Variable Frequency Drive Market Size, Share & Trends Analysis Report By Product Type (AC Drives, DC Drives, Servo Drives), By Power Range (Micro (0-5 kW), Low (6-40 kW), Medium (41-200 kW), High (>200 kW)), By Application (Pumps, Electric Fans, Conveyors, HVAC, Extruders, Others), By End Use (Oil & Gas, Power Generation, Industrial, Infrastructure, Automotive, Food & Beverages, Other) and By Region(North America, Europe, APAC, Middle East and Africa, LATAM) Forecasts, 2022-2030

Market Overview

The global variable frequency drive (VFD) market size was valued at USD 23.79 billion in 2021 and is predicted to reach at USD 38.58 billion by 2030, increasing at a CAGR of 5.52% from 2022 to 2030.

Variable Frequency Drives (VFDs) Controlls Alternating current (AC) motors. For high-voltage alternating current devices, Variable Frequency Drives (VFDs) are commonly employed. Compressors are connected to Variable Frequency Drives to optimize energy use and improve manufacturing operations whenever high voltage ac power devices do not need a consistent source of current.  Variable Frequency drives enable compressors to regulate speed, improve operational efficiency, as well as enhance the mechanical resonance. Factors contributing to this rise include the increasing pace of industrialization and urbanization, as well as better energy efficiency standards, updated and modernized electrical distribution infrastructure, and a more secure and safe supply of electricity.

The Variable Frequency Drive (VFD) Market is being driven by a number of factors, including energy efficiency regulations, the requirement for secure and safe power distribution system, industrialization, and urbanization. The Energy Conservation Act (EC Act) was passed by the Indian government, requiring the labelling of energy consumption guidelines for devices and energy-intensive businesses.

Market Dynamics

Global variable frequency drive market drivers

A rise in industrialization and a rise in the demand for energy conservation

For industrial and infrastructure applications, variable frequency drives (VFDs) are becoming increasingly popular. As India's infrastructure boom continues, cement demand is predicted to rise by 45 million metric tons over the next three to four years. In India, the housing sector accounts for around 67% of the entire use of cement. China, the United States, and Canada together account for half of the world's pulp & paper production capacity. Increasing demand for electric motors and variable frequency drives in these nations is projected as a result of the growing pulp and paper and cement sectors.

It is estimated that over 300 million motors are being used in various sectors, major buildings and infrastructures around the world and 30 million new electric powered motors are managed to sell each year for industrial applications. Variable frequency drives are projected to see increased demand due to rising energy efficiency standards and increased industrialization.

Boosting market growth through digital and automation

VFDs have seen a rise in demand due to the increasing use of digitization, connectivity, and automation in industrial processes across a wide range of industries. By controlling and monitoring the motor through variable drives, which make them smart motors, and even enabling them to be remotely controlled and even automatically, further optimizing performance, system efficiency, and energy savings in complex commercial processes, like large buildings' HVAC systems.

The Industrial Internet of Things (IIoT) and other cutting-edge technologies are also being researched and developed by many industrial participants. Predictive and efficient machinery optimization and maintenance are just a few of the many benefits that can be gained from this new addition. Machine production and automation will be made safer and more efficient with ABB's all-compatible variable speed drives, which the company plans to incorporate into their systems in April 2020. This is driving the growth of the VFD Market.

Global variable frequency drive market restraints

The high cost of setting up a variable frequency drive act as restraint

Increased automation, digitization, and interoperability among various industries are all made possible because to the VFD. Variable Frequency Drives can minimize energy consumption by optimizing and improving the device's efficiency. However, the high cost of installing VFDs with devices hampers the market. A wide range of industries and applications benefit from the use of these Drives. The system's power requirements alter as a result of the project's growth and expansion. Because the drive must be installed in accordance with the power requirements of the customer for their distribution network, the overall installation cost rises. Some other uses for variable-frequency drives include reducing harmonics, HVAC (which requires lower power factors), and operational noise, all of which have an impact on the system's distribution capacity and consequently raise overhead costs even higher. Variable Frequency Drive (VFD) Market expansion will be limited by these factors.

Global variable frequency drive market key opportunities

Modernization in power infrastructure to open up lucrative opportunities

Transmission & distribution networks must be stable and reliable to meet the rising demand for energy. For uninterrupted power, the US Department of Energy (DOE) says that a system capable of handling power surges is necessary. A lack of clear strategies to update the grid is one of the key causes of the rising number of blackouts. This country has more power failures than almost any developed nation. America's businesses lose almost USD 150 billion annually as a result of power outages lasting more than an hour. For the next two decades, the power industry in Canada will require an investment of $400 billion, says the Canadian Electricity Association.

A 15% increase in electricity demand over the past decade, despite an increase in the number of energy-efficient products and structures. In North America, European region, and portions of Asia-Pacific, new laws aimed at reducing or limiting the number of power outages and modernizing old power networks are benefiting the whole value chain of power sector equipment. As a result, the need for variable frequency drives is likely to rise, providing lucrative new business opportunities for the industry's competitors.

Regional Analysis

The Global Variable Frequency Drive Market is segmented by geography into North America, Europe, Asia-Pacific (APAC), Latin America, and Middle East & Africa.

In the year 2021, the Asia Pacific's market region held the majority of the market share. It is anticipated that factors such as industrial growth in emerging economies, business-friendly policies implemented by the government, and an increase in building activities will promote the expansion of the regional market.

Similarly, it is anticipated that the growing demand for energy would lead to an increase in the utilization of VFD by energy producers, which is anticipated to stimulate regional growth. In addition, robust and consistent economic growth as a result of rapid commercial production and the existence of multiple automotive, treatment of wastewater, pulp, and food and beverage producers operating in countries like India, China, and Japan is anticipated to surge demand for variable frequency drives (VFD) to improve operational efficiency and reduce energy usage.

As a result of countries like Brazil and Mexico undergoing privatization and urbanization, it is anticipated that growth in Latin America would accelerate to a compound annual growth rate of 6.18 percent throughout the projected period. In a similar vein, rising demand from numerous end-use sectors like cement, chemical, as well as pulp is anticipated to drive the expansion of the VFD market in this area.

Segmental Analysis

The Global Variable Frequency Drive Market is divided into different segments according to the Product Type, Power Range, Application, End Use, and Region (Geography).

By Product Type, the Global Variable Frequency Drive Market is segmented into AC Drives, DC Drives, and Servo Drives. In 2021, the AC drives business accounted for more than 70% of total sales. AC drives have grown in popularity because of the advantages they offer, such as high power, ease of installation, and low maintenance. These advantages are attracting end-users from industries like food and beverages, automobiles, and power generation in order to improve operational efficiency and reduce waste. As a result, the demand for AC drives is expected to expand as a result of the rapid growth of the manufacturing sector.

From 2022 to 2030, the DC drive category is estimated to increase at a CAGR of 4.79 percent in the targeted market. Due to the high expense of maintaining DC technology compared to AC technology, its usage in industry is limited. The lack of energy efficiency and the inability to function in critical situations are expected to limit the expansion of the DC market.

By Power Range, the market of Global Variable Frequency Drive (VFD) is segmented into Micro (0-5 kW), Low (6-40 kW), Medium (41-200 kW), and High (>200 kW). The low power range led the global market in 2021, contributing for more than 42% of the total. Pump, fan, conveyor belts, centrifugal pumps, & centrifugal compressor all use low voltage frequency drives in end-use industries. Enormous amounts of funds have been used for the development of powerful, small-footprint, low-temperature low voltage drives by many manufacturers. Thus, the increasing use of low voltage frequency drive in industry verticals and the increased funding in R&D activities are projected to assist the sector lead the market growth in the next years.

It is projected that the medium power range frequency drive would have a CAGR of 5.68 percent between 2022 and 2030. The increasing demand for medium (41-200 kW) power range frequency drives in many industries, like waste water treatment plants, petrochemical, mining, etc., is due in part to the advantages of increased operating flexibility and better control they provide. In addition, the oil & gas industry is likely to drive the segment's expansion in the next years.

By Application, the Market of Global Variable Frequency Drive (VFD) is segmented into Pumps, Electric Fans, Conveyors, HVAC, Extruders, and Others. In 2021, the pumps industry's revenue share was 31%. The water treatment business, the metal industry, and the oil and gas industry all use pumps on a regular basis. Various frequency drives (VFDs) are built into these pumps, reducing power consumption, lowering operating costs, and allowing them to run at various speeds without the need for a gearbox. Since the benefits of adding a variable frequency drive (VFD) to a pump have been demonstrated, the market for variable frequency drives (VFDs) to control flow rate and improve efficiency is likely to grow.

From 2022 to 2030, the HVAC market is expected to grow at a CAGR of 6.77 percent, accounting for a major revenue share. Requirement for HVAC systems is expected to rise as the development of new homes and businesses continues at a rapid pace. Regulating the speed of blowing fans, pumps, and even compressors with a variable-frequency drive (VFD) improves energy efficiency in HVAC systems.

By End Use, the Global Variable Frequency Drive Market is segmented into Oil & Gas, Power Generation, Industrial, Infrastructure, Automotive, Food & Beverages, and Others. In 2021, the oil and gas industry held a 25 percent revenue share of the global market. At the production site, large pumps and motors are used for extraction, pumping, distribution, and other purposes. It is possible to increase output while reducing energy usage by combining the variable frequency drive with the motors. A rise in demand for VFD is projected as a result of players' efforts to maximize profits by boosting efficiency The target market's industrial sector is expected to contribute significantly to revenue.

From 2022 to 2030, infrastructure is expected to increase at a Rate of 6.59%. Increasing construction activity around the world are to blame for this growth.  Similarly, the construction industry's desire to switch from mechanical to electric motor drives will drive up demand for VFDs.

By Region or Geography, the Global Variable Frequency Drive Market is segmented into North America, Europe, Asia-Pacific (APAC), Latin America, and Middle East & Africa. In the year 2021, the market was led by the Asia Pacific region. Emerging economies' rapid industrialization, government support for business, and increased construction activity are all elements that are expected to lead to regional market’s growth. As a result of the privatization and urbanization in countries like Brazil and Mexico, Latin America is projected to grow at an annual growth rate of 6.18 percent over the next five years.

Recent Developments

• June 2022 - On June 20, 2022, Hitachi, Ltd. announced the start of the Hitachi Green Bond framework as one of our long-term environmental goals, "Hitachi Environmental Innovation 2050," to accomplish carbon neutrality by the year 2030 at company locations (factories and offices).

• May 2022 - Honeywell launched an Emissions Control & Reduction Initiative to help clients become carbon neutral. The program will primarily aim to help oil and gas customers track and minimize fugitive methane emissions, and that are 25 times as strong as carbon dioxide for trapping heat in the atmosphere.