Market Trends of Africa Diesel Generator Industry
Backup Generators to Dominate the Market
- Several African countries, especially Western Africa, heavily rely on small-capacity generators to meet daily electricity usage. This is primarily due to the demand for an uninterrupted and reliable power supply, which the utility grid cannot provide.
- The transmission network and reliability of the utility grid may directly correlate with the amount of power generated by the backup generators in a region. For Example, North Africa, which has higher access to the grid, has a lower use of backup generators than the Sub-Saharan countries.
- In September 2022, Engie Energy signed a USD 60 million financing agreement with CrossBoundary Energy Access (CBEA) to deploy solar-powered mini-grids in Nigeria.
- Many different industries, like the construction industry, require a reliable source of electricity. Such industries make up a large user base for backup generators; with the growth of such sectors in the region, the demand for backup generators is expected to increase further in the forecast period.
- Therefore, diesel backup generators are expected to continue dominating the market due to increased demand for an uninterrupted and reliable energy source in the region.
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Nigeria to Dominate the Market
- Nigeria is among the highest consumer of energy generated by backup generators in the region. It is due to several factors, including easy availability of fossil fuel, poor governmental policies leading to low transmission capabilities, and an increasing population leading to an increase in electricity demand. All these factors push consumers to produce their electricity using small backup generators, aiding the market's growth.
- According to the IRENA report released in 2022, frequent power shortages made many households and businesses resort to self-power generation, using diesel and gasoline generator sets as a backup. The report revealed that 84% of urban households in Nigeria use backup power supply systems such as fossil diesel/ gasoline generators. In comparison, 86% of the companies in Nigeria own or share a generator.
- Nigeria has the potential to generate 18,000 MW of electric power from existing plants. On most days, however, it can only dispatch around 8,000 MW, which is insufficient for a country of over 211 million people. With a population of about 216 million in 2022, the government has a power installed capacity of around 16.38 GW from its existing plants. The power generated from the existing plants must be increased to cater to all the urban and rural populations.
- Additionally, DGs in the residential and commercial segments are inefficient and expensive - costing, on average, USD 0.40/kWh or more. Additionally, since the start of the Russia-Ukraine conflict, diesel prices in Nigeria, which are not subsidized like petrol, tripled to nearly NGN 800/liter in 2022.
- The country is a large user of small-scale diesel generators, which rely heavily on diesel and gasoline as the primary fuel. Problems with electricity transmission are a significant driver of the market, as, in 2021, only 65.5 % of the population had direct access to the utility grid.
- However, diesel generators contribute emissions of delicate particulate matter, which includes black carbon, to the environment, which is a predisposing factor for cardiopulmonary and respiratory diseases leading to increased hospital visits and risk of premature death. This factor is expected to hinder the market.
- Nigeria is expected to dominate the market due to its large population and low transmission capabilities, increasing demand for diesel generators.
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