Market Insights & Analysis: Saudi Arabia Diesel Generator Market (2023-28)
The Saudi Arabia Diesel Generator market is projected to grow at a CAGR of around 12.18% during the forecast period, i.e., 2023-28. This is owing to the growing application of diesel generators in the oil & gas industry, manufacturing units, commercial, and other sectors. A diesel generator is the combination of a diesel engine with an electric generator to generate electrical energy. The main components of these generators include a diesel engine, an AC alternator, a fuel tank, a control panel, & radiator. These generators are used either as a power backup system or as a prime electricity source.
Extensive focus on the exploration & production of crude oil is one of the leading factors for the deployment of the generators. These generators are being utilized in the absence of a power grid at the offshore & onshore sites for drilling the oil wells, along with operating various other machinery at the rig. According to the Organization of Petroleum Countries, Saudi Arabia possess approximately 17% of the world’s proven petroleum reserves. This high presence of a huge oil reserve & the ongoing exploration process to discover new oil wells is expected to upscale the Saudi Arabia Diesel Generator market share.
| Report Coverage | Details |
|---|---|
| Study Period | Historical Data: 2018-21 |
| Base Year: 2022 | |
| Forecast Period: 2023-28 | |
| CAGR (2023-2028) | 12.18% |
| Key Companies Profiled | Cummins Arabia, Atlas Copco Industrial Equipment Co., FG Wilson, Kohler SDMO, Aksa Power Generation, Caterpillar Inc., Saudi Diesel Equipment Co. Ltd., Generac Holdings Inc., Siemens Energy AG, Kirloskar DMCC |
| Unit Denominations | USD Million/Billion |
Moreover, the emergence of government initiatives for the expansion of IT, manufacturing, tourism, and service industry to attain the economic diversification target of 2030 would further assist the demand for diesel generators to be deployed in the expanding industrial units. As part of the government’s initiative to strengthen the manufacturing base in the country, various investments are underway. For instance,
Additionally, the surge in investment opportunities has been a part of a major expansion of its Namaat industrial investment programs. Hence, it is anticipated that the continuous investment in manufacturing & other industry by the public & private sectors would surge the Saudi Arabia Diesel Generator Market. Further, the surging construction activities in the country are propelling the demand for diesel generator installation in construction sites that are located in remote areas with limited grid connectivity.
The government of Saudi Arabia has announced various construction projects such as the Red Sea Project, AMAALA, Neom City, and others which would consist of hotels, malls, hospitals, tourist attraction places, etc. These ongoing construction activities would enhance the demand for diesel generator sets in the construction sites for powering the equipment during the forecast period, therefore enhancing the market size.
Market Dynamics
Key Driver: Uninterrupted Power Supply Demand from the Industries for Operational Activities
There are certain sectors where an uninterrupted power supply is required to ensure the smooth functioning of the industry. Hence, to suffice this need, several industries seek diesel generators as standby units. These generators are in high demand in industries like healthcare, oil refineries, and telecommunications due to unforeseeable circumstances such as power outages & blackouts. In the healthcare sector, machines such as ventilators rely on electricity to function, therefore hospitals & nursing homes keep standby diesel generators on hand to avoid disruption. Furthermore, the telecom industries have led to growth in the market for diesel generators, as telecom companies have set up new base stations to ensure better network coverage following the arrival of 5G in 2019.
Additionally, over 1000 base stations were formed to provide users with a better network coverage range & increase internet penetration in Saudi Arabia, which elevated the requirement for generators. Further, the oil & gas industries use power generators for drilling & digging since the equipment requires more power to provide the service. As a result, industries rely on these generators to supply power & provide backup to fine-tune industrial operations, as these industries typically require a consistent supply, resulting in a demand for commercial & large-power generators during 2023-28.
Possible Restraint: Disruption in Supply Chain for Raw Materials
Saudi Arabia Diesel Generation industry is an import-dependent economy, owing to the fewer manufacturing facilities for generators. Further, most construction companies & rental equipment industries in the country buy these generators for short- & long-term construction projects to have an uninterrupted power supply. In recent years, the government in Saudi Arabia has highly invested & announced several mega construction projects such as NEOM, and Four Points Hotel Jeddah Corniche, among others, which led to a surge in the requirement for these generators in the construction sites.
However, due to supply chain disruption, the unavailability of components faced by the manufacturing companies resulted in hampering the market growth. The delay in supplying generators further slowed the country's construction activities. Hence, the supply chain disruption for the raw materials after the pandemic made it difficult for the manufacturers to fulfill the growing need, thus impeding market growth.
Growth Opportunity: Emergence of the Country as a Prominent Data Center Hub
In recent years, Saudi Arabia has emerged as the preferred destination for establishing data centers. This is due to the constant push by the government to establish the country as the regional digital hub & boost the development of data center facilities in the country to store government-specified data effectively. Thus, this has increased the demand for diesel generators for data center facilities, owing to their requirement for 24x7 continuous power to minimize revenue loss. Furthermore, the government of the country has also planned to diversify the economy from oil-based to other avenues like technology, communication, etc. Owing to this, many strategic investments in data centers have come up in Saudi Arabia. For instance,
Furthermore, companies such as Aramco, Cognite, STC, Huawei, and others made significant investments to establish data centers in 2022. As a result, the demand for diesel generators is predicted to rise in the near future as more data center units are to be built, therefore supporting the market growth.
Key Trend: Increasing Popularity of Common Rail Technology & Electronic Fuel Injection in DG
The burgeoning vogue of advanced technology has affected the market of diesel generators in Saudi Arabia, where consumer preference has enhanced with technologically advanced features. The demand for high fuel efficiency, high reliability, and low emission has generated a supplemented demand for mechanically advanced generators, due to which technologies like Common Rail Technology & Electronic Fuel Injections are witnessing rapid adoption in diesel sets. The trend of continuous mechanical & technical upgradation of generator sets has been brought about by growing government initiatives & consumer awareness about carbon emissions & energy efficiency.
Diesel generator sets have higher carbon footprints than their counterparts, so continuous improvement has been a long-term trend. Although companies like MTU Solutions introduced their diesel generators with common rail technology in 2014, the requirement for advanced engine modifications has occurred only in recent years. Hence, this has further brought a new trend where continuous research & development activities are being carried on by the manufacturers, to deal with the consumer demands of mechanical & technological advancements.
Market Segmentation
Based on Type:
Among these, Standby diesel generators are witnessing notable market growth in the Saudi Arabia Diesel Generator market due to their surging application in the residential, commercial, and healthcare sectors for providing an uninterrupted supply of electricity. End-user industries are actively utilizing standby generators to meet short-term power requirements in the event of a power outage to reduce the possibility of operational inefficiency. Due to the surging construction of residential, commercial, and healthcare buildings in the country, the deployment of these generators is also rapidly expanding. Additionally, the launch of various housing projects like the Sakani housing program, Nasaj Town, and others to cater to the growing housing needs of the residents would drive the installation of these generators in the coming years. For instance,
Hence, with the upscaling investments in the commercial, residential, and healthcare sectors of the country as a part of the Saudi Vision 2030 to strengthen the non-oil economic sectors, the demand for standby generators is anticipated to rise in the upcoming years.
Based on End Users:
Of them, the Healthcare segment is becoming a major source of demand for diesel generators in Saudi Arabia owing to the surging construction of hospitals & clinics due to the growing prevalence of various non-communicable diseases. The continuous requirement for power supply for operating medical devices like ECG monitors, ventilators, oxygen concentrators, etc., for treating these diseases has augmented the demand for DG sets in healthcare units. In addition, the launch of government initiatives like 'The Health Sector Transformation' to restructure the health sector by implementing an integrated health system like e-health services & digital solutions. This has augmented the adoption of modern technologies & integrated care models in hospitals, thereby requiring these generators for continuous operations.
Additionally, the country is undergoing several public-private partnerships to construct healthcare facilities, including King Abdullah Bin Abdulaziz Medical Complexes – Riyadh & Jeddah, King Khalid Medical City, King Faisal Medical City, etc. Further, the investment plans of the Saudi Government for the expansion of the healthcare industry by 2030 would significantly contribute to the healthcare-based construction activities & deployment of modern electrical equipment. Hence, the upcoming construction of the healthcare sector supported by public-private & government investment would further push the market in the coming years.
Recent Developments by the Leading Companies
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Frequently Asked Questions
A. The Saudi Arabia Diesel Generator Market is expected to grow at a CAGR of around 12.18% during 2023-28.
A. The demand for uninterrupted power supply from the industries for operational activities is expected to drive the Saudi Arabia Diesel Generator Market during the forecast period.
A. Cummins Arabia, Atlas Copco Industrial Equipment Co., FG Wilson, Kohler SDMO, Aksa Power Generation, Caterpillar Inc., Saudi Diesel Equipment Co. Ltd., Generac Holdings Inc., Siemens Energy AG, and Kirloskar DMCC are the top players in the Saudi Arabia Diesel Generator Market.
A. The Standby diesel generator is the leading type for the growth of the Saudi Arabia Diesel Generator Market.
A. The increasing popularity of common rail technology & electronic fuel injection in diesel generator is the key trend shaping the growth of the Saudi Arabia Diesel Generator Market.
A. Residential, Commercial, Healthcare, Government & Transport, Oil & Gas, Industrial, and Equipment Rental Companies are the industry's potential end-users.
A. The emergence of the country as a prominent data center hub is the growth opportunity driving the Saudi Arabia Diesel Generator Market through 2028.
