Market Overview
| Study Period | 2020 - 2030 |
|---|---|
| Market Size (2025) | USD 277.71 Billion |
| Market Size (2030) | USD 415.08 Billion |
| Growth Rate (2025 - 2030) | 8.37% CAGR |
| Fastest Growing Market | Asia Pacific |
| Largest Market | Asia Pacific |
| Market Concentration | Medium |
Major Players
*Disclaimer: Major Players sorted in no particular order Image © Mordor Intelligence. Reuse requires attribution under CC BY 4.0. |
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Distributed Power Generation Market Analysis by Mordor Intelligence
The Distributed Power Generation Market size is estimated at USD 277.71 billion in 2025, and is expected to reach USD 415.08 billion by 2030, at a CAGR of 8.37% during the forecast period (2025-2030).
The expansion reflects a structural move from centralized supply toward local assets that combine solar, fuel-flexible engines, and digital controls. Widespread equipment cost reductions, pro-renewable regulations, and rising grid-resilience needs are the main accelerants. Asia-Pacific anchors volume and momentum, while North America leverages abundant gas, and Europe focuses on energy security. Technology competition revolves around hydrogen-ready fuel cells and integrated microgrid offerings that bundle storage, software, and services. At the same time, interconnection bottlenecks, energy-storage capital needs, and tightening emission caps shape investment risk.
Key Report Takeaways
- By Technology, solar photovoltaics led with 35% revenue share in 2024, whereas fuel cells are forecast to expand at 11.8% CAGR through 2030.
- By Power rating, the 0-100 kW band accounted for 47% of the distributed power generation market share in 2024; systems above 1,000 kW are set to advance at a 10.2% CAGR to 2030.
- By Fuel Type, non-renewable commanded a 58% share in 2024, while renewable is the fastest-growing with a 13.55% CAGR through 2030.
- By Connectivity, on-grid projects captured 65% of revenues in 2024; off-grid schemes are growing at a 10.9% CAGR as remote microgrids scale.
- By End-user, commercial and institutional facilities held 36% of demand in 2024, while telecom and data-center installations are rising at a 12.5% CAGR during the outlook period.
- By Geography, Asia-Pacific commanded a 44% share in 2024 and remains the fastest-growing region with a 11.1% CAGR through 2030.
Global Distributed Power Generation Market Trends and Insights
Drivers Impact Analysis
| Driver | (~) % Impact on CAGR Forecast | Geographic Relevance | Impact Timeline |
|---|---|---|---|
| Rapid decline in small-scale solar-PV LCOE | +2.80% | Asia-Pacific core; spill-over to MEA | Medium term (2-4 years) |
| Booming commercial & industrial behind-the-meter installations | +2.10% | Europe & North America | Short term (≤ 2 years) |
| Microgrid adoption for telecom towers | +1.90% | Africa, Middle East, island nations | Long term (≥ 4 years) |
| Natural-gas price volatility shifting demand toward biogas gensets | +1.40% | North America | Medium term (2-4 years) |
| Mandated renewable portfolio standards for municipal utilities | +1.60% | United States | Long term (≥ 4 years) |
| Hydrogen-ready fuel-cell pilots in data centers | +1.30% | Middle East, global data centers | Long term (≥ 4 years) |
| Source: Mordor Intelligence | |||
Rapid Decline in Small-Scale Solar-PV LCOE
Chinese TOPCon module prices fell to USD 0.16 per watt in 2024, driving a region-wide drop in levelized electricity costs and reshaping distributed economics.(1)Source: International Renewable Energy Agency, “Renewable Power Generation Costs in 2024,” irena.org Installation labor standardization, low-cost inverters, and concessional finance amplify the effect, positioning Asia-Pacific as the global benchmark for small-scale PV. Governments streamline permitting and grid-code rules, further shortening project cycles. The price pressure forces suppliers elsewhere to differentiate on efficiency and application-specific design.
Booming Commercial & Industrial Behind-the-Meter Installations
European firms accelerate on-site generation to hedge volatile wholesale prices and meet corporate decarbonization pledges. Record rooftop additions in Germany follow EU rules that require solar on new commercial buildings from 2026, broadening to retrofits by 2028.(2)Source: European Parliament, “Directive on Solar Energy in Buildings,” europarl.europa.eu Battery systems paired with PV allow load shifting and ancillary service income, making distributed assets a financial and environmental tool. North American businesses replicate the model, spurred by federal tax incentives and state clean-energy mandates.
Microgrid Adoption for Telecom Towers across Africa & Islands
Reliable power for mobile networks is mission-critical, yet diesel logistics inflate costs in remote areas. Solar-plus-battery microgrids now underpin multi-site rollouts, with operators such as IHS Nigeria and CrossBoundary Energy proving bankability for tower clusters. Integration of satellite backhaul and IoT monitoring reduces on-site intervention, improving uptime. Development finance institutions channel concessional capital, extending microgrid designs to adjacent communities and reinforcing energy-access goals.
Natural-Gas Price Volatility Shifting Demand toward Biogas Gensets
U.S. natural gas spot prices averaged USD 4.15 per MMBtu in Q1 2025 and remain exposed to LNG export swings.(3)Source: U.S. Energy Information Administration, “Short-Term Energy Outlook June 2025,” eia.gov Distributed operators mitigate price risk by deploying dual-fuel gensets able to switch to biogas or renewable natural gas. Long-term power-purchase contracts capture renewable energy credits, improving project returns. Data centers in constrained grids favor the approach, pairing reciprocating engines with low-carbon fuel pathways.
Restraints Impact Analysis
| Restraint | (~) % Impact on CAGR Forecast | Geographic Relevance | Impact Timeline |
|---|---|---|---|
| Distribution-network interconnection barriers | −1.8% | Emerging economies worldwide | Medium term (2-4 years) |
| Capital-intensive energy-storage pairing | −2.2% | Global | Short term (≤ 2 years) |
| Stringent NOx/PM limits on diesel gensets | −1.1% | Europe; spreading globally | Long term (≥ 4 years) |
| Complex permitting for rooftop PV in historic centers | −0.9% | Europe; select global cities | Medium term (2-4 years) |
| Source: Mordor Intelligence | |||
Distribution-Network Interconnection Barriers in Emerging Economies
Renewables waiting in global interconnection queues exceed 3,000 GW, and 80% of applications are withdrawn due to escalating costs or long studies.(4)Federal Energy Regulatory Commission, “Final Rule on Generator Interconnection Improvement,” ferc.gov Emerging grids lack modern standards and workforce capacity, so small projects face disproportionate delays. Although a “first-ready, first-served” reform is underway, progress outside advanced markets remains slow, restraining near-term deployment.
Capital-Intensive Energy-Storage Pairing for Intermittent DG
Battery system prices declined to USD 148 per kWh in 2024, yet the up-front spending still strains sub-100 kW projects. Even with Investment Tax Credit bonuses, the levelized cost of 4-hour lithium-ion storage hovers around USD 124 per MWh. Long-duration thermal or compressed-air designs trend lower for 8-hour duty cycles but demand site-specific engineering. Until capital markets accept merchant-storage risk at scale, many distributed schemes limit renewable penetration to avoid oversizing batteries.
Segment Analysis
By Technology: Fuel Cells Move from Pilot to Portfolio
The solar segment commanded 35% of 2024 revenues, anchored by residential and light-commercial rooftops that capitalize on simplified mounting and inverter kits. Solar’s share of the distributed power generation market size for 2024 stood at USD 88.9 billion. Though smaller today, fuel cells deliver the highest 11.8% CAGR, led by projects at data-center campuses where operators seek diesel-free uptime. Caterpillar validated a 1.5 MW hydrogen fuel-cell backup system that met a 99.999% service-level target for a hyperscale facility in Wyoming. Wind micro-turbines and reciprocating gas engines round out the mix, serving niche sites that value either land-use efficiency or combined heat-and-power capability. Competitive dynamics now center on integrating storage and power electronics rather than standalone generation hardware.
Note: Segment shares of all individual segments available upon report purchase
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By Power Rating: Scale Economics at Both Ends
Household and small-business systems in the 0-100 kW bracket captured 47% of 2024 demand, reflecting kit-based procurement and turnkey installation models. The segment accounted for the largest distributed power generation market share in unit terms. At the other extreme, Above 1,000 kW solutions will record a 10.2% CAGR through 2030 as industrial campuses opt for on-site generation to bypass grid constraints. Vendors differentiate through digital twins and O&M analytics that fine-tune dispatch against utility tariffs. Mid-range 101-1,000 kW packages serve hospitals and university estates, balancing standardized skids with limited custom engineering.
By Fuel Type: Renewables to Drive the Market
Non-renewables supplied 58% of output in 2024; however, renewables are projected to drive the demand by 13.55% CAGR through 2030 and capture a share of some non-renewable fuel types. Solar and wind still dominate the renewable block, but biogas engines and biomass CHP plants broaden the mix in agri-industrial zones. Natural gas remains the preferred bridging fuel where pipeline access exists, thanks to quick-start capability and lower NOx. Hybrid arrays blend PV or wind with gas engines, steering toward emissions compliance while securing resilience.
Note: Segment shares of all individual segments available upon report purchase
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By Connectivity: Grid-Interactive Assets Dominate
On-grid assets delivered 65% of 2024 revenue, leveraging net-metering, feed-in premiums, and ancillary-service payments. These systems now feature bidirectional inverters and software that monetize frequency and voltage support, extending revenue beyond simple energy exports. Off-grid capacity, growing 10.9% annually, remains essential for island communities and remote mines. Residential “microgrid-in-a-box” solutions that combine solar, a 10-15 kWh battery, and vehicle-to-home EV charging emerged in 2025, offering up to 60% bill savings while enabling grid-service participation when connected.
By End-User: Digital Infrastructure Pulls Ahead
Commercial and institutional users held a 36% share in 2024. That bracket includes campuses, healthcare, and municipal buildings, all of which prize cost certainty and resiliency. Datacenter and telecom facilities will post a 12.5% CAGR, rising from modest baselines as AI workloads multiply power density. Vantage Data Centers’ 1 GW microgrid deal with VoltaGrid underscores the trend toward multi-gigawatt-hour gas-plus-battery platforms that sidestep grid delays. Residential adoption benefits from financing innovations such as subscription-based energy-as-a-service that bundles equipment, maintenance, and software in a single bill.
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Geography Analysis
Asia-Pacific dominated the distributed power generation market with a 44% revenue share in 2024 and continues to post the fastest 11.1% CAGR to 2030. Regional leadership rests on mass-manufactured PV modules, extensive policy incentives, and surging electricity demand. China’s rooftop program alone realized more than 50 GW of new capacity in 2024, while India’s distribution utilities aggregate rooftop installations into virtual power plants. Several Southeast Asian governments are formalizing net-billing regimes, unlocking behind-the-meter investment.
North America ranks second in absolute value and combines an abundant natural gas supply with favorable tax credits. American Municipal Power’s 20 MW behind-the-meter program in Michigan typifies how municipal utilities leverage local generation for peak shaving. Thirty state-level renewable portfolio standards catalyze solar-plus-storage at schools and municipal facilities. Data-center clusters in Virginia, Texas, and Alberta drive early adoption of dual-fuel or hydrogen-ready engines, further lifting the region’s demand profile.
Europe’s distributed strategy aligns with energy-security imperatives following geopolitical gas disruptions. The EU Solar Standard obliges new commercial buildings to integrate PV from 2026, pushing developers toward distributed layouts. France mandates 50% solar coverage on parking lots over 1 500 m², with fines up to EUR 40 000 for non-compliance, accelerating commercial-real-estate retrofits. Germany simplified the registration of “balcony power plants” up to 800 W, broadening household participation. Heritage-site constraints and lengthy city-level permitting temper growth in historic urban cores.
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Competitive Landscape
The distributed power generation market features a balanced mix of diversified industrial OEMs and specialized technology vendors. Caterpillar, Cummins, and Siemens draw on global service networks and multi-fuel engine portfolios, ensuring strong incumbency in larger power classes. Generac’s residential leadership is reinforced by its acquisition of MOTORTECH, adding advanced gaseous-engine controls that enhance product breadth.
Strategic consolidation is accelerating. Deutz purchased Blue Star Power Systems to secure a North American generator share, targeting USD 100 million in incremental revenue. Siemens partnered with EnergyHub to integrate distributed-energy-resource management software, positioning the group for grid-orchestrated value streams. OEMs increasingly bundle storage, controls, and long-term service agreements, reflecting buyer preference for turnkey resilience solutions.
White-space innovation centers on hydrogen fuel cells and island-able microgrids. Ballard Power Systems signed a supply deal with Sierra Northern Railway to repower diesel locomotives, highlighting technology spillovers into heavy transport. Fuel-cell suppliers court data-center operators that require zero-emission backup yet insist on five-nine reliability. Market participants able to orchestrate generation, storage, and load via cloud-based platforms are best positioned to capture premium margins.
Distributed Power Generation Industry Leaders
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Ansaldo Energia SpA
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Ballard Power Systems Inc.
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Caterpillar Inc.
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Siemens AG
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General Electric Co.
- *Disclaimer: Major Players sorted in no particular order
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Recent Industry Developments
- June 2025: Ballard Power Systems agreed to supply 1.5 MW of fuel-cell engines to Sierra Northern Railway for hydrogen locomotive retrofits.
- May 2025: Caterpillar launched a three-year program to commercialize hydrogen-hybrid solutions on its C13D engine line, co-funded by the U.S. Department of Energy.
- April 2025: Generac finalized its acquisition of MOTORTECH, strengthening gaseous-generator controls across residential and commercial portfolios.
- March 2025: ADQ and Energy Capital Partners formed a USD 25 billion joint platform to invest in U.S. natural-gas-fired assets that support growing data-center loads.
Global Distributed Power Generation Market Report Scope
Distributed energy refers to the on-site generation and utilization of electricity. It is also termed the decentralized generation of electricity. The distributed generation sources typically include solar, wind, waste-to-energy, and combined heat and power. The market for decentralized energy generation is increasing since many countries are opting for distributed generation as a local option for producing electricity in areas that are not connected to the grid.
The distributed power generation market is segmented by technology and geography (North America, Europe, Asia-Pacific, South America, the Middle East, and Africa). By technology, the market is segmented into solar PV, diesel gensets, natural gas gensets, microgrids, and other technologies. The report covers the market size and forecasts for all the major regions. For each segment, market sizing and forecasts have been done based on revenue (USD million).
By Technology
| Solar Photovoltaic (Rooftop & Ground-Mounted ≤5 MW) |
| Wind Turbines (≤5 MW) |
| Microturbines |
| Gas Turbines (≤50 MW) |
| Fuel Cells (PEMFC, SOFC, Others) |
| Diesel Gensets |
| Natural-Gas Gensets |
| Hydrokinetic and Small Hydro (≤10 MW) |
| Others (Biomass CHP, Stirling Engines) |
By Power Rating
| 0 to 100 kW |
| 101 to 1,000 kW |
| Above 1,000 kW |
By Fuel Type
| Renewable |
| Non-Renewable |
By Connectivity
| On-Grid |
| Off-Grid and Remote |
By End-user
| Residential |
| Commercial and Institutional |
| Industrial and Manufacturing |
| Utility and IPP Peaking/Reserve |
| Telecom and Data Centers |
By Geography
| North America | United States |
| Canada | |
| Mexico | |
| Europe | United Kingdom |
| Germany | |
| France | |
| Spain | |
| Nordic Countries | |
| Russia | |
| Rest of Europe | |
| Asia-Pacific | China |
| India | |
| Japan | |
| South Korea | |
| Malaysia | |
| Thailand | |
| Indonesia | |
| Vietnam | |
| Australia | |
| Rest of Asia-Pacific | |
| South America | Brazil |
| Argentina | |
| Colombia | |
| Rest of South America | |
| Middle East and Africa | United Arab Emirates |
| Saudi Arabia | |
| South Africa | |
| Egypt | |
| Rest of Middle East and Africa |
| By Technology | Solar Photovoltaic (Rooftop & Ground-Mounted ≤5 MW) | |
| Wind Turbines (≤5 MW) | ||
| Microturbines | ||
| Gas Turbines (≤50 MW) | ||
| Fuel Cells (PEMFC, SOFC, Others) | ||
| Diesel Gensets | ||
| Natural-Gas Gensets | ||
| Hydrokinetic and Small Hydro (≤10 MW) | ||
| Others (Biomass CHP, Stirling Engines) | ||
| By Power Rating | 0 to 100 kW | |
| 101 to 1,000 kW | ||
| Above 1,000 kW | ||
| By Fuel Type | Renewable | |
| Non-Renewable | ||
| By Connectivity | On-Grid | |
| Off-Grid and Remote | ||
| By End-user | Residential | |
| Commercial and Institutional | ||
| Industrial and Manufacturing | ||
| Utility and IPP Peaking/Reserve | ||
| Telecom and Data Centers | ||
| By Geography | North America | United States |
| Canada | ||
| Mexico | ||
| Europe | United Kingdom | |
| Germany | ||
| France | ||
| Spain | ||
| Nordic Countries | ||
| Russia | ||
| Rest of Europe | ||
| Asia-Pacific | China | |
| India | ||
| Japan | ||
| South Korea | ||
| Malaysia | ||
| Thailand | ||
| Indonesia | ||
| Vietnam | ||
| Australia | ||
| Rest of Asia-Pacific | ||
| South America | Brazil | |
| Argentina | ||
| Colombia | ||
| Rest of South America | ||
| Middle East and Africa | United Arab Emirates | |
| Saudi Arabia | ||
| South Africa | ||
| Egypt | ||
| Rest of Middle East and Africa | ||
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Key Questions Answered in the Report
What is the current distributed power generation market size?
The distributed power generation market size stands at USD 277.71 billion in 2025 and is on track to reach USD 415.08 billion by 2030.
Which region leads the distributed power generation market?
Asia-Pacific holds the lead with a 44% revenue share in 2024, driven by low-cost solar manufacturing and rapid electricity-demand growth.
What technology segment is growing fastest?
Fuel cells post the highest 11.8% CAGR to 2030, propelled by data-center and hydrogen-economy investments.
Why are data centers adopting distributed generation?
Data-center operators deploy on-site microgrids to ensure n-five-nine reliability, hedge volatile power prices, and achieve decarbonization pledges.
How do interconnection delays affect the market?
A global queue of 3,000 GW and rising study costs push many distributed projects to adopt hybrid or off-grid configurations while regulators work on queue-reform measures.
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