Distributed Power Generation Market Research Report By Fuel Type (Gas, Diesel, Coal, Renewables (Solar, Wind, Biomass), Nuclear), By Generation Capacity (Less than 1 MW, 1-5 MW, 5-10 MW, 10-50 MW, Over 50 MW), By Application (Residential, Commercial, Industrial, Utilities), By End-User (Electricity Grid, Off-Grid Applications) and By Regional (North America, Europe, South America, Asia Pacific, Middle East and Africa) - Forecast to 2032

Distributed Power Generation Market Overview

As per MRFR analysis, the Distributed Power Generation Market Size was estimated at 158.45 (USD Billion) in 2022. The Distributed Power Generation Market Industry is expected to grow from 182.68 (USD Billion) in 2023 to 657.3 (USD Billion) by 2032. The Distributed Power Generation Market CAGR (growth rate) is expected to be around 15.29% during the forecast period (2024 - 2032).

Key Distributed Power Generation Market Trends Highlighted

Distributed Power Generation (DPG) is gaining traction due to increasing demand for reliable and decentralized energy sources. The rise of renewable technologies such as solar and wind power is driving the adoption of DPG, as it enables the integration of these intermittent sources into the grid. Additionally, growing concerns over climate change and the need for energy independence are further fueling the market growth.Key market drivers include the increasing demand for electricity in remote and underserved areas, the need for resilient and reliable power supply, and the growing adoption of microgrids and smart grid technologies. Opportunities for exploration lie in the development of advanced technologies such as distributed energy storage systems, combined heat and power systems, and virtual power plants.Recent trends in the DPG market include the integration of digital technologies, the rise of battery energy storage systems, and the emergence of peer-to-peer energy trading platforms. These trends are creating new business models and enabling the optimization and management of distributed energy resources.

Source Primary Research, Secondary Research, MRFR Database and Analyst Review

Distributed Power Generation Market Drivers

Declining Cost of Renewable Energy Technologies

One of the key drivers fuelling the growth of the globally distributed power generation market is the decreasing cost of renewable energy technologies, such as solar photovoltaic and wind turbines. The cost of solar PV modules has fallen by more than 80% over the last decade, and the cost of wind turbines has also decreased significantly. As a result, distributed power generation has become more accessible to businesses and consumers. Furthermore, an increasing number of organizations have adopted renewable energy sources, such as solar PV, to generate power.This trend is expected to fuel the growth of the market during the forecast period. In addition to the decreasing cost of renewable energy technologies, the growing need for electricity is another key driver of the market. The world’s population is growing at a rapid pace, and the number of people seeking employment is increasing. This has resulted in the high demand for electricity across the globe. Moreover, the growing adoption of electric vehicles in response to the increasing fuel prices, vehicle pollution, and the overall improvement in sustainability is also accelerating the demand for electricity as these vehicles may be charged using power generated at home or at the workplace.Finally, as societal concerns regarding the environmental implications of the activities of power providers grow, the focus on sustainability is increasing. In this context, distributed power generation can help minimise greenhouse gas emissions and air pollution harmful to human health.

Government Support for Distributed Power Generation

Government support for distributed power generation is another major driver of the growth of the market. Governments around the world are providing a variety of incentives to businesses and consumers to adopt distributed power generation, including tax breaks, rebates, and feed-in tariffs. These incentives are making distributed power generation more affordable and attractive and are expected to continue to drive growth in the market in the coming years. In addition to government support, there are a number of other factors that are driving the growth of the distributed power generation market. These include The increasing availability of financing for distributed power generation projects There is a growing number of banks and other financial institutions that are offering financing for distributed power generation projects. This is making it easier for businesses and consumers to finance the upfront cost of distributed power generation systems. The development of new technologies that make distributed power generation more efficient and reliable There are a number of new technologies that are being developed that make distributed power generation more efficient and reliable. These technologies include new types of solar panels, wind turbines, and energy storage systems.

Increasing Demand for Microgrids

One of the major drivers of the distributed power generation market is the growing demand for microgrids. Microgrids are small, self-contained electrical grids that can power a community or campus. They can be used to enhance the reliability and resilience of the electric grid, and they can also be used to integrate renewable energy sources into the grid. There are a number of reasons why the demand for microgrids is increasing The increasing frequency and severity of power outages and power outages are increasing around the world.There are a number of reasons for this, including extreme weather and cyber-attacks. Microgrids can provide backup power during outages, and they can help businesses and communities keep running. The growing adoption of renewable energy As more and more renewable energy is adopted, the need for microgrids is increasing. Renewable energy sources, like solar and wind power, are intermittent, and they can vary from place to place depending on the weather.Microgrids can help smooth out the variability of renewable energy sources, and can help make sure that there is always enough power to meet demand. The increasing focus on sustainability There is an increasing focus on sustainability around the world, and this is increasing the adoption of microgrids. Microgrids can reduce greenhouse gas emissions and improve air quality.

Distributed Power Generation Market Segment Insights

Distributed Power Generation Market Fuel Type Insights

The Distributed Power Generation Market is segmented by fuel type into gas, diesel, coal, renewables (solar, wind, biomass), and nuclear. The gas segment is expected to dominate the market in 2023, accounting for a revenue share of 36.8%. The growth of the gas segment can be attributed to the increasing demand for natural gas as a cleaner and more efficient fuel source. The diesel segment is expected to hold the second-largest revenue share in 2023 due to its wide usage in remote areas and as a backup power source. The coal segment is expected to decline in the coming years due to environmental concerns and the increasing adoption of renewable energy sources.The renewables segment is expected to grow significantly in the coming years, driven by the increasing adoption of solar and wind energy. The nuclear segment is expected to remain relatively stable in the coming years due to safety concerns and the high cost of building and operating nuclear power plants.

Source Primary Research, Secondary Research, MRFR Database and Analyst Review

Distributed Power Generation Market Generation Capacity Insights

The Distributed Power Generation Market is divided by generation capacity into less than 1 MW, 1-5 MW, 5-10 MW, 10-50 MW, and over 50 MW segments. In 2023, the 1-5 MW segment was the leading area, comprising over 35% of the market’s global revenue. This inclusion was driven by the rising preference for 1-5 MW distributed power generation systems across multiple commercial and industrial applications. These systems are employed due to their cost efficiency, as well as the ability to meet the specific power requirements across various industries.Over 50 MW is likely to exhibit the fastest growth in the Distributed Power Generation Market for the next years as distributed power generation becomes more popular across multiple developing and third-world countries that require large-scale projects. Growing efforts by the local governments in these countries to facilitate these developments and make them more viable will also support this area. Overall, the continued adoption of energy generation systems across most industries will bring sizeable benefits to the market.

Distributed Power Generation Market Application Insights

The Distributed Power Generation Market is segmented based on application into residential, commercial, industrial, and utilities. Among these, the industrial segment is anticipated to hold the largest market share during the forecast period. The growth of this segment can be attributed to the increasing demand for reliable and efficient power supply in industrial facilities. The commercial segment is also expected to witness significant growth due to the rising construction of commercial buildings, such as offices, shopping malls, and hotels.The residential segment is likely to grow steadily, driven by the increasing adoption of distributed power generation systems in homes to reduce energy costs and improve reliability. The utilities segment is expected to contribute a significant share of the overall market, primarily due to the increasing investments in renewable energy projects by utility companies.

Distributed Power Generation Market End-User Insights

The Distributed Power Generation Market segmentation by End-User into 'Electricity Grid' and 'Off-Grid Applications' offers crucial insights into the market dynamics. The 'Electricity Grid' segment is expected to witness significant growth in the coming years, driven by factors such as increasing demand for reliable and efficient power supply coupled with government initiatives promoting renewable energy integration. In 2023, the 'Electricity Grid' segment is projected to account for a substantial share of the Distributed Power Generation Market revenue, estimated to be around 65% of the total market.On the other hand, the 'Off-Grid Applications' segment is also experiencing steady growth, primarily driven by the rising demand for power in remote areas and regions with limited grid access. This segment is expected to grow at a CAGR of over 12% during the forecast period, owing to the increasing adoption of distributed power generation solutions in rural electrification and industrial applications. As a result, the 'Off-Grid Applications' segment is expected to contribute significantly to the overall market growth.

Distributed Power Generation Market Regional Insights

The Distributed Power Generation Market is segmented into North America, Europe, APAC, South America, and MEA. The North American region is expected to dominate the market, accounting for a share of around 35% in 2023. The growth of the market in this region is attributed to the increasing demand for distributed power generation systems from commercial and industrial sectors. The European region is expected to witness a significant growth rate during the forecast period, owing to the growing adoption of renewable energy sources and stringent environmental regulations.The APAC region is expected to be the fastest-growing region, with a CAGR of over 18% during the forecast period. This growth is attributed to the increasing urbanization and industrialization in countries such as China and India. The South American and MEA regions are expected to witness a moderate growth rate during the forecast period.

Source Primary Research, Secondary Research, MRFR Database and Analyst Review

Distributed Power Generation Market Key Players And Competitive Insights

Leading manufacturers in the Distributed Power Generation Market are continuously engaging in developing and launching new products in order to satisfy the demand of customers, as well as investing in research and development to enhance the efficiency and performance of their products. Companies leading the Distributed Power Generation Market on the regional and global level are inclined towards making their presence more dynamic from a global standpoint. The distributed Power Generation Market is driven by numerous growth-inducing factors, such as the rising demand for electricity due to an increase in the world’s population and growing industrialization, rising costs and depleting resources of fossil fuels and rising environmental awareness. Enhanced focus of manufacturers towards market opportunities in various regions of the world is set to drive competitors of the Distributed Power Generation Market to compete on both price and quality factors.The leading company in the Distributed Power Generation Market is Caterpillar. Caterpillar is a global distributor of construction and mining equipment, industrial gas turbines, diesel and natural gas engines and diesel-electric locomotives. Caterpillar offers reciprocating engines, microturbines and fuel cells as part of its distributed power generation products. It is investing in research and development in order to enhance the efficiency and performance of its products. Cummins is a competitor company in the Distributed Power Generation Market. It is a manufacturer of diesel and natural gas engines, generators and power systems. Cummins offers reciprocating engines, microturbines and fuel cells as part of its distributed power generation products. It is also focusing on enhancing the efficiency and performance of its products through product research and development.

Key Companies in the Distributed Power Generation Market Include

• Wärtsilä


• Cummins


• Siemens


• ABB


• Wood Group


• Caterpillar


• Bloom Energy


• RollsRoyce


• Enphase Energy


• SMA Solar Technology


• Ingeteam


• Honeywell


• General Electric


• Schneider Electric


• SolarEdge Technologies

Distributed Power Generation Market Industry Developments

The Distributed Power Generation Market is projected to witness substantial growth in the coming years. In 2023, the market was valued at USD 182.68 billion and is anticipated to reach USD 657.3 billion by 2032, exhibiting a CAGR of 15.29% during the forecast period. This growth is attributed to factors such as increasing demand for electricity, growing environmental concerns, and government initiatives promoting renewable energy sources.Recent developments in the market include partnerships and acquisitions, product launches, and technological advancements. For instance, in 2023, Siemens Energy acquired a majority stake in Greenbyte, a provider of AI-powered analytics and optimization solutions for renewable energy assets. Such developments indicate the increasing consolidation and innovation within the industry.

Distributed Power Generation Market Segmentation Insights

• Distributed Power Generation Market Fuel Type Outlook


• Gas


• Diesel


• Coal


• Renewables (Solar, Wind, Biomass)


• Nuclear

• Distributed Power Generation Market Generation Capacity Outlook


• Less than 1 MW


• 1-5 MW


• 5-10 MW


• 10-50 MW


• Over 50 MW

• Distributed Power Generation Market Application Outlook


• Residential


• Commercial


• Industrial


• Utilities

• Distributed Power Generation Market End-User Outlook


• Electricity Grid


• Off-Grid Applications

• Distributed Power Generation Market Regional Outlook


• North America


• Europe


• South America


• Asia Pacific


• Middle East and Africa