Variable frequency drives (VFD) are controllers/regulators which modulate the voltage and frequency transmitted to the electric motor. These are also used to control the speed of AC induction motors. VFDs have widespread applications in industries such as metal & mining, power generation, automotive, oil & gas, etc. Increasing focus on R&D activities will lead to improved performance and productivity, thereby enlarging the application base. Therefore, the growth of the VFD market is reliant on the usage of these products across industry verticals.
The global variable frequency drive market was valued at nearly USD 20 billion in 2019. It is projected to register a compound annual growth rate of around 5% from 2020 to 2026. Its approximate valuation by the end of 2026 is expected to reach USD 28 billion.
The key players operating in the market are:
The variable-frequency drive market is segmented into AC drive and DC drive. AC drives captured the majority of the market share in 2019. It is estimated to witness the highest growth rate of over 6% during the forecast period. This is attributed to the extensive use of these drives in industries such as oil & gas, infrastructure, automotive, etc.
The DC drive segment, on the contrary, may witness a slower growth rate due to the limited demand and high cost as compared to AC drive.
The low-power range segment garnered more than 40% of the global variable frequency drive market. This type of frequency drive is used in printing machines, fans, cranes, etc. Due to its widespread utilization across various sectors and applications, the low-power segment is projected to maintain its dominance over the market.
The demand for medium-power range frequency drives from chemical, marine, power as well as oil & gas has been growing steadily over the past few years. This type of frequency drive offers benefits such as reduced CO2 emissions and energy optimization. Therefore, this segment is estimated to witness the highest growth rate over the forecast period.
The high-power range segment is reliant on the demand from the industrial and commercial sectors.
The pumps segment dominated the variable frequency drive market in 2019. The advantage VFDs offer such as elimination of throttle valves, simplified piping installation, and design, and reduce maintenance cost and energy consumption is propelling the demand for these drives in the pumps segment. This, in turn, expands the market.
The HVAC segment is anticipated to register the highest growth rate over the forecast period. This is attributed to the increasing residential and non-residential construction activities across the globe.
The variable-frequency drive market is classified on the basis of end-use industry into automotive, industrial, power generation, infrastructure, oil & gas, food & beverage and others. Among these, the oil and gas industry is projected to maintain its leading position throughout the forecast period. The use of heavy power motor-driven pumps and pumping systems that reduce energy consumption will ensure the dominance of the oil and gas industry.
The pandemic has had adverse effects on various industries including power, oil & gas, automotive, industrial and construction. The demand for VFDs from these industries has declined. Furthermore, worldwide lockdowns have resulted in global shutdown and/or temporary closure of manufacturing units. Therefore, the variable frequency drive market has been negatively impacted due to the pandemic.
1. Industrial Internet of Things (IoT) revolution
The development of industrial IoT introduces the increased utilization of equipment such as VFDs for automation. The efficiency and flexibility that these drives provide, propels the growth of the market.
2. Growing demand from various Industries
Growing population, rapid urbanization, and increased industrialization are fueling the growth of power, construction, automotive, petrochemical, oil & gas, etc. This, in turn, is creating numerous opportunities for the variable frequency drive market surge.
3. Supportive Government Policies
The mandatory use of energy-efficient products implemented by global governments has resulted in the upsurge of the market.
4. Technological Advancements
Technological advancements in AC and DC motors, pumps, and many more are projected to fuel the variable frequency drive market growth.
5. Growing Need to Reduce Power Consumption
The growing need to improve the performance and efficiency of machines, motors, and electrical equipment in order to reduce power consumption has also helped in driving growth in the variable frequency drive market.
1. High Cost
Integration of electric drives with VFDs is an expensive process due to the high initial cost of these drives. This high cost poses a key challenge to the rise of the variable frequency drive market.
2. Stagnation of oil and gas industry growth
There has been a decrease in exploration and production activities in the oil and gas industry due to an oversupplied market. Since this industry is one of the major consumers of VFDs; any decline can severely hamper the expansion of the market.
Asia – Pacific region dominated the variable frequency drive market in 2019. It was valued at nearly USD 8.0 billion. The region is expected to maintain its dominance throughout the forecast period. Strong economic growth, due to rapid urbanization and industrialization in countries such as Japan, Australia, India, China, and Indonesia, is estimated to surge the demand for VFDs. Moreover, the rising demand for energy optimization and increasing focus on the development of the manufacturing sector are major contributors to the upsurge in the regional market.
North America is projected to garner the second-largest variable frequency drive market share due to the growing deployment of the HVAC system and the rising exploration and production activities in the region. Stringent regulations related to energy-efficient infrastructure and refurbishment of existing buildings will lead to the substantial rise of the market in the European region.
The Latin American market is anticipated to witness the highest growth rate during the forecast period due to increasing industrialization in countries such as Brazil and Mexico.
The research report analyses the ecosystem of variable frequency drive market and categorizes it to forecast the revenues and analyze the trends in each of the following below-mentioned market segments.
By Power Range
Priyanka has been writing chemicals & material market research reports for the last 12 years. A post-graduate, her specialization is in the chemicals sector. Preparing end-to-end reports covering minute details for market insights, competitive intelligence and trend analysis in the CMFE sector.