Growing Penetration across Rural Regions in Developing Nations to Propel Market Growth
The global telecom industry has witnessed exponential growth over the past couple of decades due to a range of factors. Players operating in the current telecommunication sector around the world are increasingly focusing on catering to one of the biggest obstacles in the telecom tower sector i.e. unreliable electrical grid supply. In addition, the increasing frequency of electrical grid outages in most developing nations has, thereby accelerated innovations and large-scale development in the modern telecom sector. At present, telecom tower operators primarily use diesel generators as a power management solution due to which, the diesel generator market in telecom sector is expected to witness considerable progress in the forthcoming years.
As the telecom sector continues to expand at a rapid pace worldwide, with it, the diesel generator market in telecom sector is expected to grow at a steady pace. The market growth is primarily driven by the growing adoption across developing nations, including India, China, Brazil, and Indonesia. While other alternative power management solutions such as batteries are gradually gaining popularity, low operating costs and modest initial investment costs of diesel generators continue to drive the demand in underdeveloped and developing regions of the world.
Government initiatives and projects are expected to play an important role in augmenting the demand for diesel generators in the telecom sector, especially in India and China– the two prominent markets for players operating in the current market landscape. While the demand is expected to grow at an impressive pace in the upcoming years, the mounting environmental concerns and growing emphasis on sustainability across the telecom sector could hinder the growth of the diesel generator market in telecom sector in the second half of the forecast period.
At the back of these factors, the global diesel generator market in telecom sector is expected to reach a value of US$ 1.4 Bn by the end of 2030.
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Rise of Green Telecom Towers May Hinder Market Growth
Over the past decade, the augmenting interest in renewable energy has led to considerable developments across the global telecom sector. In addition, fast-paced advancements in the renewable energy space could potentially replace diesel generators in the telecom sector over the upcoming decades, as stricter laws and regulations are formulated. Renewable energy sources have emerged as a popular off-grid mobile base station choice and as this trend gains further momentum, the diesel generator market in telecom sector could witness a slower growth rate toward the latter stages of the forecast period.
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In the current scenario, the adoption of diesel generators is expected to outpace that of renewable energy sources due to lower costs and required reliability. In addition, the growth of the diesel generator market in telecom sector will continue to gain momentum in the upcoming years, due to rising telephony subscriptions worldwide, especially in developing regions. In addition, the growing deployment of telecom towers in rural regions of both developed and developing regions is another factor that is expected to drive the diesel generator market in telecom sector during the forecast period. However, the advent of a robust off-grid technology, low PV prices, and high availability of Energy Service Companies is expected to gradually tilt the pendulum toward renewable energy across the global telecom sector. In addition, dwindling solar PV prices are another factor that is projected to cut-short the growth of the global diesel generator market in telecom sector during the assessment period.
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Market Growth to Decline in 2024 amid COVID-19 Pandemic
The global diesel generator market in telecom sector could witness slow growth in 2024 due to the outbreak of the novel COVID-19 pandemic. As governments across the world were highly focused on containing the transmission of the novel coronavirus by imposing stringent lockdown measures and restrictions on cross-border trade and transportation during the second quarter of 2024, the demand for diesel generators across the telecom sector remained steady and lower than initial projections. However, as lockdown restrictions in several nations are gradually being lifted, delayed or stalled projects across the diesel generator market in telecom sector are anticipated to resume due to which, the adoption is likely to increase.
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Analysts’ Viewpoint
The diesel generator market in telecom sector is expected to grow at a moderate CAGR of ~4% during the forecast period. The market growth can be primarily driven by a range of factors including booming telecom sector in developing and underdeveloped nations, low operating costs of diesel generators, and high levels of reliability exhibited by diesel generators. In addition, the market growth will be driven by tax subsidies given by governments to companies operating across the telecom tower sector. Although the entry of renewable energy could dent the growth of the global diesel generator market in telecom sector in the upcoming years, market players should focus on diversifying their operations in the future to stay relevant in the developing market landscape.
Diesel Generator Market in Telecom Industry: Overview
- Diesel generators are available in stationary and portable types. The framework of stationary diesel generator does not move. It is used to drive power at a stationary location. Portable generator is powered by gas or diesel fuel; and can provide temporary electrical power.
- Standby power generators are often used in emergency situations such as power outages. They are ideal for applications where another reliable continuous power source is required. These generators are primarily used during a power outage and regular testing and maintenance activities.
- Prime power rated generator is used as a primary power source and not for standby or backup power only. This generator can supply power in a situation where there is no utility source, as is often the case in industrial applications, such as mining or oil & gas operations in remote areas where the grid is not accessible.
- Continuous power is similar to prime power, but has a base load rating. It can supply power continuously to a constant load. However, it does not have the ability to handle overload conditions or work well with variable loads. The major difference between a prime and continuous rating is that prime power gensets are set to have maximum power available at a variable load for an unlimited number of hours. They generally include approximately 10% overload capability for short durations.
Rise in Incidence of Power Outages to Drive Diesel Generator Market in Telecom Industry
- The electrification rate has improved across the globe over the last decade. However, the incidence of power outages has also increased. The global electrification rate reached 89% in 2018. Around 153 million people obtained to access electricity in 2019. Nevertheless, the biggest challenge remains in most of the remote areas globally and in sub-Saharan Africa where approximately 570 million people still live without electricity.
- Natural calamities; failure of distribution lines and transmission lines; and faults in equipment of power generation stations or substations are some of the key factors causing power outages across the world. Recently, a power outage in Argentina and Uruguay affected 10 million people in an electrical failure.
- On an average, more than 60% of the telecom tower sites face electrical grid outages in excess of eight hours a day in India. Therefore, tower owners deploy a combination of batteries and backup power for electrical grids in order to ensure power availability of more than 99.95%. This is likely to create lucrative opportunities for the diesel generator market in the telecom industry.
Growth in Adoption of Renewable Energy to Provide Lucrative Opportunities for Diesel Generator Market in Telecom Industry
- Renewable electricity generation (excluding hydro) accounted for 9.3% share of global electricity generation in 2018. Demand for renewable energy has been gaining momentum in the global power generation mix since the last few years due to the increase in focus on reducing the climate change impact.
- Renewable power consumption grew by 14% in 2018, providing 9% of the world’s electricity. Europe leads the world in terms of adoption of renewable energy. The share of renewable power in global power generation reached nearly 8.4% in 2017, almost doubling in five years from 4.6% in 2012. Similarly, many countries in the world such as China, India, Japan, Brazil, the U.S., and Canada have also increased their share of consumption of renewable energy. However, sources of renewable energy are intermittent sources of power, as they are dependent on several natural factors. For instance, solar energy can be produced only during daytime, while wind energy can be produced only when the wind is blowing with certain force. Hence, backup power sources are required for these resources. Diesel generator is one of the sources of backup power.
Stringent Environmental Regulations for Pollution and Noise Control to Hamper Diesel Generator Market in Telecom Industry
- Diesel generator achieves the highest thermal efficiency vis-à-vis any other combustion engine. It is quite close to the Carnot efficiency and hence, is widely used. It is also extensively used in the telecom industry, owing to low installation cost, easy availability of fuel, reliability, and safe operation. However, diesel generator emits oxides of nitrogen, carbon monoxide, and particulate matters that are harmful to the environment.
- Several environmental agencies such as the Central Pollution Control Board (CPCB) (India) and the U.S. EPA (Environmental Protection Agency) have imposed stringent regulations on diesel power generators. According to the CPCB, the emission of oxides of nitrogen and hydrocarbons in a diesel generator with up to 19 kW power should not exceed 7.5g/kW-hr.
- Rise in prices of commodities, especially steel and other materials, has a major impact on cost escalations. This is estimated to adversely affect the demand for offshore wind turbines during the forecast period. In turn, this is projected to hinder the global diesel generator market in telecom industry.
- Thus, rise in concern about noise and air pollution is likely to restrain the diesel generator market in telecom industry during forecast period
Recent Developments, Expansions, Acquisitions, and New Contracts in Diesel Generator Market in Telecom Industry
- On March 13, 2019, Generac Holdings Inc., announced it had acquired Neurio Technology Inc., a leading energy data company focused on metering technology and sophisticated analytics, to optimize energy use within a home or bus
- In December 2017, Cummins, Inc. launched RS125 and RS150, new models in the Quiet Connect series of generators. These generators have capacity ranging from 13 kW to 150 kW. They can be used to provide backup power to large homes and small businesses, including dental and medical offices, grocery stores, gas stations, and strip malls.
Asia Pacific Highly Lucrative Region of Diesel Generator Market in Telecom Industry
- Asia Pacific led the global diesel generator market in telecom industry in 2019, owing to significant rise in electricity usage and telecom usage in the region. China dominated the diesel generator market in telecom industry in Asia Pacific with 38.35% share in 2019. The country is anticipated to continue its dominance in the near future primarily due to the presence of major telecom operators. Furthermore, introduction of fifth-generation (5G) superfast wireless network is expected to provide an impetus to the diesel generator market in telecom industry in China.
Highly Competitive Diesel Generator Market in Telecom Industry
- The global diesel generator market in telecom industry is highly competitive. Several large players are engaged in manufacture and supply of diesel generators. Value-added features such as wireless monitoring, automated power management systems, rapid installation technology, and portability are incorporated in generator sets to make them more attractive for customers.
- Key players operating in the global diesel generator market in telecom industry are
- Cummins Inc.
- Generac Holdings
- Caterpillar Inc.
- HIMOINSA
- KOEL Green
- Aggreko PLC.
- Jakson
- MAHINDRA POWEROL
- AGCO Corporation
- Kohler Co.
- Multiquip Inc.
- AKSA Power Generation
- Greaves Cotton Limited
