Variable Frequency Drive Market Size, Share & COVID-19 Impact Analysis, By Type (AC Drive, DC Drive, Servo Drive), By Power Range (Micro, Low, Medium, High), By Application (Pumps, Electric Fan, HVAC, Conveyors, Extruders, Others), By End-user (Power Generation, Infrastructure, Oil & Gas, Food & Beverages, Mining, Agriculture, and Others), and Regional Forecasts, 2022-2029

The global variable frequency drive market was USD 19.21 billion in 2021 and is projected to grow from USD 19.87 billion in 2022 to USD 32.31 billion in 2029, growing at a CAGR of 7.2% during the 2022-2029 forecast period. Based on our analysis, the global market exhibited a decline of -3.6% in 2020 as compared to 2019. The global COVID-19 pandemic has been unprecedented and staggering, with variable frequency drive experiencing lower-than-anticipated anticipated demand across all regions compared to pre-pandemic levels.

Variable frequency drives (VFD) are electrical equipment used with electric motors, which change the applied voltage supplied to the motor. It helps to control the operating speed to reduce energy consumption. VFD combines software solutions to monitor the functioning of speed, and thus improves its overall efficiency.

COVID-19 IMPACT

Disruptions in Supply Chain Management to Slow Down Growth amid Pandemic

The global health emergency caused due to the impact of COVID-19 has been staggering and unprecedented-with major impact on different industry verticals. The implementations of travel ban and restrictions, shelter-in-place-orders, and shutdowns have slowed down the manufacturing industries and caused trade disputes across the globe, thereby hampering the variable frequency drive market growth. End-use industry, such as oil & gas power, has witnessed a negative impact due to the spread of COVID-19, weakening their business growth. Other industry verticals, such as infrastructure power generation, have also experienced a negative impact, notably due to delay in projects, reduced electricity demand due to social distancing norms, disruption in the supply chain, and organizational changes caused due to travel restrictions.

LATEST TRENDS

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Increase Demand for Energy-efficient Solutions Spur Market Opportunities

The primary electricity consumption as energy is dominated by buildings and industrial infrastructure, and it is anticipated that electric-powered motors consume around 45% of the world’s electricity in buildings and industrial applications. The growth in public awareness for the need for action on climate change and the use of sustainable technology is expected to deliver greater benefits for the environment while the global economy will propel the demand of VFDs, as adding variable speed drives, particularly in pump, fan or compressor applications that are widespread across all industries and buildings, can typically reduce power consumption by an additional 25%. The design of modern, high-efficiency motors, paired with variable-speed drives, tends to be flexible and reliable, resulting in the drive's use for HVAC systems in buildings with advancement in energy savings features.

DRIVING FACTORS

Increasing Digital and Automation to Spur Market Growth

The increased shift toward digitalization, connectivity, and automating industrial processes by different industry verticals has witnessed a growing demand in VFDs, helping them remotely monitor the process. In complex industrial applications, such as large buildings HVAC systems, the resulting data can be optimized with a significant gain in efficiency and energy savings by controlling and monitoring the motor by variable drives, making them become smart motors and even allowing them to be controlled remotely or even automatically, further optimizing performance, system efficiency and energy savings.

Various industry players are also performing research & development activities to include leading technologies such as the Industrial Internet of Things (IIoT) to these devices. This extension can widely help reduce downtime, energy consumption, wear & tear, and efficient machine optimization and predictive maintenance to the systems. For example, in April 2020, ABB integrated a seamless safety functionality and communication for its all-compatible variable speed drives in machine manufacturing and automation and simplifying the engineering design process in machine manufacturing and automation.

Government Regulations and Policies for Energy Saving to Spur Market Growth

Favorable government regulations and policies are expected to enhance the market growth as it acts among the main drivers of industrial investment in energy efficiency around the globe. This is particularly true of the rules implemented by large industrial producers such as China, Europe, India, and the U.S. For instance, the European Union (EU) Ecodesign Directive’s latest Ecodesign Regulation (EU) 2019/1781 came into effect in October 2019, including variable frequency drives and a wider range of motors, improving the environmental performance of products from household appliances to engineering products.

In addition, investments made in drives & motors are often an attractive proposition due to their ease of installation. They can generally be installed without requiring any additional modification of an existing industrial system, thereby leading to the rapid uptake of the system.

RESTRAINING FACTORS

High Installation Cost of VFD System to Limit Adoption

VFDs provide a wide range of energy efficiency benefits; the cost associated with installing VFD devices may hamper the market growth. The use of these drives in any industry and application leads to better efficiency of the process; however, during the upgrade and expansion of any projects, the power requirement is often changed, which may result in deployment of the drive as per user requirement for the distribution system, which will increase the total cost of installation. Moreover, VFDs for applications such as HVAC experience lower power factors, harmonics, and operational noise, which could also affect the distribution capacity of the system, resulting increase in overhead cost.

SEGMENTATION

By Type Analysis

AC Drive to Hold Dominant Market Share Due to Quick Installation and Cost-effective Factor

The market is segmented into AC drive, DC drive, and servo drive based on type. The AC drive segment accounted for the major share of the market in 2021, owing to its extensive use for a large number of applications. The DC drive also accounts for a significant share of the market due to its simple circuit, making it one of the most economic and highly efficient drives compared to other drives. Servo drive is another segment in the VFD market with its major robotics and automation use.

By Power Range Analysis

Low Power Range to Hold Dominant Market Share due to its High Durability and Performance

The market is divided into micro, low, medium, and high power ranges based on power range. The low power range dominates the global market. Easy configuration and less installation time lead to its adoption in general purpose applications and make it one of the premier choices in various industry verticals. Due to their efficient installation in general purpose applications, medium power range drives are set to experience substantial growth during the forecast period. The micro power range of drives is flexible for various operations due to less-complex designs and easy machines integration. It is expected to witness a sizeable growth during the forecast period. The high power range of drives is considerably better in controlling and easy to maintain, due to which, it is expected to grow considerably in the forthcoming years.

By Application Analysis

Pumps to Hold Dominant Market Share Due to Cost-Saving Factor

The market is segmented into pumps, conveyors, HVAC, electric fans, extruders, and others based on application. The pumps segment holds the largest variable frequency drive market share. The use of VFD to effectively regulate the pressure flow coupled with significant cost saving makes it one of the most viable options in pumps application. Increasing the use of electric fans in various industrial, commercial, and industrial activities will propel VFDs' market growth for electric fans. With the growing demand and need for adjustment in motor speed as per the system load to reduce the overall energy consumption by the system, the HVAC system is set to account for a significant share in the global market and grow during the forecast timeframe. Applications such as conveyors and extruders that have largely been accepted in general-purpose industries, including textile, mining, and machinery processing, are expected to experience significant growth with increased demand for energy efficiency across these industry verticals.

By End-user Analysis

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Power Generation End-user to Hold Dominant Market with Increase in Electricity Demand

Based on end-user, the market is segmented into power generation, infrastructure, oil & gas, food & beverages, mining, agriculture, and others. The power generation sector uses VFDs every step of the way, from the fuel to the grid, to smoothly start large motors and continuously adjust the speed as required by the process. With rising electricity demand across countries in Asia Pacific, North America, Europe, power generation will continue to dominate the market segment during the forecast period. Subsequently, the adoption of the VFDs has increased across end-user industries such as infrastructure, oil & gas, agriculture, among others, with the growing focus on digital connectivity and automating the process is also prevailing the adoption of drives. The growing landscape of these industries globally is complementing product adoption. Other end-user industries such as the machinery industry, processing industry, textile, pulp & paper also use this drive for process efficiency.

REGIONAL ANALYSIS

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Regions analyzed for the market in this report comprise North America, Europe, Asia Pacific, Latin America, and Middle East & Africa.

Electricity is set to experience a surge in demand during the forecast period. The majority of this increase will occur in the fast-growing Asia Pacific region, resulting in the largest share of the VFD market.

The growth of renewable energy in North America and Europe is expected to result in significant market share for this region.

Countries in Latin America will experience investment activities across mining and oil & gas industries. The growing landscape of these industries across the region leads to a considerable market share during the forecast period.

The Middle East & African countries are in the phase of infrastructural development. Saudi Arabia has initiated its Vision 2030 plan for sustainable growth. Along with this, South Africa is one of the rich lands for mining minerals. These industrial activities are likely to propel the market across the region.

KEY INDUSTRY PLAYERS

Key Participants are Concentrating on Enhancing their Product Capacities

The market comprises various key players delivering scale products for numerous applications, shaping the competitive landscape. Major key players operating in the market are WEG, Danfoss Corporation, Honeywell International, and ABB, focusing on improving product capability to maintain their variable frequency drive brand. For instance, in November 2021, ABB collaborated with Shipbuilder Asenav and live fish transport service to boost aquaculture sustainability in southern Chile. The collaboration led to the introduction of the Patagón IX wellboat powered by ABB’s drives and motors, helping them improve energy efficiency in live fish transport vessels. 

List of Key Companies Profiled:

• Eaton Corporation (Ireland)


• Hitachi Hi-Rel Power Electronics (India)


• Rockwell Automation (U.S.)


• Johnson Controls (Ireland)


• Anaheim Automation Inc. (U.S.)


• WEG (Brazil)


• ABB (Switzerland)


• Nidec Motor Corporation (Japan)


• Siemens (Germany)


• Danfoss Corporation (Denmark)


• Honeywell International Inc. (U.S.)


• TMEIC (U.S.)


• Fuji Electric Corp. of America (Japan)


• Schneider Electric (France)


• Yaskawa Corporation (Japan)


• Toshiba International Corporation (U.S.)


• General Electric (U.S.)


• Mitsubishi Electric Automation, Inc. (U.S.)

KEY INDUSTRY DEVELOPMENTS:

• September 2021 - Danfoss introduced the new VACON 1000 medium-voltage drive. The new addition of these drives is the preferred choice for industrial medium-voltage general purpose applications, especially for variable torque loads such as pumps and fans.


• May 2021 -  Nidec Motor Corporation announced its brand cooperation in the U.S. by extending the line of heating, ventilation, and air conditioning and refrigeration (HVACR) solutions for the aftermarket segment.

REPORT COVERAGE

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The global variable frequency drive market research reports present a comprehensive industry assessment by offering valuable insights, facts, industry-related information, and historical data. Several methodologies and approaches are adopted to make meaningful assumptions and views to formulate the research report. Furthermore, the report covers a detailed analysis of market segments, including applications and regions, helping our readers get a comprehensive overview of the global market.

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