establishment of new industrial facilities and put a drag on market recovery.

On the other hand, measures to mobilize the medical system and equip temporary COVID hospitals required the use of a large number of generators. At the same time, in the second half of 2020, the effect of this factor may fade out against the background of the gradual weakening of the pandemic and the removal of social isolation.

In the wind energy segment, which comprises the global exports of $6.1B in 2019, an additional factor is also favorable government policy worldwide. Increased attention to environmental issues and the political goal of reducing the “carbon load” will increase the demand for generators on alternative energy sources, in particular, for wind turbines.

As for portable generators, the additional demand could be found in those countries with a lack of stale centralized electricity supply e.g., in many African countries. Furthermore, lower oil prices as a result of reduced demand and oversupply amid the pandemic are making oil and gas more affordable. Consequently, the cost of electricity that is generated by the fossil-fuel-based equipment is reduced, which contributes to the growth of the use for electric generating sets and rotary converters. The increasing social anxiety, as well as the continuing threat of isolation due to the virus, could lead to the purchase of portable generators for future use in case of power outages in emergency situations.

Taking into account the above, it is expected that in 2020 and the next few years, global consumption of electric generating sets and rotary converters should decline somewhat against 2019. In the medium term, as the global economy recovers from the effects of the pandemic, the market is expected to grow gradually. Overall, market performance is forecast to pursue a slightly upward trend over the next decade, expanding with an anticipated CAGR of +0.9% for the period from 2019 to 2030, which is projected to bring the market volume to 25M units (IndexBox estimates) by the end of 2030.

Source: IndexBox AI Platform