Generator Market in Data Centers Size 2024-2028

The generator market in data centers is estimated to grow by USD 4.26 billion, at a CAGR of 8.56% between 2023 and 2028. Market expansion relies on various factors, such as escalating investments in data centers, growing demand for data center services, and heightened power consumption within data centers. These elements collectively shape the trajectory of market growth, reflecting a blend of technological advancements, business requirements, and environmental considerations. The increasing investments in data centers signify the importance of robust infrastructure to support digital operations and information storage needs. Simultaneously, the rising demand for data center services underscores the significance of reliable and scalable computing resources in the digital age. Additionally, the heightened power consumption in data centers highlights the imperative for energy-efficient solutions to mitigate environmental impact and operational costs. Thus, the interplay of these factors delineates the landscape for the anticipated expansion of the market.

What will be the size of the During the Forecast Period?

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Market Segmentation

This report extensively covers market segmentation by type (diesel and gas), capacity (less than 1MW, 1MW-2MW, and more than 2MW), and geography (North America, Europe, APAC, South America, and Middle East and Africa).

By Type

The market share growth by the diesel segment will be significant during the forecast period.  Diesel is the most common fuel used in generators installed in data centers. This is mainly because diesel is readily available compared with gas. Diesel can be stored effectively in containers (for a certain period) and used as per the requirement, unlike natural gas which requires adequate piping infrastructure and has no storage option. Such factors are expected to drive the diesel segment of the market during the forecast period.

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The diesel segment was valued at USD 4.51 billion in 2018. Diesel generators can provide high performance in fluctuating or transient-power scenarios. This is because of their high-torque performance characteristic. Diesel generators are available in a wide portfolio of capacity ranges. The actual system comprises various components, including the diesel engine, generating unit, fuel storage/supply, and electrical switchgear. Diesel generators are cost-effective and the preferred choice globally. This is because they are reliable, safe to operate, and require minimal maintenance. The output energy capacity of diesel generators is higher compared with other types of generators. The requirement is higher in large data center infrastructure. Such factors will increase the segment growth during the foecast period.

By Region

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North America is estimated to contribute 36% to the growth of the global market during the forecast period. Technavio’s analysts have elaborately explained the regional trends and drivers that shape the market during the forecast period. The high demand is one of the major reasons for the growing demand in North America. The need is increasing due to high investments by hyperscale cloud providers. The demand will continue to increase in North America, driven by high investments by hyper-scale cloud providers, colocation service providers, and enterprises, which are upgrading their IT infrastructure to support edge computing, 5G, multi-cloud services, big data analytics, and IoT. Similarly, with the increase in cloud services, there is a rise in demand for data centers in North America. 

Market Dynamics and Customer Landscape

In data centers, power interruptions and system downtime pose risks of information loss and anomalies, leading to errors and undermining up-time and reliability. To counteract this, power density is crucial, driving the demand for edge data centers equipped for 5G technology and the Internet of Things (IoT). However, concerns about power costs persist, prompting exploration into alternative solutions like fuel cells, as pursued by the Adani Group. Innovations like solar-powered data parks, natural gas generators, and Li-ion batteries offer viable options for backup power systems, bolstering data center power consumption management and energy loss prediction while ensuring customized capacity for uninterrupted operations. Our researchers analyzed the data with 2023 as the base year, along with the key drivers, trends, and challenges. A holistic analysis of drivers will help companies refine their marketing strategies to gain a competitive advantage.

Key Market Driver

The rising demand for data centers is a key factor driving the growth of the market. The adoption of big data analytics and cloud-based services is increasing at a significant pace. In addition, digitalization has increased the number of application workloads on servers with cross-platform support. Processor manufacturers, including Intel, are focusing on increasing the efficiency of a server in a distributed computing environment. Enterprises are involved in increasing the utilization of underlying data center infrastructure, such as servers, using virtualization techniques to gain competitive advantages. Most of enterprises worldwide are increasing their data center footprint, which is heavily contributed by CSPs and colocation providers. For instance, SMEs are highly dependent on CSPs and colocation providers for their business operations.

Moreover, the growing customer base and the need to increase productivity are driving enterprises to adopt additional servers, which are mostly for mission-critical and high-performance computing (HPC) workloads. This will result in an increased need for an uninterrupted power supply to run servers efficiently. During the forecast period, the demand is expected to increase for business needs. This will lead to the adoption of generators to supply additional power, especially in countries that have an inadequate power supply.

Significant Market Trends

The increasing use of dual power feeds in data centers is the primary trend in the market. The demand for efficient, fast, and resilient data centers has been growing. This is because of the high Internet penetration, increase in streaming content, and growing cloud adoption. To cater to the growing need and to reduce downtime, they are adopting this technology from utility companies. This configuration is now widely seen in Tier-4 data centers. A major advantage of this power supply configuration is that when one feed is interrupted, the other source immediately takes over and continues to supply the necessary power.

Either of the two feeds can experience failure. The two feeds individually comprise all the above-mentioned components and can operate independently. This helps significantly reduce downtime during an interruption in power supply. The majority of the modern infrastructure components, such as servers and switches, are designed with dual power supplies. During normal operation, the component consumes equal power from both feeds. In case of an interruption in any of the feeds, the equipment can automatically switch all power to one feed or the other.

Major Market Challenge

The increase in carbon emissions is a major challenge to the growth of the market. During operation, various components in a data center environment, including generators, IT servers, building shells, and cooling systems, release carbon dioxide. The amount of power consumed by these facilities can help in determining carbon emissions. Data centers that use coal-generated electricity emit more carbon compared with others, such as renewable energy sources. Many large organizations are developing new data centers to run their business efficiently. The installation of efficient power management systems with monitoring features will aid in reducing consumption and carbon emissions in these facilities.

On average, the data centers in the US account for a significant amount of carbon footprint per year, which is high compared with many other countries. They are encouraged to calculate the carbon usage effectiveness (CUE) metric through the data center facilities' power usage effectiveness (PUE) rating and the carbon dioxide emissions factor of data center locations. It has been noticed that facilities with low PUE ratings emit less carbon compared with data center facilities with high PUE ratings. The use of intelligent infrastructure is expected to increase as it helps in the efficient calculation of CUE. With the use of CUE, power can be supplied based on the exact requirement of IT infrastructure operations.

Key Market Customer Landscape

The report includes the adoption lifecycle of the market, covering from the innovator’s stage to the laggard’s stage. It focuses on adoption rates in different regions based on penetration. Furthermore, the report also includes key purchase criteria and drivers of price sensitivity to help companies evaluate and develop their growth strategies.

Global Market Customer Landscape

Who are the Major Market Companies?

Companies are implementing various strategies, such as strategic alliances, partnerships, mergers and acquisitions, geographical expansion, and product/service launches, to enhance their presence in the data center generator market.

Atlas Copco AB- The company offers generators in data centers that are easy to move on-site as it comes with single axle sturdy undercarriage with parking brakes.

The report also includes detailed analyses of the competitive landscape of the market and information about 15 market companies, including:

• Aggreko Plc
• AVK SEG
• Caterpillar Inc.
• Cummins Inc.
• Generac Holdings Inc.
• Greaves Cotton Ltd.
• J C Bamford Excavators Ltd.
• Kirloskar Oil Engines Ltd.
• Kohler Co.
• Mahindra and Mahindra Ltd.
• Nidec Corp.
• Powerica Ltd.
• Rolls Royce Holdings Plc
• Sterling and Wilson Pvt. Ltd

Qualitative and quantitative analysis of companies has been conducted to help clients understand the wider business environment as well as the strengths and weaknesses of key market players. Data is qualitatively analyzed to categorize companies as pure play, category-focused, industry-focused, and diversified; it is quantitatively analyzed to categorize companies as dominant, leading, strong, tentative, and weak.

Segment Overview

The market research report provides comprehensive data (region-wise segment analysis), with forecasts and estimates in "USD Billion" for the period 2024 to 2028, as well as historical data from 2018 to 2022 for the following segments.

• Type Outlook 
  • Diesel
  • Gas

• Capacity Outlook 
  • Less than 1MW
  • 1MW-2MW
  • More than 2MW

• Region Outlook 
  • North America
    • The U.S.
    • Canada
  • Europe
    • The U.K.
    • Germany
    • France
    • Rest of Europe
  • APAC
    • China
    • India
  • South America
    • Chile
    • Argentina
    • Brazil
  • Middle East & Africa
    • Saudi Arabia
    • South Africa
    • Rest of the Middle East & Africa

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Market Analyst Overview

The market addresses the demand for uninterrupted power amidst fluctuating electricity prices and taxes. Gas turbines and power modules offer robust solutions, complemented by sustainable options like biogas, landfill gas, and solar energy promoted by the Solar Energy Industries Association. Backup power systems, including fuel cell power systems, safeguard against power interruption, ensuring power reliability critical for data center operation. With a focus on secondary data center facilities and edge computing sites, decision-makers prioritize power backup solutions tailored to micro-economic factors while balancing reliance on fossil fuels and nuclear energy with environmental considerations. Major manufacturers are increasingly turning to hyperscale facilities, integrating backup power systems fueled by diverse sources such as steam, sewage gas, and industrial waste gases, alongside small-scale solar photovoltaic systems, to ensure reliable backup power supply and reduce environmental impact.

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What are the Key Data Covered in this Market Report?

• CAGR of the market during the forecast period
• Detailed information on factors that will drive the market growth and forecasting of the market between 2024 and 2028
• Precise estimation of the market size and its contribution to the parent market
• Accurate predictions about upcoming market trends and analysis and changes in consumer behavior
• Growth of the market across Europe, North America, APAC, South America, and Middle East and Africa
• Thorough market growth analysis of the market’s competitive landscape and detailed information about companies
• Comprehensive market analysis and report on the factors that will challenge the market research and growth of market companies

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