The distributed energy generation (DEG) systems market is highly fragmented and led by a large number of multinationals worldwide. The top five companies accounted for 38.5% of the market in 2012. Key players operating in the market are GE Energy, Siemens Energy, Caterpillar, E.ON Group, and Mitsubishi Power Systems. Players are increasingly focusing on product innovation, states a new report by Transparency Market Research (TMR). Companies are also collaborating with major organizations. A case in point would be Nokia Siemens. The company collaborated with Ballard Power Systems Inc., to develop fuel cell systems, which offers backup to mobile networks during power blackout.
The presence of existing conventional energy systems poses a threat to the DEG market. The availability of low cost high energy density batteries also poses a threat to the market. The distributed energy generation systems market is known for its brand value, with key players marking their presence strongly. The high potential of the market attracts new players but they have to meet with entry barriers such as EPA regulations and high capital investments.
Growing Concerns over Energy Consumption and Emission to Boost Demand for DEG Systems
The demand for DEG systems has increased substantially owing to factors such as unstable geopolitical conditions surrounding oil production, rising energy prices, and increasing concerns regarding energy consumption and emissions. The fluctuating oil and coal prices have increased the insecurity among energy consumers. This has subsequently caused a shift towards the generation of energy from renewable sources. Thus, the demand for DEG systems is increasing since these systems make use of different sources such as biomass, wind, and hydropower.
A shift towards green technology has also created a demand for DEG systems as they have relatively lower environmental impact. These systems not only emit negligible carbon into the environment, but also prevent the loss of energy occurring due to long transmission lines, thus appealing further to consumers.
Dependence on Climate Dissuades Firms from Investing on DEG Systems
Changes in weather conditions significantly impacts the working of DEG systems. Humidity causes corrosion whereas hailstorms and cyclones damage these systems. This reduces the efficacy of DEG systems and acts as a challenge. “The high installation cost of DEG systems is another factor which is dissuading firms from investing in these systems”, states a TMR analyst. Moreover, if the plant size is not accurately determined, the heat generated may not be effectively utilized, rendering the system economically unviable. Maintenance cost is yet another issue with DEG systems.
Foreseeable Growth in Asia Pacific to Open Opportunities for DEG System Manufacturers
The intensified competition due to low prices offered by DEG manufacturers in Asia Pacific is another foreseeable growth of the market in the region. The availability of raw materials in low price and lower labor overheads with subsidized resources by the government are factors responsible for the low cost production of DEG systems.
In recent times, there has been a high demand for larger homes and subsequently, more energy services. The rising number of household appliances and equipment is increasing the demand for electricity, which is expected to create opportunities for the DEG market. Similarly, commercial buildings such as retail stores, offices, malls, hospitals, institutions, and universities have high demand for electricity. Thus, the demand for DEG systems is likely to grow. Local governments are also encouraging the use of distributed energy generation systems with the intent to curb carbon emissions.
According to the report, the global distributed energy generation systems market was valued at US$127 bn in 2015 and is expected to rise to US$155.86 bn by 2018. By technology, the combined heat and power segment is expected to lead by 2018 and account for 43.3% of the global distributed energy generation systems market. By application, the grid connected segment led in the past and is expected to retain its leading position in the market by 2018. On the basis of end use, the commercial and industrial segment is expected to account for 72.3% of the global DEG systems market by 2018. Europe is expected to be the leading regional segment by 2018, and account for 39.03% of the market.
This information is based on the findings of a report published by Transparency Market Research titled “Distributed Energy Generation Systems Market - Global Industry Analysis, Size, Share, Growth, Trends, and Forecast 2012 - 2018.”
The global distributed energy generation systems market is segmented as follows:
- Solar photovoltaic
- Combined heat and power (CHP)
- Wind turbine
- Reciprocating engines
- Fuel cells
- End User
- Buildings and Institutions
- Commercial and Industrial
- On Grid
- Off Grid
- North America
- MEA (Middle East & Africa)
- Rest of the World (Brazil and Mexico)
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