Let us start by saying that there is only one type of diesel engine. The difference between a prime rating and a standby rating lies solely on the way you are going to use that diesel engine and how long you expect it to last.
An engine rated for prime duty will be expected to operate continuously. The manufacturer then knows that with continuous operating duty, the engine's 'consumable' components, like piston rings, cylinder liners, fuel injectors, etc. will last x number of hours before an inspection/overhaul is required.
When the same engine is rated for standby duty, the manufacturer assumes that the engine will not run continuously, but only in emergency requirement. The number of operating hours per calendar year will then be appreciably lower than when operated in prime duty. Given this, the manufacturer then affords to get more out of the same engine by setting it to a higher output. This will induce accelerated wear on the components, but given it will be used for short periods of time, the engine will still last for the same number of calendar years (not operating time). In fact if you were to totalise the number of operating hours of a standby rated engine to the same engine rated for continuous (prime) duty, you will find that the standby duty engine would require earlier overhauls.
There is no physical difference in the actual engines. Prime and standby are two different ratings for the same engine. The prime rating is the power that the engine/alternator can deliver continuously (24/7/365). The standby rating is 20% higher than the prime rating, but the set will only be able to deliver this higher power for a limited time, perhaps 24 hours. After this time, the set is in danger of overheating unless the loading is reduced back to the prime rating of the set. You choose a generator based on the prime rating if the set needs to be run continually. You choose a generator based on the standby rating if the set is to be used for emergency backup power.
