Emission regulations hindering generator set sales

Emission regulations in the United States and Europe, along with volatile oil prices, is expected to make revenues for generator sets decline by 3.6% in 2017 according to IHS Markit, but future projections look positive.

08/17/2017


Emission regulations in the United States and Europe, along with volatile oil prices, is expected to make revenues for generator sets decline by 3.6% in 2017 according to IHS Markit, but future projections look positive. Courtesy: IHS MarkitThe generator sets market has been extremely volatile since the fall of global oil prices, and emission regulations have contributed significantly to an already challenging market environment. In 2016, the estimated worth of the world market for generator sets was approximately $13.8 billion. In 2017, revenue is forecast to decline 3.6%.

The regulatory environment for diesel off-road engines and therefore generator sets is becoming more challenging. In 2015, the market saw the final introduction of the US EPA's tier 4 regulations in the United States for all diesel off-road engines over 560 kW. In the three preceding years, these tier 4 regulations had been phased in for all diesel engines below 560 kW. Tier 4 regulations limit emissions of CO2, PM and NOx, for some power ranges by up to 90 percent of previous standards. The cost of adding exhaust gas treatment such as selective catalytic reduction devices is anticipated to increase the cost of the final genset unit.

European regulations set similar ranges to those set by the US EPA. Stage 4 requirements in Europe have been in place for stationary engines since 2014. Of note, Stage 5 regulations have been confirmed for introduction in 2019. Most manufacturers interviewed believe that this will have a slight dampening effect on sales for generator sets. As each new tier of emissions regulation is enforced, the manufacturers R&D cost of meeting the new emissions standard increases. These costs must be passed on to the customer or absorbed thereby reducing supplier profit margins. With 2017 forecast to be a down year for global generator set sales, manufactures are currently absorbing the bulk of these cost increases.

Outside North America and Europe, the regulatory picture becomes more mixed. In Japan, the equivalent of tier 4 regulations is now in place up to 560 kW. China is currently on the equivalent of EPA tier ½ for off-road regulations to allow its domestic manufacturers to hold market share in the country. In India, regulations have been in place since 2014 and are similar to those of EPA tier 4. Genset suppliers indicate that they expect more regions and countries to adopt and enforce EPA tier 4 or 5 equivalent standards in the future. This ongoing development could potentially diminish generator set sales in emerging markets where these standards have yet to go into effect.

Greg Johnson, senior analyst, capital equipment & machinery, IHS Markit. IHS Markit is a CFE Media content partner. Edited by Chris Vavra, production editor, Control Engineering, CFE Media, cvavra@cfemedia.com.



The Top Plant program honors outstanding manufacturing facilities in North America. View the 2015 Top Plant.
The Product of the Year program recognizes products newly released in the manufacturing industries.
Each year, a panel of Control Engineering and Plant Engineering editors and industry expert judges select the System Integrator of the Year Award winners in three categories.
A new approach to the Skills Gap; Community colleges may hold the key for manufacturing; 2017 Engineering Leaders Under 40
Doubling down on digital manufacturing; Data driving predictive maintenance; Electric motors and generators; Rewarding operational improvement
2017 Lubrication Guide; Software tools; Microgrids and energy strategies; Use robots effectively
The cloud, mobility, and remote operations; SCADA and contextual mobility; Custom UPS empowering a secure pipeline
Infrastructure for natural gas expansion; Artificial lift methods; Disruptive technology and fugitive gas emissions
Mobility as the means to offshore innovation; Preventing another Deepwater Horizon; ROVs as subsea robots; SCADA and the radio spectrum
Power system design for high-performance buildings; mitigating arc flash hazards
Research team developing Tesla coil designs; Implementing wireless process sensing
Commissioning electrical systems; Designing emergency and standby generator systems; Paralleling switchgear generator systems

Annual Salary Survey

Before the calendar turned, 2016 already had the makings of a pivotal year for manufacturing, and for the world.

There were the big events for the year, including the United States as Partner Country at Hannover Messe in April and the 2016 International Manufacturing Technology Show in Chicago in September. There's also the matter of the U.S. presidential elections in November, which promise to shape policy in manufacturing for years to come.

But the year started with global economic turmoil, as a slowdown in Chinese manufacturing triggered a worldwide stock hiccup that sent values plummeting. The continued plunge in world oil prices has resulted in a slowdown in exploration and, by extension, the manufacture of exploration equipment.

Read more: 2015 Salary Survey

Maintenance and reliability tips and best practices from the maintenance and reliability coaches at Allied Reliability Group.
The One Voice for Manufacturing blog reports on federal public policy issues impacting the manufacturing sector. One Voice is a joint effort by the National Tooling and Machining...
The Society for Maintenance and Reliability Professionals an organization devoted...
Join this ongoing discussion of machine guarding topics, including solutions assessments, regulatory compliance, gap analysis...
IMS Research, recently acquired by IHS Inc., is a leading independent supplier of market research and consultancy to the global electronics industry.
Maintenance is not optional in manufacturing. It’s a profit center, driving productivity and uptime while reducing overall repair costs.
The Lachance on CMMS blog is about current maintenance topics. Blogger Paul Lachance is president and chief technology officer for Smartware Group.
The maintenance journey has been a long, slow trek for most manufacturers and has gone from preventive maintenance to predictive maintenance.
Featured articles highlight technologies that enable the Industrial Internet of Things, IIoT-related products and strategies to get data more easily to the user.
This digital report will explore several aspects of how IIoT will transform manufacturing in the coming years.
Maintenance Manager; California Oils Corp.
Associate, Electrical Engineering; Wood Harbinger
Control Systems Engineer; Robert Bosch Corp.
This course focuses on climate analysis, appropriateness of cooling system selection, and combining cooling systems.
This course will help identify and reveal electrical hazards and identify the solutions to implementing and maintaining a safe work environment.
This course explains how maintaining power and communication systems through emergency power-generation systems is critical.
click me