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The global variable frequency drive market size was USD 17.40 billion in 2019 and is projected to reach USD 21.71 billion by 2027, exhibiting a CAGR of 5.9% during the forecast period.
Variable frequency drive is electrical equipment used with an electric motor, which changes the frequency of 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.
The growing need for improving the performance of the equipment and machines to reduce the power consumption drives the application of variable frequency drive. In addition to this, the increasing investment in industrial and commercial infrastructure for mitigating the unnecessary power consumption propels the demand for variable frequency drive. The increasing installation of HVAC systems to maintain the building temperature augments the deployment of variable frequency drives.
The VFD equipment is widely adopted across various industries such as power generation, metal & mining, food & beverage, oil & gas, and other industries. They are further used to regulate and control rotating equipment such as conveyors, machine spindles, fans, and pumps in the production process and manufacturing units and enhance the energy efficiency.
COVID-19 Impact: Declining Growth of Manufacturing & Processing Industry to Restrain Market
Industries such as automotive, aviation, power, manufacturing, and transportation are witnessing a negative impact on their business growth due to COVID-19. Manufacturing & processing industries are catering to the essential activities for constructions, industrialization, and power industry globally, which are exempted from the lockdown measures.
The spread of the novel coronavirus poses a considerable threat to the global market growth owing to the halted industrial and commercial operations. The OECD's interim economic assessment has addressed China playing a key role in the supply chain and commodity market.This has hampered the Asia Pacific countries drastically owing to the lockdown of transportation and logistics from China. Furthermore, the COVID-19 pandemic has impacted the oil & gas industry, industrial, and commercial sectors that are expected to hinder the market growth during the forecast period.
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Growing Demand for Energy Optimization Products & Operational Advantages to Spur Demand
The growing demand for energy optimization has enabled key players to invest heavily in the market. The rising awareness for deploying energy-optimized products among residential, industrial, and commercial sectors holds lucrative growth opportunities for the market. For instance, in July 2017, Power Survey, a power quality product manufacturer, raised an investment worth USD 24 million for energy optimization, connectivity, and energy management. VFD helps in energy-saving and delivers benefits such as less line disturbance, longer motor life, saves energy & cost, and less maintenance. Hence, these factors are expected to spur the demand for the VFD market.
Increasing Renewable Energy Integration & Aging Power Infrastructure to Fuel Demand
The increasing demand for sustainable electricity generation for mitigating carbon footprint and supportive government initiatives augments the adoption of renewable energy in the power system. Thus, the growing demand for power generation from renewable energy sources is a key factor for integrating renewable energy, which in turn, escalates the application of variable frequency drives. Aging power infrastructures are propelling the need for installing and building new power structures. VFD is a cost-efficient and reliable solution that is mostly deployed in the development of the industrial infrastructure sector largely. For instance, the U.S. Energy Independence and Security Act 2007 has mandated energy equipment standards and increased the investments in intelligent electric network technologies, encouraging the VFD application.
Increasing Need for Energy Efficient Systems to Drive the Market Growth
The higher power consumption leads to mitigate the cost incurred, which in turn, increases the demand for energy-efficient systems, coupled with the significant development of innovative devices and equipment for different applications that will accelerate the market growth. Supportive government initiatives augment the usage of VFD. For instance, in March 2019, Europe had planned to invest USD 125.41 million of its total budget to secure, clean, and deliver a reliable source for energy efficiency projects. Additionally, the Indian government introduced the Energy Conservation Act (EC Act) that delivers a regulatory mandate for labeling appliances and equipment and energy consumption norms for energy-intensive industries.
Supportive Government Policies to Positively Influence the Market Growth
Various organizations and governments have introduced favorable policies and targets to keep a record of electricity intake of the structures that are expected to bode well for the market growth. For instance, In December 2018, the revised energy efficiency directive introduced an energy efficiency target for 2030 of at least 32.5% with a clause for a possible upwards revision by 2023. The devices integrate with the commercial and industrial infrastructures to mitigate the operation cost and increase the lifespan of the systems.
Involvement of High Equipment Cost is Projected to Hamper the Market Growth
The cost factor is impacted dramatically on market growth, which includes installation and application of variable frequency drive. Harmonics, the distance between drive and motor, input line quality, and system efficiency are the prominent factors responsible for the higher cost of VFD. The high cost of equipment, operation, installation, and maintaining power quality are key parameters driving the cost to the higher side. Hence, the involvement of high equipment cost restrains the market growth in the forthcoming years.
Operational Advantages of AC Drives Anticipated to Gain a Dominating Position
Based on the type, this market is segmented into AC drive, DC drive, and servo drive.
The AC drive type segment is expected to hold the largest market share during the forecast period due to the increasing application of AC motors in various equipment, coupled with growing awareness among consumers to cut the expenditure cost.
The DC drive segment is expected to experience considerable growth in the forthcoming years as it reduces the overall cost by varying the speed by changing the input voltage to the motors.
The servo drives segment is estimated to showcase considerable growth due to the increasing investment in research & development activities.
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Durable Life of Medium Power Range Segment Is Projected to Drive the Market Growth
Based on the power range, this market is segmented into micro, low, medium, and high segments.
A longer operational life, improved performance, compact size, and adaptability to provide better control leads to the growth of the medium-range VFD segment.
The micro range segment is expected to have a significant growth in the industry owing to its cost-effective nature, precise operating features, wide applications range, and the capability to control single-phase as well as three-phase motors.
The rising demand for controlling the speed of pumps and conveyors from industrial and commercial applications drives the demand for a high power range segment.
Wide Scope of Application for Pumps is Projected to Account for Largest Market Share
Based on the application, the variable frequency drive market is broadly categorized into pumps, conveyors, HVAC, electric fans, extruders, and others.
The pumps segment is anticipated to hold the largest market share owing to its wide scope application of centrifugal pumps in industrial, commercial, agricultural, and other applications, along with better flow handling, to reduce the waste energy.
HVAC segment is estimated to experience considerable growth due to the increasing adoption of energy-efficient heating and air conditioning systems across the globe.
The increasing mining activities, along with the developing commercial and industrial sectors in emerging economies, propel the demand for the conveyor segment.
Large applications of electric fans across various industries, coupled with growing concerns to lower the power spending, are projected to lead the segment dynamics.
Increasing Efforts to Improve Productivity from the Oil & Gas Industry is Likely to Drive Market Growth
Based on the end-user, the market is broadly categorized into food & beverage, oil & gas, power generation, infrastructure, agriculture, mining, and others.
The increasing production and exploration activities, and the rising number of discoveries of new hydrocarbon reserves, is expected to contribute to the growth of the oil & gas industry segment. In addition to this, the growing initiatives for increasing productivity by using lift methods are expected to favor the industry.
The increasing initiatives by regional governments to build new buildings with low energy consumption are likely to contribute to the growth of the infrastructure segment.
The power generation segment is expected to hold a substantial share owing to the long-standing power plant structures, along with the construction of new generation stations to cater to the increasing energy demand.
Asia Pacific Variable Frequency Drive Market, 2016-2027 (USD Billion)
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Geographically, the global market is segmented into five major regions, namely, North America, Europe, Asia Pacific, Latin America, and the Middle East & Africa.
Asia Pacific is estimated to hold the largest market share worth USD 5.82 billion in 2019, owing to a significant investment in industrial infrastructure, drilling operation, and precise control for increasing or decreasing flow across pipelines in the oil & gas industry, and rich agricultural heritage. Southeast Asian countries such as Thailand, Indonesia, Malaysia, and Myanmar have experienced a significant increase in the production & exploration activities, along with discoveries of oil & gas reserves. For instance, in February 2019, Repsol, a global energy company, declared the largest gas discovery in Indonesia that holds an estimated production of over 2 trillion cubic feet (TCF) of recoverable resources.
North America is expected to hold the second-largest market share due to the rising E&P activities in exploring new reserves, along with the growing deployment of the HVAC system. In November 2018, the United States geological survey reported discoveries of hydrocarbon reserves in Bone Spring Formation, Wolfcamp Shale, and Permian Basin.
Europe is anticipated to grow substantially owing to the stringent regulation for building energy-efficient infrastructure and refurbishing existing buildings. For instance, in June 2018, the European Parliament, Commission, and the Council framed a new agreement that includes the guidelines for improving energy efficiency in the member states. The amended guidelines are expected to enable the European countries to achieve an energy efficiency target of 32.5% by 2030.
The increasing production and exploration activities for developing the untapped potential are expected to drive the Middle East & Africa VFD market. The growing initiatives to augment the power generation capacity, coupled with increasing adoption of the HVAC system, drives the demand for the variable frequency drives during the forecast period.
Rockwell Automation and Johnson Controls Focus on Adopting Advanced Technology to Shape Industry Outlook
The competitive landscape of the market depicts significant advancements in the automation industry that focuses on improving quality, efficiency, and enhanced productivity. The growing adoption of variable frequency drive by the utilities and industries for processing and controlling a motor are the key factors responsible for the dominance of the prominent players. For instance, in 2019, CG Power and Industrial Solutions Limited introduced Emotron VSX & VSM Series variable speed drives for use in the critical application that provides enhanced protection and cost-saving ability.
Major companies are adopting strategies such as mergers & acquisitions, product development, and joint ventures to strengthen their position in a competitive environment. This is projected to positively impact the global market during the forecast period.
An Infographic Representation of Variable Frequency Drive Market
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The report provides the trending factors and detailed analysis of the growing adoption of variable frequency that is anticipated to drive the global market. Along with this, the report provides an elaborative analysis of the market dynamics and competitive landscape. Various key insights presented in the report are the price trend analysis, recent industry developments in the global market such as mergers & acquisitions, the regulatory scenario in crucial countries, macro, and microeconomic factors, SWOT analysis, and key retail industry trends, along with competitive landscape and company profiles.
Value (USD Billion)
By Power Range
Fortune Business Insights says that the global market size was USD 17.40 billion in 2019 and is projected to reach USD 21.71 billion by 2027.
Growing at a CAGR of 5.9%, the market will exhibit steady growth in the forecast period (2020-2027).
In 2019, the Asia Pacific market value stood at USD 5.82 billion.
The medium power range segment is anticipated to be the leading segment in this market during the forecast timeframe.
The increasing need for energy-efficient systems and supportive government policies are key factors driving the growth of the market.
Eaton, Rockwell Automation, Johnson Controls, WEG, ABB, and Mitsubishi Electric Automation, Inc. are major players operating in the global market.
Asia Pacific dominated the market share in 2019.
VFDs are devices that can reduce nearly half of the energy consumed by the motors. Governments of various countries have implemented targets to achieve energy efficiency in infrastructure. Therefore, energy-efficient directives will imply users to install technologies with less energy consumption and more output in the power industry.
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