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Cover Story | February 2011

Generating Success

There is a 17 per cent gap between gensets demand and supply. With a market of about two lakh every year, fuel prices are not a deterrent to the growth of diesel gensets. As infrastructure projects pick up speed and the rental market burgeons, it's time for the organised sector to get its act together, says Daya Kingston.

Power backup is a crucial requirement for any kind of economy, whether developing or developed. While developed nations do not face a major demand-supply gap in electricity, they still have to contend with the issue of ensuring stability of systems. This is important as even minor interruptions in power supply can result in heavy losses. Generators usually include a fuel tank, an engine, a speed regulator, the generator itself and a voltage regulator. They come in different voltages to suit different applications and range widely in the amount of power they can produce and in the amount of fuel they consume. They can be quite noisy, but silent gensets too are available.

The Indian market

India is now the 5th largest power market in the world. The per capita electricity consumption in the country is around 665 units which is envisaged to increase to 1,000 units by 2011-12. There is a growing gap between demand and supply of about 17 per cent. The demand for power is typically driven by sectors such as telecom, commercial construction, IT, retail, Information Technology Enabled Services (ITES), etc.

The domestic genset market (inclusive of the telecom sector) is about two lakh per annum (pa), in the range from 10-2,000 kVA. The generator industry in India has over 200 players. Indian manufacturers are competent enough to produce AC generators from the range of 0.5-25,000 kVA and diesel generators ranging from 7.5 kVA-2,200 kVA.

As per a Federation of Indian Chambers of Commerce and Industry (FICCI) report, AC generators produced in India are at par with their global counterparts.

Speaking of the gensets market, Pankaj Katiyar, DGM Marketing, Mahindra and Mahindra, said, “We have a 25 per cent market share and have been here for 50 years. We also export to Africa, USA, Bangladesh and Malaysia. Demand for generators is there in every segment and more so in the infrastructure segment as new buildings, homes and hospitals are coming up. In India, gas-powered gensets are at a nascent stage as it will call for the setting up of infrastructure like gaslines. At the moment, solar-powered gensets are quite expensive and will take time to come into the market. The future of the industry for the next four to five years is good.”

Speaking of the potential for gensets in India, Rahul Roy, DGM, Marketing, Cooper Corporation, said, “The power deficit in India is 17 per cent and even if the government does commercialise nuclear power in future, it will cover just six per cent of the deficit. Real estate is the top sector where demand is growing, followed by power, hospitality and telecom. The rural scenario is such that even if the government subsidises power, it’s still unviable and therefore there is a growing market for gensets especially second-hand gensets.”

Speaking of competition from Chinese products he said, “There was a flood of Chinese gensets in 2008 when there was a demand for them. But this is declining. Companies that bought them in huge quantities are facing problems as spares are not available and customers are now more cautious about what they buy.”

About the future he believes, “The next move in gensets will be from diesel to gas which is non-polluting. These are powered by CNG and LPG but lack of availability of piped gas is a deterrent to their growth. The future will be hybrid gensets which can run on diesel, gas or solar power and will reduce the dependency on diesel.”

The rental market

Infrastructure is one of the catalysts of economic growth in India and this is where generator rentals are in demand. Besides, renting generators is beneficial for short-term projects. Currently, this industry is fragmented in terms of services and offerings and is driven more by the financial aspect, rather than by technical aspects. Except for a few strong multinationals, there are very few suppliers that can be 'one-stop shop' for such services. Large investments in spares and tools inventory and return on assets are the deterrents to entry.


The growth of the generator industry is hampered by challenges from the unorganised sector comprising of companies that merely assemble them. Add to this is the fact that Chinese imports offer competition in terms of pricing. But when queried if rising diesel prices could be a deterrent to the growth of diesel gensets, Katiyar said, “Rising diesel prices have not impacted the buying of cars and it's the same way with gensets.”

The global market

The global power generator market has shown an astonishing rate of growth. It expanded from $10,695 million in 2005 to $11,473 million in 2010, and the telecom and construction sector will drive demand in these areas in the years to come. A look at past trends show that North America and Europe have been showing high growth levels in the past. However, in these markets, there is a rapidly decreasing gap between demand and supply of electricity and better connected power grids, so the prospects in these markets have come down.

Asian, African, Latin American countries and the Middle East will be the ones to watch out for in terms of growth for the power generator market. The increasing gap in demand and supply of electricity will drive demand there.

The way ahead

Prospects for the generator industry are bright. The future is likely to be solar-powered generators as this is a plentiful resource. At the moment, these are still at the developmental stage in India. Solar steam generators consist of a boiler, heliostats, heat transfer fluid and steam turbine. Heliostats are moveable parabolic mirrors that catch the sun’s heat and transfer them to a fluid chamber. This converts the fluid usually water or liquid sodium into steam. The pressure of the steam creates electricity. Solar steam generators are eco-friendly and help in keeping air clean and produce maximum electricity. However, a lot of R&D is needed to make this an economically viable alternative.

Types of Generators

They can be classified into standby, portable and commercial based on their mode of usage. Based on the element used to power them, they can be divided into diesel, gas and solar powered generators. Diesel is the most common in India and gas is at a nascent stage. Solar-powered generators are few and far between at the moment but they will be the future.

Standby generators

These large, and often permanent, units placed outside homes, offices and other utilities provide backup power. They are plugged into the main electric lines and automatically begin generating power in the event of a power cut.

Portable generators

They are ideal for construction or camping sites. They are designed for easy transport and the output is normally sufficient to run appliances such as pumps, refrigerators, lights, radios and television sets. Depending on the power requirement, the larger ones can be used to power anything from high-intensity lights to parked aircraft. While smaller generators typically use diesel as fuel, the larger ones use gasoline, diesel, natural gas or propane.

Commercial generators

They are an ideal alternate energy power source in places where power supply is intermittent or lacking.

Inverters: The Next Wave

The inverter industry in India is growing exponentially as it’s being looked at as an alternate power source for houses and smaller offices as they are noiseless and pollution-free. An estimated 1.8 MU inverters are sold annually in India, with more than 60 per cent rated below 1.5 kVA. This market is expected to grow steadily at a healthy rate of 10-15 per cent.

Types of inverters

An inverter is a device that converts direct current (DC) to alternating current (AC). They also supply AC power from DC sources such as solar panels or batteries. Based on the types of wave output, they can be classified into square wave inverters, quasi square wave or modified square wave inverters and pure sine wave inverters. Each of these operate on different wave signals with varying qualities of power output. Square wave inverters were the first inverters invented and are now obsolete as they result in uneven power delivery. Modified square wave (modified sine wave) inverters deliver power that is consistent and efficient to run most devices. Pure sine wave inverters are most expensive but also deliver the most consistent wave output which is critical to sensitive equipment like certain medical equipment.

Industry overview

This industry is fragmented with a few large players like Siemens, Wartsila India, Su-Kam Power Systems, Microtek, Nexus Power Systems, Cummins Generator Technologies, BHEL, Emco, GE, Crompton Greaves, Bharat Bijlee, True Power International inverters, Convergence Power Systems and so on. The unbranded inverter industry has a power electronics content of $60 million and over 80 per cent is sourced from China and Taiwan.

Rising demand and challenges

Low cost Chinese inverters are giving manufacturers stiff competition and the result is that this is pushing manufacturers to become traders in this high volume business segment. Unless significant policy changes come about and encourage access to low-cost components for the local manufacturing industry, trading will take precedence. The increasing cost of raw materials, competition from the unorganised sector and lack of consumer awareness are other challenges.

Moving ahead

The solar inverter market is likely to be the future and the global market was $3.1 billion in 2008 and is forecast to be over $12.0 billion in 2014. In 2010, one of the largest drivers of growth was the small commercial sector in Germany of around 4 GW. However, there will be a shift this year and high growth is predicted for much larger installations in other regions such as USA, Canada and China.

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