Backup Power Systems Market for Oil and Gas Industry by Product, Type and Geography - Forecast and Analysis 2023-2027

Backup Power Systems Market for Oil and Gas Industry Forecast 2023-2027

The Backup Power Systems Market for Oil and Gas Industry size is forecast to increase by USD 1.04 billion, at a CAGR of 4.72% between 2022 and 2027. The growth of the market hinges on various factors, notably the demand emanating from the oil and gas industry, the escalating global energy demand, and the technological advancements in diesel generator sets. As industries strive to meet their energy needs efficiently and reliably, the oil and gas sector's continued reliance on backup energy solutions remains pivotal. Moreover, the increasing global energy consumption, driven by economic expansion and industrialization, underscores the imperative for robust backup power systems. Concurrently, ongoing innovations in diesel generator sets enhance their performance, efficiency, and environmental sustainability, aligning with the market's evolving needs. 

What will be the size of the Market During the Forecast Period?

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Market Segmentation 

This market report extensively covers market segmentation by product (generators, ups, and inverter), type (onshore and offshore), and geography (North America, Middle East and Africa, Europe, APAC, and South America). It also includes an in-depth analysis of drivers, trends, and challenges. Furthermore, the report includes historic market data from 2017 to 2021.

Market Dynamics and Customer Landscape

The market is being driven by various factors including the need for uninterrupted power supply (UPS) in critical operations, the rising frequency of power outages, and the demand for reliable power backup solutions amidst growing concerns over climate change and extreme weather events. Additionally, advancements in technology such as digital infrastructure and the increasing reliance on data centers and cloud computing are driving the adoption of backup power systems. However, challenges persist, particularly in addressing the aging power infrastructure and integrating renewable energy sources effectively into backup power solutions. Our researchers analyzed the data with 2022 as the base year, along with the key drivers, trends, and challenges. A holistic analysis of drivers will help companies refine their marketing strategies to gain a competitive advantage.

Key Market Driver

Demand from the oil and gas industry is the key factor driving the market growth. Power generators are important tools in the oil and gas industry and protect during emergencies against energy loss, as they are the key power sources in the oil and gas industry, particularly in drilling and digging activities. The demand for oil and gas is increasing, especially gasoline, irrespective of crude oil prices. 

Oil production and consumption have increased despite the volatility in oil prices in the market. As the rigs move into more remote areas, they do not have access to the main energy grid. Therefore, to overcome the power supply issue, rigs resort to the use of diesel energy generators to power the drilling equipment and support services. As its drilling and production activities require the rigs to be offshore for extended periods of time, a constant supply of energy is needed. This need for uninterrupted fuel supply on rigs increases the demand for diesel generators. Such developments are expected to drive the growth of the market during the forecast period.

Significant Market Trends 

Increased M&A activities and strategic alliances is an emerging trend shaping market growth. Partnerships and strategic alliances enable players in the market to gain market share, improvise product features, and expand their geographical reach and product portfolios. For instance, in June 2022, ABB partnered with Shape Energy as their preferred UPS distributor in New Zealand.

Additionally, vendors are acquiring other market players to widen their product offerings and increase the distribution of product lines across the globe. For instance, in November 2022, Legrand acquired UK uninterrupted energy supply provider Power Control. Such developments are expected to propel the growth of the market during the forecast period.

Major Market Challenge

Volatility in global crude oil prices is a major challenge to the growth of the market. Fluctuations in oil prices adversely affect the profitability and performance of upstream oil and gas companies. In April 2020, due to the global economic contraction driven by the COVID-19 pandemic and the oil market collapse, the benchmark price for US crude oil briefly became negative. The International Energy Agency (IEA) reported that oil and gas revenues for various prominent oil and gas producers declined by 50%-85% in 2020, over that in 2019. According to the Asian Development Bank (ADB), the global demand for oil declined by 25% year-over-year in April 2020, largely due to a sharp drop in regional and global transportation activities.

With lower demand for oil, oil producers had to store the surplus crude oil, and stocks reached an all-time high in June 2020. The price cuts led to decreased investments in oil and gas projects as the revenues of prominent oil and gas producers declined in 2020. Thus, unexpected price fluctuations can affect the market and result in the cancellation or postponement of exploration projects, which, in turn, may negatively impact the growth of the market during the forecast period.

Customer Landscape

The market forecasting report includes the adoption lifecycle of the market research and growth , covering from the innovator’s stage to the laggard’s stage. It focuses on adoption rates in different regions based on penetration. Furthermore, the market report also includes key purchase criteria and drivers of price sensitivity to help companies evaluate and develop their market growth and forecasting strategies.

Customer Landscape

Who are the Major Market Players?

Vendors are implementing various strategies, such as strategic alliances, partnerships, mergers and acquisitions, geographical expansion, and product/service launches, to enhance their presence in the market.

Aggreko Plc. : The company offers backup power systems for oil and gas industry such as generators, load banks, transformers, and fuel tanks.

The report also includes detailed analyses of the competitive landscape of the market and information about 15 market players, including:

• ALCAD A.B.
• Atlas Copco UK
• ATLAS Corp.
• Byrne Equipment Rental
• Caterpillar Inc.
• Cetronic Power Solutions Ltd.
• Cummins Inc.
• EaglePicher Technologies LLC
• Exide Industries Ltd.
• Fullriver Battery
• Herc Rentals Inc.
• Modern Hiring Service
• Steatite Ltd.
• TotalEnergies SE
• Yanmar Holdings Co. Ltd.

Qualitative and quantitative analysis of vendors has been conducted to help clients understand the wider business environment as well as the strengths and weaknesses of key market players. Data is qualitatively analyzed to categorize vendors as pure play, category-focused, industry-focused, and diversified; it is quantitatively analyzed to categorize vendors as dominant, leading, strong, tentative, and weak.

What is the Fastest-Growing Segments in the Market?

In the market, ensuring an Uninterrupted power supply (UPS) is imperative, given the sector's critical operations. Power outages can disrupt production and compromise safety, highlighting the need for reliable power backup solutions. With the sector's reliance on digital infrastructure and data centers, including those for cloud computing and International Data Centers (IDC), uninterrupted power is paramount. This demand is particularly pronounced in emerging economies where infrastructure development is ongoing. Moreover, industries like healthcare and telecom also rely heavily on robust backup energy systems to maintain operations during outages. With technological advancements, including gas generators, solar generators, wind turbines, and battery systems, the industry is better equipped to tackle challenges posed by climate change and extreme weather events. Upgrading aging power infrastructure and integrating renewable energy sources further enhance resilience in the face of disruptions.

The market share growth by the generators segment will be significant during the forecast period. In the oil and gas industry, generators are used as backup energy supplies when the primary power supply is lost. A generator can be selected based on the backup time and power required for an oil and gas facility during a energy outage. 

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The generators segment was valued at USD 1.78 billion in 2017 and will continue to grow by 2021. A generator is a machine that converts mechanical energy into electricity to serve as a energy source for other machines. The standby generators are robust and can function even in adverse weather conditions. They can also provide power for several days after a blackout. Also, generators can supply energy reliably if there is sufficient fuel. Thus, an increase in the sales of generators because of their reliability is expected to drive the growth of the generator segment, which, in turn, will propel the growth of the market during the forecast period.

Which are the Key Regions for the Market?

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North America is estimated to contribute 30% to the growth of the global market during the forecast period. Technavio’s analysts have elaborately explained the regional trends and drivers that shape the market during the forecast period. North America will be the largest geographic segment in the market in 2022 and will continue to remain the same during the forecast period. In 2022, the United States and Canada will make the largest contribution to the market. These countries are one of the world's major oil and gas producers. In most of these countries, oil and gas production has increased significantly due to unconventional exploration and production (E&P) activities. 

According to the US Energy Information Administration (EIA), the US produced around 11.25 million barrels of crude oil per day in 2021. Thus, growing E&P activities during upstream, midstream, and downstream areas require an uninterrupted, highly reliable electrical power supply to carry out sensitive operations, even in extremely harsh environments. This is expected to increase the demand for backup fuel systems, which, in turn, will drive the growth of the regional market during the forecast period.

Segment Overview

The market report forecasts market growth by revenue at global, regional & country levels and provides an analysis of the latest trends and growth opportunities from 2017 to 2027. 

• Product Outlook 
  • Generators
  • UPS
  • Inverter

• Type Outlook
  • Onshore
  • Offshore

• Region Outlook 
  • North America
    • The U.S.
    • Canada
  • Europe
    • U.K.
    • Germany
    • France
    • Rest of Europe
  • APAC
    • China
    • India
  • South America
    • Chile
    • Argentina
    • Brazil
  • Middle East & Africa
    • Saudi Arabia
    • South Africa
    • Rest of the Middle East & Africa

Market Analyst Overview

In the market, several market drivers fuel growth, including the growing demand for backup power solutions across residential, industrial, and hospital sectors. Critical applications necessitate reliable backup systems, supported by distributed energy resources and government regulations. Rising technological advancements in the electronic industry have led to the development of advanced residential backup power systems and UPS (Uninterruptible Power Supply) solutions for safeguarding electronic devices and maintaining stable voltage supply during emergencies. Manufacturers are integrating IoT-based UPS with connectivity features like Bluetooth, Wi-Fi, and innovative products such as ZunVolt and mini Wi-Fi UPS. Fuel cell technologies, including PEM fuel cells and diesel-powered backup generators, offer cost-effective solutions with reduced maintenance hours.

However, restraining factors like high initial costs and maintenance, the market witnesses utility-scale adoption, especially in regions prone to power cuts due to uncertain weather glitches, transmission, and distribution grid problems like Ontario and Quebec, facing issues such as derechos and thunderstorms. The emphasis on clean energy, supported by initiatives like the Government of India’s Ministry of New and Renewable Energy (MNRE) promoting rooftop solar panels, drives the adoption of renewable power generation solutions, including wind and solar power, contributing to reducing greenhouse gas emissions.

Market Scope
Report Coverage	Details
Page number	155
Base year	2022
Historic period	2017-2021
Forecast period	2023-2027
Growth momentum & CAGR	Accelerate at a CAGR of 4.72%
Market growth 2023-2027	USD 1.04 billion
Market structure	Fragmented
YoY growth 2022-2023(%)	4.26
Regional analysis	North America, Middle East and Africa, Europe, APAC, and South America
Performing market contribution	North America at 30%
Key countries	US, Canada, Saudi Arabia, China, and Russia
Competitive landscape	Leading Companies, Market Positioning of Companies, Competitive Strategies, and Industry Risks
Key companies profiled	Aggreko Plc, ALCAD A.B., Atlas Copco UK, ATLAS Corp., Byrne Equipment Rental, Caterpillar Inc., Cetronic Power Solutions Ltd., Cummins Inc., EaglePicher Technologies LLC, Exide Industries Ltd., Fullriver Battery, HBL Germany GmbH, Herc Rentals Inc., Kohler Co., Modern Hiring Service, Steatite Ltd., TotalEnergies SE, Trojan Battery Co. LLC, Yanmar Holdings Co. Ltd., and Zahid Group
Market dynamics	Parent market growth analysis, market forecast, Market growth inducers and obstacles, Fast-growing and slow-growing segment analysis, COVID-19 impact and recovery analysis and future consumer dynamics, Market condition analysis for the forecast period.
Customization purview	If our report has not included the data that you are looking for, you can reach out to our analysts and get segments customized.

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What are the Key Data Covered in this Market Research Report?

• CAGR of the market during the forecast period
• Detailed information on factors that will drive the growth of the market between 2023 and 2027
• Precise estimation of the market size and its contribution of the market in focus to the parent market
• Accurate predictions about upcoming trends and changes in consumer behavior
• Growth of the market across North America, Middle East and Africa, Europe, APAC, and South America
• Thorough analysis of the market’s competitive landscape and detailed information about vendors
• Comprehensive analysis of factors that will challenge the growth of market companies 

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