[MARKET STUDY]

-  How much will rebuilding Gaza's power grid actually cost?

*US$50 billion and US$80 billion: The estimated cost to rebuild Gaza's power grid is projected to be between US$50 billion and US$80 billion. The United Nations estimates the total reconstruction cost at $80 billion, with significant damage to infrastructure and energy systems.  Another estimate suggests a cost of US$70 billion, highlighting the need for independent energy generation capabilities.  The World Bank has also assessed the damage, estimating costs of $18.5 billion specifically for infrastructure. These figures reflect the extensive damage and the challenges of rebuilding in the context of ongoing conflict and blockades.

-  By how much will the Middle East Market expand in the next 5 years?

*The Middle East and Africa Generator Market is expected to register a CAGR of greater than 6.25% during the forecast period. This growth is driven by the increasing deployment of gas generators across various end-user industries in the region, the rising need for power in industrial operations, and the new focus on clean energy. Saudi Ariba is expected to dominate the market during this period, with the falling cost of natural gas and the increasing usage of natural gas across the commercial and residential sectors. The new focus on the rising industrial and construction sectors with clean energy is also expected to drive the gas generator market significantly in the forecast period [Mordor Intelligence].

- What does this WIP/MEP Report show?

*With the eyes of the world focused on how instability in the Middle East could affect energy supplies and prices,   WIP and MEP staff have analysed the potential repercussions and effects of these geopolitical realignments on the energy industry. The Middle East region, crucial to the global energy market with up to 48% of the world’s oil reserves and 40% of gas, faces a new test of resilience amidst the conflict in Gaza.

 This area is fundamental not only for its production capacity but also for its role as a major energy exporter.

Although Israel and Gaza do not significantly contribute to this production, the instability generated by the conflict has the potential to indirectly affect the flow and global prices of these essential commodities. The world’s economic and energy interdependence means that any sign of turbulence in this region immediately raises concerns about the security of energy supply and global economic stability, highlighting the delicate network of connections that supports the international energy system. Following the attack by Hamas, oil prices experienced significant increases, reflecting market anxiety over possible supply disruptions. However,  for now, the markets remain stable, attributing the increase to future concerns rather than direct impacts.

ECONOMIC PROJECTIONS FOR THE MIDDLE EAST

Middle East's engine generator market is projected to reach 10M units valued at US$867M by 2035, driven by increasing demand. Turkey and Saudi Arabia currently dominate consumption and production, while Turkey leads in imports and exports. The Middle East & Africa generator market is estimated to value at US$4.7 Bn by the end of 2031, up from US$3.4 Bn estimated in 2024. Generator sales in MEA are expected to surge at a CAGR of 4.6% in the forthcoming years from 2024 to 2031, reports Persistence Market Research (http://www.persistencemarketresearch.com). The Middle East & Africa generator market is a vital segment of the global energy industry, driven by the increasing demand for uninterrupted and reliable power supply across various sectors.

    The market encompasses the sale of generators, which are devices that convert mechanical energy into electrical energy, catering to both residential and commercial needs. Key factors propelling the growth of the generator market include the rising frequency of power outages, growing industrialization, and the expanding construction sector.

   The increasing prevalence of natural disasters, and severe weather conditions has heightened the need for back-up power solutions. Technological advancements have also led to the development of more efficient and environmentally friendly generators, further boosting market demand.

  Generator sales in MEA are anticipated to experience robust growth, supported by ongoing infrastructure development and the necessity for resilient power systems in an increasingly energy-dependent world.

   The rise of hybrid power solutions combining traditional generators with renewable energy sources like solar and wind to enhance efficiency and reduce environmental impact. The growing adoption of smart grid technologies and advanced control systems in generator units is enhancing operational efficiency and enabling remote monitoring and management.

  Additionally, the increasing demand for rental generators in various sectors, including construction, events, and emergency response, is driving the expansion of rental services in the generator market in the Middle East & Africa region.

HOW IS THE GENSET MARKET DOING?

The market for generator sales, mainly fuelled by rapidly expanding urbanization and industrial activities, experienced a heightened demand for reliable power solutions, as many areas in the Middle East still grapple with inconsistent electricity supply.

   The generator market benefited significantly from infrastructural developments and construction booms, particularly in countries like Saudi Arabia, the United Arab Emirates, and Nigeria. Major events like Expo 2020 in Dubai also spurred the demand for temporary power solutions, thereby boosting generator sales.

 Both governments, and private sectors invested heavily in backup power solutions to mitigate the adverse effects of power disruptions on economic activities. The healthcare sector especially became a significant customer due to the critical need for continuous power supply in hospitals and clinics.

Key Trends and Innovations in the Middle East Market

-Development of more fuel-efficient and low-emission engines

-Government investments in power infrastructure

-Shift towards advanced generator technologies

-Growth in infrastructure projects

-Expansion of data centres

-Middle East & Africa Generator Market Growth Drivers

-Rapid Industrialisation in Middle East/North African nations.

   Industrial sectors in countries like South Africa, and the UAE are expanding rapidly. The UAE, for instance, has witnessed notable growth in its manufacturing and logistics sectors, with the manufacturing sector achieving a real GDP growth rate of 8.75% in 2022, according to the UAE Ministry of Economy.

  The Ministry of Industry and Advanced Technology (MoIAT) has launched Operation 300Bn, the UAE's most extensive plan to develop the industrial sector and boost its contribution to the national economy. The strategy aims to elevate the sector's GDP contribution from AED 133 Bn to AED 300 Bn by 2031.

    To maintain continuous operations, industries require a reliable power source, and generators are essential for providing back-up during power outages, thereby preventing costly downtimes and production losses. Large-scale industrial projects and economic initiatives, such as Egypt's Suez Canal Economic, further underscore the need for robust power solutions.

TELECOMS IN THE MIDDLE EAST - EXPANDING POTENTIAL

Telecom infrastructure heavily relies on stable electricity to ensure connectivity for businesses, governments, and individuals. However, many areas in the MEA region suffer from inadequate or unreliable grid power, making generators essential for maintaining continuous operation.

  The demand surge is evident in the rollout of 5G networks across the MEA region. Deploying 5G requires a denser network of base stations, which, in turn, necessitates a robust power back-up system. Generators serve as a reliable source of back-up power, ensuring that telecom services remain operational even during power outages or grid failures.

  Remote or off-grid locations, extreme weather conditions, and political instability in certain areas disrupt grid power supply. Consequently, telecom companies and infrastructure providers are investing heavily in generator systems to ensure the resilience of their networks.

FACTORS AFFECTING GENSET MARKET GROWTH

 * The ongoing civil war in YEMEN has significantly impacted the generator sales market in the Middle East. The conflict has led to the destruction of social and commercial infrastructure, necessitating the construction of new infrastructure such as schools and water storage facilities. This construction requires power supply, which has increased the demand for diesel generators.

  The war has also led to the destruction of the existing Yemeni electricity grid, further necessitating the availability of diesel generators for daily operations in hospitals and schools. Additionally, the war has affected the manufacturing, industrial, and tourism sectors, which in turn impacts the demand for generators in these sectors. However, the war has also led to a decline in the manufacturing, industrial, and tourism sectors, reducing the need for generators in these sectors.

*Stringent government regulations across the Middle East region pose a significant challenge for the Middle East & Africa generator sales, particularly concerning conventional fuel generators. These regulations often aim to address environmental concerns such as air pollution, and carbon emissions, which are prominent issues in the region due to heavy reliance on fossil fuels for power generation.

* For instance, countries like Saudi Arabia, and the United Arab Emirates have been implementing policies to diversify their energy mix and reduce dependence on traditional fuel sources.  Such measures include promoting renewable energy sources like solar and wind power while imposing stricter emission standards on conventional generators. These regulations impact the MEA generator market by increasing the cost of compliance for manufacturers and distributors.

*  Governments, and businesses in the Middle East & Africa increasingly prioritize sustainability and cost-effectiveness, there is a growing demand for energy-efficient solutions across various sectors. Generators, serving as crucial back-up power sources in regions with unreliable grid infrastructure, are poised to capitalize on this trend in the MEA generator market.

* The rising adoption of hybrid power systems in the MEA region exemplifies this shift. These systems seamlessly integrate generators with renewable energy sources like solar and wind power, aiming to maximize efficiency while minimizing carbon emissions.

* By integrating generators into hybrid setups, businesses and communities ensure continuous power supply while simultaneously reducing their dependence on traditional fossil fuels.

* Finally, advancements in generator technology are driving improvements in energy efficiency and environmental performance. Contemporary generators come equipped with a range of features such as variable speed control, sophisticated fuel management systems, and automatic load sensing capabilities. These enhancements optimize fuel consumption and diminish emissions, aligning with global sustainability objectives.

HYBRID, BI-FUEL & INVERTER GENERATORS IN THE MIDDLE EAST

Hybrid generators, which integrate traditional fuel sources with renewable energy like solar power, present a more sustainable and cost-effective solution. In the Middle East & Africa, the abundant sunlight can utilize to lower fuel consumption and operational expenses. For example, hybrid systems reduce fuel usage by up to 30%, resulting in significant savings and less reliance on diesel, a crucial advantage given the region's fluctuating fuel prices.

 Bi-fuel generators, capable of running on a combination of diesel and natural gas, provide another layer of flexibility and cost efficiency. The Middle East, with its abundant natural gas reserves, stands to benefit immensely from this technology. The adoption of bi-fuel generators leads to cost savings of up to 40% compared to traditional diesel-only systems.

 This dual-fuel capability also ensures greater reliability and continuity of power supply, which is crucial for industries and businesses operating in remote or off-grid locations where power stability is a major concern. The increasing adoption of hybrid generators, bi-fuel generators, and inverter generators in MEA is poised to significantly enhance the generator market.

LOOKING AT YEMEN

The Yemen Diesel Generator market is projected to grow at a CAGR of around 9.17% during the forecast period of 2025-28, cites MarkNtel Advisors in the recent research report. This attributes to the support provided by the international community to maintain & construct the country's social infrastructure. The ongoing civil war in Yemen has been leading to the destruction of the social & commercial infrastructure of the country.

   Thus, various international organizations such as the United States Agency for International Development (USAID), UNICEF, and the government of different countries such as the UAE & Saudi Arabia have started providing support for the construction of social infrastructure such as schools, water storage, etc. The requirement of power supply in these spaces for construction & electricity supply as the prime source is thus generating the demand for generators in the country. In addition, the restoration of the existing infrastructure is further enhancing the construction activities in Yemen, consequently aiding these generators' demand.

   Moreover, the destruction of the existing electricity grid of the country due to the war is further necessitating the availability of these generators. Further, the increasing number of power outages due to the demolition of grid infrastructure is increasing the demand for prime-power diesel generators for their daily operations in hospitals and schools. Also, the rising number of malnutrition cases and renal diseases is intensifying the requirement for healthcare infrastructure in Yemen. Thus, the current development of the hospitals & other allied infrastructure backed up by the aid provided by countries & organizations is continuing to generate demand for generators in the country.

  However, the war is leading to a decline in the manufacturing, industrial, and tourism sectors of the country. Also, the lack of investment by private companies in other sectors, such as residential, non-residential, etc., is reducing the need for these generators in these sectors, thus impacting the market negatively. However, the reconstruction or the ongoing developments by the neighbouring countries is presumed to generate minimal or limited demand, further states the research report, “Yemen Diesel Generator Market Analysis, 2023.”[ www.marknteladvisors.com]

Will Saudi Arabia Mega projects affect generator sales in the region? (Market  value: US$570.67 Million by 2034)

The upcoming megaprojects in Saudi Arabia, such as NEOM, the Red Sea Project, and Qiddiya, are expected to significantly increase generator sales in the region. These projects are part of the Kingdom's Vision 2030 initiative, which aims to transform the country into a global leader in the energy sector. The projects require massive amounts of power, necessitating the deployment of high-capacity diesel generators to support construction activities and initial operations. This surge in demand for generators is likely to drive sales and create new opportunities in the region's generator market.

    The Saudi Arabia generator sales market is projected to experience significant growth in the coming years. The market size reached approximately US$363.97 Million in 2024 and is expected to grow at a CAGR of 4.60% in the forecast period of 2025-2034, reaching a value of around US$570.67 Million by 2034. This growth is driven by the increasing demand for reliable power supply across various sectors, including commercial, residential, and industrial applications. The market is also influenced by the need for backup power solutions due to the aging power infrastructure and the rising cost of electricity. [Mordor Intelligence]

  The market is expected to witness a CAGR of 7.92% during the forecast period 2024-2031, growing from US$1004.13 million in 2023 to US$1847.59 million in 2031. This growth is attributed to the rise in demand for reliable power sources in commercial and residential sectors, coupled with the need for uninterrupted power supply in various industries.

[IMARC]

  The market is also seeing a rise in the integration of diesel generators with renewable energy systems, such as solar and wind systems, to support sustainable energy goals and minimize fuel consumption and emissions. This trend is expected to gain momentum as the Kingdom continues to invest in infrastructure development and renewable energy initiatives, reports  markwideresearch.com

   Overall, the Saudi Arabia generator sales market is poised for continued growth, driven by the need for reliable power solutions across various sectors and the increasing demand for backup power systems.