Research Report: China's Power Generation Engine Industry in 2026 — Policy, Industrial Chain, Market Size, Market Concentration, Key Enterprises and Development Trend Analysis

I. Overview of the Power Generation Engine Industry

An engine is a machine that converts other forms of energy into mechanical energy, including internal combustion engines (reciprocating piston engines), external combustion engines (Stirling engines, steam engines, etc.), jet engines and electric motors. Among them, the power generation engine is a special-purpose type of engine. It refers to internal combustion engines or gas turbines specially used to drive generators, converting chemical energy of fuel into electric power. Its core function is to deliver stable and reliable mechanical power. Coupled with synchronous generators, it outputs alternating current (AC) that meets the requirements of power grids or loads.

II. Current Development of the Power Generation Engine Industry

Power generation engines are dedicated to stable power supply and are key equipment for energy infrastructure. In recent years, with sustained global economic development and rapid improvement of electrification level, demand for stable and uninterrupted power supply has been growing. Driven by energy security, green transition and digital economy, the power generation engine industry continues to expand. Statistics show that the global market size of power generation engines reached RMB 65 billion in 2025 and is expected to hit RMB 76 billion in 2026. China is the world’s largest market for power generation engines. In recent years, the rapid expansion of data centers, distributed power stations and infrastructure projects in China has become a core engine for high-quality development of the power generation engine sector. China’s market size of power generation engines reached RMB 17.5 billion in 2025 and is forecast to surpass RMB 20 billion in 2026.

III. Industrial Chain of the Power Generation Engine Industry

The upstream of the power generation engine set industry mainly includes raw materials such as high-performance special steel, copper, aluminum and engineering plastics, as well as core components including crankshafts, fuel systems, electronic control systems, intake and exhaust systems and after-treatment systems. The midstream covers manufacturing of power generation engines. The downstream involves the integration of power generation engine sets. Downstream applications cover standby power supplies, emergency power supply and distributed power generation systems, including data centers, distributed power stations and infrastructure scenarios requiring uninterrupted and stable power supply.

A generator set consists of a power generation engine, generator, control system and auxiliary systems. Auxiliary systems include cooling systems, fuel supply systems, exhaust systems and other core components. In terms of cost composition, power generation engines account for 65% of the total cost of generator sets, generators 15%, and control systems 18%. The core function of a power generation engine is to provide stable and reliable mechanical power. By coupling with a synchronous generator, it outputs alternating current (AC) complying with power grid or load specifications.

IV. Development Environment of the Power Generation Engine Industry — Relevant Policies

As high-end manufacturing equipment and core facilities for guaranteeing power continuity in the energy system, the power generation engine industry has benefited from a series of policies issued by Chinese authorities in recent years, creating a sound development environment. Representative policies include Technical Requirements for Pollutant Emission Control of Non-road Mobile Diesel Machinery, High-quality Development Plan for Internal Combustion Engine Industry (2021-2035) and Opinions on Improving the Development Level of Processing Trade.

V. Competitive Landscape of the Power Generation Engine Industry

1. Major Market Players

China’s power generation engine market features a competitive pattern where foreign players dominate the high-end segment and domestic enterprises occupy the mainstream mid-market. Three foreign brands — Cummins, Caterpillar and MTU — form a tripartite competition in the high-end market. Local leading enterprises are rising rapidly, with domestic market share steadily climbing. Major domestic players include Yuchai Marine Power, Weichai Power, Weichai Heavy Machinery and Zhefu Holdings. Yuchai Marine Power takes the first place in China’s power generation engine market with a market share of 20.2%, making it the largest domestic supplier of power generation engines and a leading supplier of marine engines in China. According to relevant statistics, the CR5 of China’s power generation engine industry reached 61.7% in 2024, CR4 54.90%, CR3 45.40% and CR2 33.10%.

2. Representative Enterprises

(1) Guangxi Yuchai Marine Power Co., Ltd.

Yuchai Marine Power is a wholly-owned subsidiary of Guangxi Yuchai Machinery Co., Ltd. It specializes in R&D, manufacturing and services of marine and power generation power systems. Its core businesses cover power generation engines, marine propulsion and auxiliary engines, generator sets and engine components. Its product portfolio includes gas-fired power systems and multiple series of marine power engines such as YC6T and YC6C, widely applied in data centers, oil & gas fields, ships and other sectors. As of 2025, Yuchai Marine Power owned 714 patents and has obtained High-tech Enterprise qualification. According to corporate announcements, Yuchai Marine Power achieved operating revenue of RMB 4.967 billion and profit of approximately RMB 762 million in the first three quarters of 2025.

(2) Weichai Power Co., Ltd.

Weichai Power was established by Weichai Holding Group Co., Ltd. together with domestic and overseas investors. It operates national-level research institutions including the State Key Laboratory of Internal Combustion Engines and Power Systems. As a leading enterprise in China’s equipment manufacturing sector, its business covers six strategic sectors: powertrains, commercial vehicles, agricultural machinery, construction machinery, smart logistics and marine equipment. Its product network covers more than 150 countries and regions worldwide.

Weichai Power’s engine division has three major production bases in Weifang, Yangzhou and Chongqing, with a standard annual engine production capacity of 1.02 million units. Meanwhile, flexible multi-product production line renovation projects are underway to adapt to market and segment demands of various engine series. According to corporate announcements, Weichai Power posted operating revenue of RMB 113.152 billion in H1 2025, among which powertrain, complete vehicles and key components contributed RMB 47.932 billion, accounting for 42.36% of total revenue.

(3) Zhefu Holding Group Co., Ltd.

Zhefu Hydropower, a wholly-owned subsidiary of Zhefu Holdings, is engaged in R&D, design, manufacturing and services of large and medium-sized complete hydro-generator sets. Its product range includes three main types: bulb hydro-generator sets, axial-flow hydro-generator sets and mixed-flow hydro-generator sets, as well as pumped storage generator units, EPC of hydropower engineering electromechanical projects and EPC of power station electromechanical equipment. It has an annual production capacity of large and medium-sized hydro-generator sets totaling 3,000 MW.

Zhefu Holdings owns more than 80 large CNC machining centers and special equipment. The maximum hoisting capacity of its factory reaches 400 tons, with an assembly platform area of 3,018 square meters. The factory buildings and equipment are configured for manufacturing single units with a capacity of up to 700,000 kW, achieving world-class manufacturing capability in terms of equipment and production capacity. According to corporate announcements, Zhefu Holdings achieved operating revenue of RMB 10.642 billion in H1 2025.

VI. Development Trends of the Power Generation Engine Industry

As key cross-field equipment for high-end manufacturing and energy systems, driven by the dual carbon goals, energy security strategy, the East-to-West Computing Project and the AI computing boom, the power generation engine industry is transforming from its traditional role as an “emergency standby power source” into a new core node for power supply security featuring high efficiency, low emissions, intelligence and multi-energy integration. The industry is shifting from supplying single equipment toward delivering comprehensive energy solutions.