Middle East

A complex and competitive market

October 2023

For many OEMs of generator sets, the Middle East was one of the first major export markets.

Today it's crowded, competitive and evolving. But there are still opportunities.

The Middle East is really split into two very different types of markets, each with its own specific needs and drivers.

Around three quarters of the regional opportunity is accounted for by "low hours standby" markets, where typically diesel generator sets are installed for light standby, similar to Europe or North America. Some of these countries have among the world's highest levels of electric power generated per head of population.

Although the risk of outages in these countries is very low, often there is a regulatory requirement for a source of standby power in public buildings, including shopping malls and leisure facilities.

In the remaining quarter of the market, diesel generator sets typically operate for 1,000 - 2,000 hours a year, three to five hours a day, and often for much longer, particularly in Iraq and Lebanon.

The Middle East is effectively two different types of market, each with its own needs.

Electricity Generated by Utilities per Head of Population

(kWh, 2021)

The Gulf states have some of the world's highest electricity generated per head of population

Low Hours Standby Markets

Türkiye, UAE, Saudi Arabia, Israel, Qatar, Kuwait, Oman, Bahrain

In these countries, most diesel generator sets operate for much less than 500 hours a year and those operating for longer hours are often rental units or operating at construction sites.

The electric utility sector can also be significant: grid operators commonly operate substantial fleets of diesel generator sets to provide quick-response temporary power in case of grid failure. If the grid suffers an outage in 50°C heat, these can quite literally be lifesavers.

Reflecting the tough environment in which diesel generator sets can operate, typical specifications, even for standby applications, call for a prime rating with 10% overload.

Annual Usage of Diesel Generator Sets

(Low Hours Standby Countries)

Source: Genstat+ from Parkinson Associates

High Hours Standby Markets

Iraq, Pakistan, Lebanon, Yemen, Afghanistan, Jordan

The common denominator across all of these markets is demand for electricity far exceeding supply, with regular outages, often during the extreme heat of summer, when demand rises and extreme heat reduces the efficiency of grid transmission and distribution systems. As a result, generator sets are a near necessity and are worked hard.

In Iraq, one of the region's top five markets, almost 80% of businesses own or have access to a generator set, with usage levels of between 4,000 - 5,000 hours a year.

Annual Usage of Diesel Generator Sets

(High Hours Standby Countries)

Source: Genstat+ from Parkinson Associates

For grid supply, Lebanon is probably one of the most challenged countries in the region: the electric utility EDL has almost collapsed, able to supply a typical 13 hours a day in 2019 but dropping to only two hours a day in 2023. Most individuals and businesses have taken matters into their own hands, either acquiring a generator set or buying electricity from one of the many private generator subscription companies.

Beirut, Lebanon: 90% of businesses either own or have access to a generator set

Market Supply

Fifty years ago, the Middle East was among the first major export markets for many of today's premium US and European players in the diesel generator set industry. Today, all of them have a strong presence in the region, with well-established distribution networks and brands that are well known. Türkiye has well-established OEMs which have a strengthening presence both in the Middle East and worldwide.

Over the last 10 - 15 years, local OEMs, usually based in Lebanon or the Gulf region, have gained a stronger presence and, particularly below 1,000 kVA, a volatile and declining market has produced aggressive price competition.

Lebanese OEMs in particular have seen strong growth and the UAE’s key position as a trading hub and the presence of Free Zones have encouraged many new regional OEMs to locate production and distribution facilities there. Diesel generator sets produced in both Lebanon and the UAE are commonly seen in North Africa and beyond.

However, above around 1,500 kVA, premium US and European imports still dominate and a US or European manufacturing origin is often a bid requirement for consultants and government buyers.

Middle East Opportunity by OEM Type (2022)

Source: Genstat+ from Parkinson Associates

Major Markets

In 2022, the Middle East market for diesel generator sets was worth around $1.1 billion, based on ex-works product value to an OEM, and almost 80% of the total opportunity was focused on the top five markets:

Saudi Arabia
United Arab Emirates
Türkiye
Iraq
Israel

2022 Middle East Diesel Generator Set Opportunity by Top Markets (US$ m)

Source: Genstat from Parkinson Associates. Values based on OEM ex-works.

The Future

Co-existing with Emerging Power Generation Technology

Across the Middle East, over the last 3 - 5 years there has been considerable interest in renewable generation, especially solar PV systems, as a practical and economic solution for energy needs.

Growth in solar has surged since 2020, spreading across rooftops of houses, apartment buildings, commercial premises and offices as availability has increased and payback times have decreased.

The challenge for many large businesses and organizations in the commercial, banking, retail, healthcare and education sectors is that they lack space to fit enough panels and energy storage to provide for their needs. In comparison, a diesel generator set and its fuel tank occupy a very compact space.

Where solar is used in commercial applications, most often it's to reduce, but not eliminate reliance on generator sets.

Solar PV systems are gaining popularity in the Middle East

Middle East Industry Forecast

Although the Middle East market has grown post-Covid, over the longer term and certainly over the last decade, the market trend has been gradual decline. Over the next 5 to 10 years, at a regional level, the overall market is likely to be flat with very slight growth at best.

Low Hours Standby Countries

In low hours standby countries, expect to see generator sets continue playing a key role as standby power for large buildings and commercial facilities, also featuring in rental fleets which play a major role in the construction sector. However, in these countries, diesel generator sets are almost certainly past their market peak, seen 10 - 12 years ago.

Expect to see more experimentation with solar and energy storage by some customers to reduce, though not entirely eliminate the need for diesel generator sets. This will make a dent in the diesel generator set market and in low hours standby countries, we foresee a slight decline in the diesel generator set market to 2028, increasing to 2033.

Middle East Diesel Generator Set Opportunity > 7.5 kVA (US$ m)

Source: Genstat from Parkinson Associates. Values based on OEM ex-works.

Grid transmission lines in Iraq

High Hours Standby Countries

These countries are similar to many in Africa, where diesel generator sets fill a large gap in supply from the grid. Many of these countries are facing:

Substantial increase in demand for power.
Urgent need of investment in utility generation, transmission and distribution.

They are also vulnerable to climate change with heatwaves and droughts straining power networks.

Utilities will continue to explore renewable generation but to set the foundations for progress, for many of them reform, restructuring and investment in transmission and distribution are needed first. And all of this will take time.

In these countries, businesses and individuals will continue to take matters into their own hands and generate their own power. Solar is attractive, but power outages are for so long and so regular that there are challenges with generating enough power and storing it.

For the foreseeable future, diesel generator sets will help to meet the growing need for power. Expect to see market growth over the next 5 - 10 years.

Insights on Opportunity for Producers of Diesel Generator Sets

To find out more about this study, contact us at at enquiries@parkinsonassociates.com

Parkinson Associates publish an opportunity database, Genstat, available quarterly and annually, for diesel generator sets, split by 12 power bands for every country. Click here to find out more.

To find out more about our research in the diesel generator set industry, click here

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