HVAC Drive Market Size, Share & COVID-19 Impact Analysis, By Type (DC Drives, AC Drives, and Others), By Power Range (Less Than 10 KW, 10-100 KW and 101 and Above KW), By Application (Air Handling Units, Pumps, Cooling Towers and Others) and Regional Forecast, 2020-2027

The global HVAC drive market size was USD 2.34 billion in 2019. The global impact of COVID-19 has been unprecedented and staggering, with variable frequency drives witnessing a negative demand shock across all regions amid the pandemic. Based on our analysis, the global market will exhibit a huge decline of -4.9% in 2020. The market is projected to grow from USD 2.22 billion in 2020 to USD 2.69 billion in 2027 at a CAGR of 2.8% in the 2020-2027 period. The sudden rise in CAGR is attributable to this market’s demand and growth, returning to pre-pandemic levels once the pandemic is over.

The rising electricity prices, the emergence of building automation systems (BAS), and stringent government regulations are set to propel this market. Also, the integration of various intuitive technologies embedded in drives, mainly regenerative energy capability and communication protocols such as BACnet and Modbus, programmable logic controllers (PLC), wireless diagnostics, and many others, is likely to further increase the penetration of variable frequency drives across HVAC applications. For instance, in April 2018, Eaton launched its new PowerXL series of DH1 VFDs designed to improve safety, support reliable operations, reduce energy consumption, and maximize energy savings in HVAC/R applications.

COVID-19 Pandemic to Create Significant Opportunities to Develop Products that Minimize Transmission   

Several suppliers of heating, ventilation and air conditioning systems, as well as components or services, have slowed down their operations amid the COVID-19 pandemic. It has created a brutal economic downturn, which was felt at every level of the industry. Multiple coronavirus positive cases and quarantine rules disrupted supply chains and forced HVAC dealers to deploy HVAC technologies and new approaches to reduce the disease. In the short term, the COVID-19 has impacted various macroeconomic conditions such as disruption in the functioning of financial and capital markets, foreign exchange, and interest rates. The volatility in the financial market restricted these drives to access the financial markets as there was no assurance of financing on attractive terms.

Also, the multi-sectoral impact significantly affected business operations, by strict limitations, quarantines, and supply chain disruption have resulted in businesses shutting down in the past few months. However, in the longer term, HVAC system suppliers are focusing on introducing products that are capable of minimizing disease transmission. For instance, in October 2020, Blue Star launched its new range of products with virus deactivation technology to help improve the indoor air quality, disinfect air and surfaces, and augment fresh air in large conditioned places to provide protection against viruses, including COVID-19. The constant innovations observed in the HVAC systems are set to create a potential room for variable frequency drives players to gain momentum and enlarge their business activities.

LATEST TRENDS

Evolvement of Energy Saving HVAC Drives is a Prominent Market Trend

The rising energy prices and stringent energy-efficiency regulations imposed by various regulatory authorities is a major factor compelling HVAC drives OEMs to develop intelligent and high-performance products. According to the Environmental Protection Agency, buildings use 36% of America's overall annual energy consumption and 65% of the electricity demand. Similarly, according to the German Electrical and Electronic Manufacturers' Association, it is estimated that motors represent approximately 70% of industrial energy usage.

In the aforementioned scenario, the emergence of technologically advanced drives has proven to be a significant energy management tool that can provide higher reliability and lower total cost of ownership (TCO) for commercial and residential applications. Moreover, these drives are configured with a diagnostic alert function, which notifies the staff in the event of leakage or a broken pipe.

In addition to that, drives are streamlined with intelligent protection capability and sensorless pump control, which provides no/low flow detection and sleep mode, sensorless pump control, and others.

DRIVING FACTORS

Integration of HVAC Drives Across Healthcare Sector to Bolster Growth

The high efficiency of drives to reduce the energy cost significantly enables the healthcare industry to make huge strides towards freeing up valuable funding for further capital investments. The National Health Service (NHS) alone has a carbon footprint of 25 million tonnes of CO2 emissions per year. Also, the energy expenditure in the healthcare sector is approximately USD 911 million per year.

Moreover, the Energy Information Administration, hospitals are considered as an extremely energy-intensive building wherein electricity accounts for around 18 percent of their delivered energy use and it represents over 50 percent of their energy costs. In the above-mentioned scenario, the integration of variable frequency drives (VFDs) plays an important role as an energy management tool to realize substantial energy savings. Also, by leveraging VFDs, a fluctuating building environment, as well as an adjustable flow of energy and temperature, is efficiently managed as hospitals with HVAC systems are considered as the greatest drain on electricity.         

RESTRAINING FACTORS

Involvement of High Equipment Cost May Hinder Growth

The growing demand for energy optimization backed by supportive government initiatives and massive funding would augment the HVAC drives market. However, the involvement of high cost is a major factor responsible for slowing down growth. The costs associated with the equipment, installation, operation, and maintaining power quality is limiting market growth. Also, the lifespan of the HVAC system and its components is highly dependent on climatic conditions. Geographies that have damp climate conditions tend to decrease the longevity of the system owing to the corrosive effects. This is further expected to limit demand.  

SEGMENTATION

By Type Analysis

AC Drives Segment to Show Higher Growth Rate in Coming Years

Based on the type, the market is segmented into DC drives, AC drives, and others

The AC drives segment is forecast to grow at a higher rate in the coming years as these drives are more energy-efficient, flexible, and easy to control. Also, these drives can generate higher torque and are capable of multi-phase configurations. In addition to that, key players are constantly emphasizing, upgrading AC drives with innovative technologies, which, in turn, is set to boost the market. For instance, in November 2019, FUJI Electric designed innovative FRENIC-HVAC drives series to maintain comfortable conditions in commercial spaces and industrial facilities. Also, this drive caters to major HVAC application functions, mainly linearization function, automatic energy optimization, PID sleep mode, and many others

The DC drives segment is anticipated to grow at a slow rate as these drives are extensively designed for industrial applications such as warehouse sorting equipment, fabrication and production units, and many others.

By Power Range Analysis

10-100 KW Segment to Hold the Highest Share Stoked by Urgent Need to Reduce Energy Consumption

Based on the power range, the market is segmented into less than 10KW, 10-100KW, and 101 and above KW.

The 10-100KW segment is anticipated to show significant growth in the coming years owing to the rising government initiatives to reduce energy consumption. Additionally, the increasing focus of vendors to upgrade their products and the availability of maximum efficiency received from these power ranges would propel growth.

The less than 10KW and 101 and above KW segments are likely to grow at a slow rate as these power drives are majorly deployed for other industrial applications.

By Application Analysis

Air Handling Units Segment to Hold Highest Share Backed by Rising Construction Sector

Based on the application, the market is segregated into air handling units, pumps, cooling towers, and others.

The deployment of drives in air handling units would increase the efficiencies of HVAC systems. Also, it would regulate and circulate air and maintain blower, heating, or cooling elements, filter racks, and other components working consistently, and increase the lifespan of the units. Owing to this, the air handling unit segment would generate a major HVAC drive market share.

The pumps and cooling tower segments are likely to grow substantially in the forecast period. The rising penetration across various industries such as pharmaceutical, food & beverages, and others are set to bolster the segments. Also, rising concerns for improving the indoor air quality and construction of residential and commercial places is another major factor responsible for surging the growth of these segments.

REGIONAL INSIGHTS

Geographically, the market is segmented across five major regions, namely, North America, South America, Europe, the Middle East and Africa, and Asia Pacific. They are further categorized into countries.

North America holds the highest share and is dominant in the market owing to the presence of major HVAC drives and HVAC system manufacturers operating in this region. Also, the rising construction of green buildings and awareness for improving indoor air quality would contribute to this growth. Besides, stringent government regulation to reduce carbon emission for creating a sustainable environment is another key factor responsible for driving market growth.

Following North America, Asia Pacific is expected to grow significantly in the upcoming years because of the presence of authorized and unauthorized local players operating in major countries such as China, India, and Japan. Also, massive investments by governmental bodies in infrastructure and industrial development and increasing residential/commercial places are likely to increase the penetration of drives across this region.

Europe is set to showcase moderate growth in the near future with the rising smart infrastructure and buildings wherein variable frequency drives play a vital role in energy savings and reducing carbon emissions. Apart from that, the sudden climate change is a major factor responsible for the rising sales of drives across this region. Besides, extreme weather conditions such as rising temperature and the awareness of removal of airborne contaminants and microscopic particles would result in the increasing deployment of the HVAC system. It is expected to further create high demand for variable frequency drives.

The Middle East and Africa is anticipated to grow at a steady rate with the rising residential, commercial, and industrial sector. Also, increasing concerns about indoor air quality improvement and government regulations to significantly reduce energy consumption and surge cost savings would propel this largest market in this region.

South America is likely to exhibit a slow growth rate owing to the expansion of production sites by major vendors in emerging economies.  Besides, the rising infrastructure spending by regulatory bodies would also aid growth.

KEY INDUSTRY PLAYERS

Key Players to Focus on Expanding Their Product Portfolios to Intensify Competition

Prominent players are focusing on expanding their existing product lines with changing consumer requirements to stay competitive in the global market. For instance, in January 2018, Danfoss A/S launched its next-generation E-frame drives in its VLT range with the power ratings of 315kW to 8000kW and 400 V to 690 V. It aims to provide E-frame drives for various applications in the HVAC and refrigeration sectors. Besides, major HVAC drives suppliers are emphasizing partnership & collaboration strategies to improve their business outcomes and enhance market shares globally.

LIST OF KEY COMPANIES PROFILED:

• Siemens AG (Germany)


• ABB (Switzerland)


• Danfoss A/S (Denmark)


• YASKAWA Electric Corporation (Japan)


• Regal Beloit Corporation (United States)


• Fuji Electric Co., Ltd. (Japan)


• Eaton (Ireland)


• WEG Industries (Brazil)


• Schneider Electric (France)


• Galco Industrial Electronics, (United States)

KEY INDUSTRY DEVELOPMENTS:

• March 2020: Danfoss Drives and its HVAC partner Digicon installed Danfoss VLT FC102 HVAC Drives in 30 Air Handling Unit Fan (AHU) applications at New College, North East England. The project was implemented to reduce energy consumption and maintain a healthy and comfortable environment.


• August 2019 – Magneti Marelli S.p.A. announced a strategic partnership with Shanghai Highly (Group) Co., Ltd. (Highly). Both companies have also agreed to establish a joint venture to operate the Marelli HVAC business.

REPORT COVERAGE

The HVAC drive market report provides an in-depth industry analysis of the key market dynamics and competitive landscape. It also offers various key insights, including recent industry developments in this market, such as mergers & acquisitions, macro, and microeconomic factors, SWOT analysis, and company profiles.

Report Scope & Segmentation