Variable Frequency Drive Market Analysis Report By Product, By Power Range, By Application, By End Use, By Region And Segment Forecasts From 2020 To 2027

Industry Insights

The global variable frequency drive (VFD) market size was accounted for USD 22.5 billion in 2019 and registering 6.5% CAGR during the forecast period, from 2020 to 2027. Growing usage of variable frequency drive across various industries coupled with increasing investment for the development of infrastructure is a major factor to drive the market growth.

In addition, the rising number of connected devices in residential, industrial, and commercial sectors coupled with advancements in technology is anticipated to propel the demand for variable frequency drives across the globe.

Rapid industrialization and urbanization are boosting consumer demand that has resulted in the growth of the manufacturing and industrial sectors, which in turn, is expected to drive the VFD demand over the forecast period. According to Central Intelligence Agency (CIA), the urban population in Malaysia, China, Vietnam, and India account for 76.6%, 60.3%, 36.6%, and 34.5%, respectively, of the total population, in 2019. In these countries, urbanization is anticipated to increase with over 2.0% rate, which is expected to be a potential driver for market growth.

Industries like manufacturing and processing are engaged in deploying different types of equipment and component that differ in terms of technology, industry, and operation mode. AC drives are used in several sectors such as food & beverage, power generation, metal & mining, and oil & gas.  In the manufacturing industry, VFDs are majorly used to control pumps, machine spindles, fans, and conveyors to enhance industrial energy efficiency. Hence, the growth of the manufacturing and processing industries is expected to drive the VFD market growth from 2020 to 2027.

Several governments have mandated to use of energy-efficient equipment across the globe which has resulted in the growth of the energy efficiency sector by 3%, in 2017. For example, to increase energy efficiency and to reduce the power loss of motors, in 2017, European Union regulated the use of variable frequency drive in order to increase motor’s efficiency with output from 0.75 kW to 375 kW that must meet IE2 efficiency level in regulation EC 640/2009.  For example, as per the International Energy Agency (IEA), in Europe, total investment for energy efficiency accounted for USD 76 billion across the transport, building, and industry sectors.

However, the major challenge faced by this industry is the high cost. While integration with electric drives becomes an expensive process. The cost of these drives may vary as per size, power rating, and application where they are used. The medium and low-voltage VFDs account for a considerable revenue share and they are expensive depending on efficiency level, operating power range, and operation. In addition, unskilled labor in developing countries is expected to hinder market growth to some extent.

Product Type Insights

On the basis of products, the variable frequency drive market is segmented into DC drives, servo drives, and AC drives. In 2019, the AC drives accounted for the largest market share and are projected to grow at a CAGR of 6.8% over the forecast period. The extensive application of AC drives in heavy and medium industries including food & beverage, oil & gas, pulp & paper, automotive, and infrastructure is projected to fuel the segment growth in the next few years. AC drives require low maintenance cost, reduce vibration level and noise along easy integration, which is further propelling the demand for AC drives.

The DC drive segment is projected to witness a slow growth rate from 2020 to 2027. The demand for these drives is limited due to the high cost of AC drives over AC technology. In addition, factors such as the high maintenance cost of DC drives and a huge number of technical irregularities are expected to restraint the growth of this segment. Limited functionalities of DC drive is another key factor estimated to hinder the segment growth in the near future.

Power Range Insights

In the market, the power range segment is fragmented into micro, low, medium, and high. The low power range includes variable frequency drives that drive motors with a power range from 6 kW to 40 kW. This segment held the largest market share of over 40.0% and was projected to lead the global market over the forecast period. These low power VFDs are widely used for several applications like cranes, pumps, fans, fluid machines, food processing machines, and printing machines, hence, due to the widespread application of VFD in various sectors, the low power segment is estimated to lead the market during the forecast period.

The medium power range segment includes VFDs that drive with power ranging from 41 kW to 200 kW. This segment is expected to grow at the fastest CAGR of over 6.5% during the forecast period. This growth is attributed to the increasing demand for VFDs in various end-use industries like power, marine, oil and gas, and chemical sectors. This drive is used to get an optimum speed of the motor and reduce gas emission along with low energy consumption.

Application Insights

By application, the variable frequency drive market is fragmented into pumps, electric fans, conveyors, HVAC, extruders, and others. In 2019, the pump segment accounted for the largest market share.  In industries such as oil & gas, wastewater, and others, hydraulic drive associated with pumps is being replaced by VFDs to improve motor operations and ensure low energy consumption. Variable frequency drive has several other benefits such as lower maintenance cost, easier piping installation, and exclusion of throttling valve. Therefore, various benefits associated with VFD to drive the pump and increasing demand across various end-use verticals are projected to drive the market growth.

The HVAC segment is projected to grow at the fastest CAGR of 8.0% from 2020 to 2027. Growing non-residential and residential construction sectors in both developed and developing countries are projected to drive the segment growth. Moreover, VFD is considered the most effective energy management tool, as it intensifies the performance of HVAC in terms of operation and increases energy efficiency. Thus, an increase in demand for HVAC systems is expected to drive the VFDs demand during the forecast period.

End-Use Insights

The market segmented into automotive, oil and gas, food and beverages, industrial, infrastructure, power generation, and others on the basis of end-use. The oil & gas industry is projected to retain its dominant position through the forecast period. This industry majorly depends on applications such as distribution, refining, and production that use heavy power pumping systems and motor-driven pumps. Hence, to drive these motors efficiently, VFD is incorporated.

The infrastructure end-use industry is anticipated to exhibit the fastest CAGR of over 7.8% during the forecast period. This growth is attributed to the growing demand for VFDs in the construction industry. Moreover, in the construction industry, the ongoing replacement of mechanical and hydraulic drives by electric motors will boost the energy-efficient devices demand to attain energy-saving goals levied by the several governments of the respective countries.

Regional Insights

In 2019, Asia Pacific accounted for revenue of USD 7.7 billion and held the largest market share in the global VFD market. Factors such as increasing demand for energy optimization, favorable government policies and regulations, and emphasis on the development of the manufacturing industry are expected to drive regional market growth. In addition, Due to rapid enhancement of industrialization and commercialization in Japan, Australia, Indonesia, and China which is expected to boost the regional market growth.

Latin America is estimated to grow at the highest CAGR from 2020 to 2027 due to rising industrialization in developing countries like Mexico and Brazil. Apart from this, rising demand for VFDs across various end-use industries like oil & gas, chemical, automotive, and, iron & steel is projected to propel the market growth in this region over the forecast period.

COVID-19 Impact Analysis

The market has been negatively impacted due to the outbreak of the COVID-19 virus. Government across the globe has shut down physical operations across several end-use verticals such as automotive, oil & gas, and others. Therefore, numerous restrictions for foreign trade, supply chain disruption, and other factors have led to declining in the demand for variable frequency drive during lockdowns.

However, post lockdown, governments across several countries are permitted to resume business activities which are expected to surge the market growth to some extent. Companies are striving for product innovation by using advanced technology. For instance, in May 2020, ABB has developed robotic automation to avoid manual assembly in manufacturing variable frequency drives in order to fulfill the increasing demand for these drives.

Variable Frequency Drive Market Share Insights

The market is highly consolidated due to the presence of private and public market players. Companies are extensively focusing on investing in R&D activities to expand the product line and introduce a new product. For example, in 2019, The Danfoss Group launched functionality and programmability for control systems and AC drives through TwinCAT automation software in order to deliver more flexibility for using its drive. Companies are concentrating on several strategies such as merger & acquisition, collaboration, and expansion to strengthen their position in the market. Some prominent players in this market are ABB, Schneider Electric, Yaskawa Electric Corporation, Siemens AG, Eaton, Hitachi Ltd., Rockwell Automation Inc., General Electric, The Danfoss Group, WEG S.A.

Report Scope

Segments Covered in the Report

This report forecasts revenue growth at global, regional, and country levels and provides an analysis of the latest industry trends in each of the sub-segments from 2016 to 2027. For the purpose of this study, Million Insights has segmented the global variable frequency drive market report on the basis of product type, power range, application, end-use, and region:

• Product Type Outlook (Revenue, USD Billion, 2016 - 2027)
    • AC Drives
    • DC Drives
    • Servo Drives

• Power Range Outlook (Revenue, USD Billion, 2016 - 2027)
    • Micro
    • Low
    • Medium
    • High

• Application Outlook (Revenue, USD Billion, 2016 - 2027)
    • Pumps
    • Electric Fans
    • Conveyors
    • HVAC
    • Extruders
    • Others

• End-Use Outlook (Revenue, USD Billion, 2016 - 2027)
    • Oil & Gas
    • Power Generation
    • Industrial
    • Infrastructure
    • Automotive
    • Food & Beverages
    • Others

• Regional Outlook (Revenue, USD Billion, 2016 - 2027)
    • North America
        • U.S.
        • Canada
    • Europe
        • U.K.
        • Germany
    • The Asia Pacific
        • China
        • Japan
        • India
        • South Korea
    • Latin America
        • Brazil
        • Mexico
    • Middle East & Africa