The world requires an ever-increasing amount of electricity. That is also leading to growing demand for decentralized energy supply. With its acquisition of Blue Star Power Systems, DEUTZ has become a significant system provider in the attractive global generator market.
Global demand for electricity is forecast to double by 2050. This poses a challenge, as the expansion of the network is failing to keep pace with the rapid growth in demand, leading to supply bottlenecks that not only affect households but also system-critical areas such as server farms and hospitals. An ageing infrastructure and extreme natural events such as storms, heatwaves, and earthquakes further exacerbate the problems. A changing energy mix, with a growing proportion of renewable energy, also causes instabilities due to a lack of network capacity to enable the comprehensive utilization of this type of energy. Network deficiencies are not restricted to the countries of the Global South, but to a large extent also affect industrialized nations such as the USA.
The solution lies in decentralized energy supply – and therefore with traditional electricity generators, known as gensets. In North America alone, the genset market has seen annual growth of 7 % since 2019. In 2024, the market revenue was US$ 10.4 billion, with US$ 14.4 billion forecast for 2028.
“With its new Energy business unit, DEUTZ intends to tap into the rapidly growing market for decentralized electricity generation. We're able to benefit from a head start, or right to win, in that DEUTZ engines have been used in electricity generators for a long time; so this is an area where we have already mastered the technology and the service business,” says David Evans. In recent times, DEUTZ has been generating annual revenue
of around €30 million from products and services related to decentralized energy supply. The main drivers were dieselpowered generators, as well as the first volume order from China for gensets with hydrogen combustion engines. In August 2024, DEUTZ significantly strengthened its position in the genset market.
Energy for the future: By taking over Blue Star Power Systems, DEUTZ has broadened its offering and is positioning itself as a relevant supplier of decentralized energy systems.
“With its new Energy business unit, DEUTZ intends to tap into the rapidly growing market for decentralized electricity generation. We're able to benefit from a head start, or right to win, in that DEUTZ engines have been used in electricity generators for a long time; so this is an area where we have already mastered the technology and the service business,” says David Evans.
In recent times, DEUTZ has been generating annual revenue of around €30 million from products and services related to decentralized energy supply. The main drivers were dieselpowered generators, as well as the first volume order from China for gensets with hydrogen combustion engines. In August 2024, DEUTZ significantly strengthened its position in the genset market. The acquisition of US company Blue Star Power Systems gives the Company access to the rapidly growing US market, new customers, and complementary business models – as well as accelerating its transition from component manufacturer to system provider. Blue Star Power Systems is one of the top ten genset manufacturers in the North American market. Based in Minnesota, the company manufactures and sells diesel and gaseous electric generators from 20 to 2,000 kW. Blue Star Power Systems more than doubled its revenue between 2019 and 2024, and raised its double-digit EBITDA margin. The reasons for this strong performance, and for the positive outlook, are the company's move into selling microgrid gensets in partnership with a strong distributor customer, as well as the growth in power output ranges above 500 kW, with applications in airports, hospitals, factories, and large industrial plants. “In Blue Star Power Systems, we have acquired a hidden champion that has held its own against large competitors by offering short lead times, great reliability, flexibility, and a customer-oriented product portfolio,” explains David Evans. The solution lies in decentralized energy supply – and therefore with traditional electricity generators, known as gensets. In North America alone, the genset market has seen annual growth of 7 % since 2019. In 2024, the market revenue was US$ 10.4 billion, with US$ 14.4 billion forecast for 2028.
“In Blue Star Power Systems, we have acquired a hidden champion that has held its own against large competitors by offering short lead times, great reliability, flexibility, and a customer-oriented product portfolio,” explains David Evans.
“All of those criteria are consistent with our own aspirations at DEUTZ. We will continue to strengthen Blue Star Power Systems' business in the USA, while also beginning to focus on expanding the genset business of DEUTZ in regions with growing energy demand in Asia and Africa, as well as in Europe. We are working on the assumption that new technologies and business models will emerge, for example from scaling up sales of hydrogen combustion engines, promoting the use of biogenic and synthetic fuels, or through demand for hybrid gensets in combination with solar or battery systems. Our activities in the new Energy business unit, including the acquisition of Blue Star Power Systems, are closely linked to our Dual+ strategy. The additional potential for engine sales boosts our Classic segment; in the New Technology business unit there is potential for selling gensets with hydrogen engines as well as battery systems (BESS), and our service business benefits from additional generator servicing. The acquisition provides additional profitable revenue of more than US$ 140 million per year. Overall, our Energy business unit aims to generate revenue of around €500 million by 2030. Our investments in the genset market are putting DEUTZ on a broader footing, making us less susceptible to economic fluctuations, and more resilient overall“, explains David Evans.