Oman Diesel Generator Market Research Report: Forecast (2023-2028)

Market Insights & Analysis: Oman Diesel Generator Market (2023-28)

The Oman Diesel Generator market is projected to grow at a CAGR of around 3.37% during the forecast period, i.e., 2023-28, owing to the increasing number of greenfield investments in the country. In an effort to develop its economy, the government of Oman is attracting investments in different sectors. The surging number of investments is resulting in infrastructural development in various sectors such as transportation, mining, etc. For instance:

• In 2022, Oman Rail and Etihad Rail signed an agreement to build a railway network to connect Oman and the United Arab Emirates (UAE), involving an investment of USD3 billion.

These developments are creating the demand for these generators for both prime power & backup power to fulfill the uninterrupted flow of supply in the construction process, which is supporting the market growth in the country. Furthermore, the Omani government's plan to grab the country's attention on tourism & hospitality is leading to the development of various facilities like resorts, hotels, etc., which require diesel generators for power generation & power backups.

Moreover, the development of remote areas is leading to a surge in establishments of industries such as food & packaging, automobile, etc., further necessitating the demand for these generators of higher ratings. Furthermore, the country's growing population creates a need for affordable housing units, prompting the government to implement several housing plans to accommodate both citizens & expatriates. As a result, the country is rapidly constructing residential units, which would support in enhancing the Oman Diesel Generator Market size in the coming years.

Thus, ongoing infrastructure development in Oman, combined with the elevation in tourism, hospitality, and other sectors, would generate revenue for a diesel generator in Oman during the forecast period of 2023-2028.

Market Dynamics

Key Driver: Increase in Demand for Diesel Generators with Expansion of Ports & Free Zones in Oman

Oman is ideally situated outside the strait of Hormuz, which serves as the gulf countries' logistics lifeline and has several large seaports, such as the Port of Salalah, the Port of Sultan Qaboos, the Port of Duqm, the Port of Sohar, the Port of Qalhat, and others. The presence of these seaports has led to the growth of special economic zones, such as the Sohar Free Zone, the Special Economic Zone at Duqm, the Al Mazunah Free Zone, the Salalah Free Zone, etc.

These special economic zones near ports include industries like metals & steel, food, light manufacturing & assembly, logistics, and trade, among others. The progression of special economic zones adjacent to the seaports has driven the diesel generator market in the historic years as the industries in the special economic zones required generators for both backup & power generations. Furthermore, the government of Oman is now focusing on expanding these ports to reduce oil dependency. For instance:

• In March 2022, the government of Oman issued a royal decree to expand free zones in the country. This step from the Omani government would increase foreign investment & lead to the proliferation of business in Oman. Salalah & Sohar have already attracted significant foreign investment in methanol, aluminum, solar power, petrochemicals, fertilizer, iron, and steel.

Hence, the expansion of ports & economic zones, resulting in the development of a large number of industries, is expected to boost the market in the upcoming years.

Key Trend: Use of Diesel Generators as a Component for Hybrid Energy Systems

Hybrid Energy Systems are setups integrated with energy generation equipment such as energy generators, electrical energy storage systems, and renewable energy sources, as well as are capable of advancing energy generation according to the power demand. Hybrid systems use diesel generators as a backup for recharging the batteries. This setup is ideal for places, such as rural areas, off-the islands, etc., with no mains supply.

 In Oman, the use & development of hybrid power systems is soaring due to the need for electricity in remote locations & off-the-grid islands. The commercial & residential units and other facilities in off-the-grid islands are planning to adopt hybrid energy generation systems with combinations of solar PVs or wind turbines, diesel generators, and storage batteries. Further, several studies have been conducted by various organizations to develop hybrid systems in Oman.

Thus, the increasing research conducted for the development of hybrid energy systems, combined with the presence of software and tools such as HOMER, Hybrid Designer, RETScreen, SOLSTOR, Hybrid2, HySim, HYBRIDS, HySys, and iGRHYSO, among others, is expected to propel the development of hybrid energy systems, thereby increasing the integration of these generators.

Growth Opportunity: Favorable Government Policies to Expand Mineral Sectors

The government is prioritizing the development of its mining sector by amending numerous laws, which, in turn, are supporting the country's mining activities, hence enhancing demand for diesel generators. The government is focusing on maximizing the use of its mineral resources by relaxing investment laws. For instance:

• In 2022, the Ministry of Energy and Minerals (MEM) and Minerals Development Oman (MDO) signed 12 exploration-to-mining concession agreements.

These agreements ease the burden of legal, technical, and financial regulations to attract domestic & foreign investment in the mining sector. As the mining industry relies heavily on various mobile generators for power generation, the government's strategic move is projected to surge demand for diesel generators in the forecast years.

Possible Restraint: Adoption of Aero Derivative Gas Turbines & Gas Engines to Hinder the Market

The Omani government has planned to achieve net-zero emissions by 2050. Owing to this, Special Economic Zones, Free Zones, and several other industries are planning to reduce carbon emissions. To reduce carbon emissions, diesel generators in these sectors are being replaced with aero-derivative gas turbines & gas engines. These engines are compact, modular, and have lesser emission rates when compared to these generators, due to which their adoption is increasing in the country.

Additionally, the environment friendliness, higher efficiency, and higher quality power generation of aero-derivative gas turbines & gas engines are witnessing significant demand, hence hampering the growth of the market.

Moreover, the transition from diesel generators to aero-derivative gas turbines & gas engines by various establishments is helping industries to generate more sustainable & affordable electricity. Due to this various others sectors are also getting attracted to aero-derivative gas turbines & gas engines. Consequently, this negatively impacts the potential market for diesel generators in the country, which acts as a restraint.

Market Segmentation

Based on KVA Rating:

• Up to 75KVA
• 75.1KVA to 375KVA
• 375.1KVA to 750KVA
• 750.1KVA to 1000KVA
• Above 1000KVA

Among them, with the substantial market share Above 1000KVA diesel generators witness considerable demand from oil & gas, power generation, mining, and large-scale manufacturing industries. These industries require huge kilo-volt amperes of electricity to operate heavy machinery at the industrial sites. According to International Trade Administration, Oman’s government derives roughly 70 percent of its annual budget from oil & gas revenues through taxation and joint ownership of some of the most productive fields and the industry accounts for around 30% of Oman’s gross domestic production. In June 2022, the Ministry of Energy and Minerals (MEM) announced that Oman’s crude oil reserves stood at 5.2 billion barrels & gas reserves at around 24 trillion cubic feet. The export of fossil fuels is a major source of revenue for the government, which would open up new revenue streams in the coming years.

By End User:

• Residential
• Commercial
• Healthcare
• Government & Transport
• Oil & Gas
• Industrial
• Equipment Rental Companies

As commercial buildings, such as premium hotels, resorts, retail malls, etc., were rapidly constructed from 2017 to 2021, the Commercial Sector represented a significant portion of the demand for diesel generators. The government's ambitious approach to generating revenue from the hospitality sector has been catalyzing the construction of commercial buildings in Oman. As per the Oman National Tourism Strategy 2040, the government is targeting to attract 11.7 million international & domestic tourists by 2040.

In line with the government’s plans & the continuous development of commercial buildings, several diesel generators would be installed at the construction sites to power the construction equipment and to supply backup power to the hotels after their completion for cooling, heating, etc. Therefore, the rising tourism leading to the investments by the government to amplify the hospitality sector is anticipated to support the growth of the market in the coming years.

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