The distributed generation market refers to smaller-scale power generation technologies that produce electricity at or near the end user. Distributed generation technologies include solar PV systems, wind turbines, reciprocating engines and fuel cells. These technologies help distribute electricity production to consumers and allow them to generate their own power onsite. Distributed generation offers several advantages such as reduced transmission losses, increased energy security and fuel diversification. Rising energy consumption globally combined with pressing needs to reduce carbon emissions is driving significant demand for distributed renewable energy sources.



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 2024 to 2031.



Key Takeaways

Key players operating in the distributed generation market are Siemens AG, General Electric, 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.). Some of these players are focusing on strategies like partnerships, new product development and geographical expansion to cement their position in the market.



The growing demand for uninterrupted and reliable power supply across commercial, industrial and residential sectors is driving demand for distributed energy resources. Distributed generation can help meet this demand by complementing traditional centralized grid infrastructure. rapid urbanization and industrialization especially in developing nations is expected to significantly boost demand.



Technological advancements are also supporting adoption of distributed generation systems. Advancements in renewable energy technologies like solar PV modules, wind turbines and fuel cells are making distributed energy more efficient and affordable. The development of smart inverters, hybrid systems and energy storage technologies is further enhancing the viability of distributed generation models.



Market Trends and Opportunities

Increasing investments in microgrids: Several companies and governments are focusing on developing decentralized microgrid projects powered by distributed energy resources. This is expected to be a key opportunity and trend in the distributed generation market.



Advancements in battery storage: Improvements in lithium-ion and other battery technologies are supporting increased integration of intermittent renewable sources like solar and wind with distributed generation. This is expected to significantly boost the business case for distributed energy adoption.



Impact of COVID-19 on Distributed Generation Market



The COVID-19 pandemic has impacted the growth of distributed generation market. During the onset of pandemic, manufacturing operations were halted and supply chains were disrupted globally. This led to decline in new installations of distributed generation systems. There was delay in commissioning of projects under development. Investments into renewable projects reduced significantly due to economic uncertainties arising from pandemic. The demand from commercial and industrial segments reduced substantially as facilities operated at low capacity utilization or remained shut during lockdowns.



However, post pandemic there has been renewed focus on distributed renewables as countries aim to rebuild their economies through green recovery programs. Government incentives and policies supporting distributed solar, wind, biomass and other renewable projects have increased. Falling technology costs have also boosted the appeal of distributed generation. Microgrids are expected to gain traction to improve energy resilience of communities and critical infrastructure. The demand from residential sector is rising as people invest in self-generation to reduce electricity bills and ensure power backup. By 2024, the market is projected to recover fully and rise steadily through 2031 supported by socio-economic recovery and decarbonization commitments of nations.



Europe and Asia Pacific have emerged as geographical regions where distributed generation market is most concentrated in terms of value currently. Europe dominates with majority of share due to favorable policies for renewables and presence of leading solar and wind equipment manufacturers. Countries like Germany, United Kingdom, Italy and France account for over 50% of European market. Asia Pacific led by China, India and Japan is growing at fastest pace and is poised to surpass Europe by 2024 on back of enormous renewable energy capacity additions underway in the region. Africa and Middle East regions will also witness high growth on account of increasing access to clean energy in rural and remote regions through off-grid solar projects. The Latin American market will grow steadily driven by developments in Brazil, Mexico and Chile. North America remains a significant mature market though growth will continue at moderate rate.



Asia Pacific is emerging as fastest growing region for distributed generation market driven by ongoing energy transition and climate actions across major economies like China and India. Both countries have set ambitious renewable capacity addition targets to meet growing power demand through sustainable means and are leading global investments into solar, wind, biomass and other clean energy sources especially at distributed and decentralized level. China alone accounts for over 50% of global investments into renewables currently. Other Southeast Asian nations are also supporting adoption of distributed energy through various initiatives. By 2031, Asia Pacific is forecasted to contribute over 35% of overall distributed generation market revenues, cementing its position as prized destination for clean energy companies worldwide. Rising living standards and increasing electricity access across rural regions will further complement future growth trajectory.