As pointed out before, the goal of the gen set design is to save fuel as well as reduce emissions. Switch engines spend a significant amount of their time in idle or low power situations and it is a challenge to come up with an approach that fits that type of operation while still providing significant tractive effort quickly.

The idea behind the gen sets is not new; for example one might argue that various passenger units with more than one prime mover (E's, DL109's) are gen-sets. Baldwin experimented with a 6000-hp locomotive during WWII that was to be powered by 8 V-8 generator sets complete with their own cooling system. During testing, one of the sets was replaced in less than 30 minutes. The project was discontinued due to cost and the frame of the locomotive was used to construct the first DR-12-8-1500/2 "Centipede" for Seaboard Air Line.

See the following link for the 408 series engine at the middle of the page.
[baldwindiesels.railfan.net]

Alternative fuels have been tried as well over the years. Aside from the UP's failed coal-gas-turbine, locomotives have operated tested on a variety of fuels including a CB&Q unit burning a liquid fuel derived from coal and the liquified natural gas switch engines tested by BN and UP. In the 1950's SP tested a Baldwin roadswitcher set up for dual fuel (AS 616?). The engine would be started with diesel fuel and when it reached operating temperature it was switched over to a heavier grade - perhaps bunker C. When shutting down, it was critical to first run the engine again on diesel to clear the fuel system and prevent solidification. While the experiment was successful and the stack reportedly showed less smoke when running on the heavy fuel, additional work would have been needed to eliminate the complex handling requirements and the dual fuel equipment was eventually removed and the engine returned to regular service.

Local government agencies have provided financial incentives to install gen sets and the experimentation will continue.