June 16, 2024

Distributed Generation Market is Estimated to Witness High Growth Owing to Increasing Adoption of Clean and Green Energy Sources

The distributed generation market involves generation of electricity from multiple small-scale systems as compared to large centralized power plants. Distributed energy resources include solar photovoltaic systems, wind turbines, combined heat and power systems, fuel cells and micro turbines that produce electricity near the location where it will be consumed. Distributed generation provides benefits such as reduced transmission and distribution costs, improved power reliability, fuel diversification and reduced environmental impacts. Additionally, the adoption of distributed generation technologies is increasingly gaining traction owing to government incentives and initiatives to expand renewable energy infrastructure.

The Global Distributed Generation Market is estimated to be valued at US$ 364.46 Billion in 2024 and is expected to exhibit a CAGR of 14.% over the forecast period from 2024 to 2031.

Key Takeaways

Key players operating in the Distributed Generation are Siemens AG, General Electric (U.S.), Schneider Electric SE, Mitsubishi Motors Corporation, and Capstone, Activ Solar GmbH, Ballard Power Systems Inc., Fortis Wind Energy, GE Power & Water, Juwi Inc., Sharp Corporation, Cummins Inc. (U.S.), Caterpillar Inc. (U.S.). The key players are focusing on investments to develop innovative distributed generation technologies and expanding their geographic presence through partnerships and collaborations globally.

Some key opportunities in the distributed generation market include growing investments towards microgrids and virtual power plants. Furthermore, favorable government policies supporting clean energy as well as incentives for distributed generation projects will continue to drive new business opportunities.

The global expansion of distributed generation market is expected owing to rising energy demand worldwide along with the need for reliable and clean sources of energy. Significant growth is expected in the Asia Pacific region especially in countries like China and India due to rapid industrialization and urbanization. North America and Europe will also continue dominating the distributed generation market with supportive regulations and increasing focus on decarbonization of energy systems.

Market drivers

Growth in global electricity demand along with increasing investments in renewable energy infrastructure is a key driver boosting the adoption of distributed generation systems globally. Additionally, advances in energy storage technologies enable higher penetration of intermittent renewable energy resources thereby driving the need for hybrid solutions integrating renewable generation and storage. Favorable government policies and programs aimed at decarbonizing energy systems also contribute to the growth of the distributed generation market.

PEST Analysis

  • Political: Distributed generation sources face various regulatory challenges across different jurisdictions. supportive policies need to promote the wider adoption of clean distributed energy sources.
  • Economic: Declining costs of distributed generation technologies such as solar PV panels and energy storage are making them increasingly competitive compared to traditional centralized sources. This is driving more customers and businesses to invest in these solutions.
  • Social: More customers want reliable and affordable energy supply. Distributed generation technologies provide an alternative for consumers concerned about environmental sustainability and energy security. They enable greater energy independence.
  • Technological: Rapid innovation across different distributed energy technologies are improving their efficiency, capacity and control capabilities. Advanced software platforms now allow integrate resources to be interconnected and coordinated as virtual power plants. Cloud-based monitoring enables remote management.

Geographical regions where market in terms of value is concentrated:

North America accounts for the largest share of the global distributed generation market, followed by Europe. Factors like supportive government policies and incentives, high electricity costs, advanced grid infrastructure, and increasing investments in clean energy technologies have supported early adoption in these regions.

Fastest growing region for the distributed generation market:
Asia Pacific region is poised to become the fastest growing regional market over the forecast period. Countries like China and India are investing heavily to expand access to electricity through distributed generation projects especially in rural areas. Rising environmental consciousness, growing industrial and commercial energy needs will further accelerate the uptake of distributed generation in Asia Pacific.