Growing Demand for Reliable Power Supply Drives Distributed Generation Market Growth

 

Distributed generation refers to small-scale power generation technology used to produce electricity close to the location where it is used. Distributed generation allows generating and distributing electricity closer to customers and the electrical demand centre. Distributed generation systems provide reliable, sustainable and cost-effective power supply to residential, commercial and industrial customers. They are commonly used in remote areas with unreliable grid connectivity.

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, as highlighted in a new report published by Coherent Market Insights.

Market key trends

Increasing investment in renewable energy is considered as one of the key trends fueling the growth of the distributed generation market. Rapid industrialization and urbanization have increased energy demand across developing regions. However, ensuring power supply through conventional centralized power grids require huge capital investments and time for infrastructure development. This has prompted governments and private organizations to invest heavily in developing small-scale renewable energy systems suitable for distributed generation. Solar home systems, mini/micro hydro power plants and biomass gasifiers are some of the distributed renewable technologies gaining significant traction in recent years. Distributed renewable systems are more economical and help address the issues of energy access in remote communities. The declining cost of solar PV and energy storage technologies is also encouraging more commercial and industrial establishments to adopt distributed renewable systems to meet their baseload and backup power needs.

Segment Analysis

The distributed generation market comprises renewable and non-renewable distributed generation. Among these, the renewable distributed generation segment dominates and accounts for over 60% share of the total market. Renewable sources such as solar photovoltaic (PV), wind and biomass are increasingly becoming viable options as distributed energy resources due to supportive government policies and declining solar PV module prices. The solar PV segment is expected to dominate the distributed generation market during the forecast period, growing at a CAGR of over 15%, owing to widespread adoption of rooftop solar panels across residential and commercial sectors.

Key Takeaways

The global distributed generation market is expected to witness high growth over the forecast period owing to supportive government policies and initiatives promoting distributed renewable energy resources and declining costs of solar panels and batteries. 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.

Regional analysis: North America dominates the global distributed generation market and is projected to grow at a CAGR of over 10% during the forecast period. The growth can be attributed to stable regulatory environment and financial incentives for distributed energy projects in the US. Asia Pacific is expected to emerge as the fastest growing region, expanding at a CAGR of around 17% owing to increasing renewable energy-based mini-grid and off-grid electrification projects across rural areas of China, India and Southeast Asian nations.

Key players: Key players operating in the distributed generation market are General Electric, Siemens, Tesla, BYD, Panasonic, Ballard Power Systems, Plug Power etc. General Electric is one of the leading players and offers a wide range of distributed energy solutions including solar PV panels, small wind turbines, fuel cells and energy storage batteries. Tesla is a pioneer in stationary energy storage solutions and its Powerwall and Megapack products have gained widespread adoption across residential and utility-scale installations globally.

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