The global variable frequency drive market size was estimated at USD 22.5 billion in 2019 and is expected to register a CAGR of 6.5% over the forecast period. Increasing investments in infrastructure development and increased usage of VFDs across major industry verticals are the crucial factors driving the variable frequency drive (VFD) market growth. Additionally, increasing penetration of connected devices in commercial, industrial, and residential sectors, along with technological advancements, is expected to surge the demand for variable frequency drives globally.
Increasing rate of urbanization and industrialization is surging the consumer demand, which would result in the growth of industrial and manufacturing sector, driving the demand for VFDs over the forecast period. As per CIA (Central Intelligence Agency), as of 2019, the urban population in Vietnam, Malaysia, India, and China was 36.6%, 76.6%, 34.5%, and 60.3%, respectively, of the total population. Urbanization in these countries is expected to increase at a rate of more than 2.0%, thus acting as a potential market driver for variable frequency drives.
Industries such as processing and manufacturing, deploy several types of components and equipment that vary in terms of industry, operation mode, and technology. AC drives are used in various sectors, including oil and gas, power generation, food and beverages, and metal and mining. Variable speed drives are used to control rotating equipment such as conveyors, fans, pumps, and machine spindles in the manufacturing process and enhance the energy efficiency of the industry. Thus, growth in the end-use sector is anticipated to fuel the overall VFD market growth over the forecast period.
Various governments across the world mandated the use of energy-efficient products, which in turn resulted in a 3% growth in energy efficiency sector in 2017. For instance, to reduce power loss and increase the energy efficiency of motors, the European Union in January 2017 regulated the use of VFD for motors with rated output from 0.75 kW to 375 kW, satisfying at least the IE2 efficiency level under EC 640/2009, Article 3. Besides, rising initiatives to spread awareness about energy efficiency is expected to act as a significant factor driving the variable frequency drives market. For instance, according to International Energy Agency (IEA), the total investment in energy efficiency in Europe amounted to USD 76 billion across the industry, buildings, and transport sectors.
One of the key challenges faced by the market is high initial cost of the variable speed drives making the integration to electric drives an expensive process. The prices of these drives vary according to power rating, size, and applications in which these are used. The low and medium voltage variable frequency drives that account for a significant share of the market revenue are highly priced in the market depending upon their operations, efficiency level, and operating power range. Additionally, lack of skilled labor in the most emerging economies is also expected to hamper the market growth over the forecast period.
The AC drives segment accounted for a dominant share in 2019 and is estimated to expand at the highest CAGR of 6.8% from 2020 to 2027. The widespread application of AC drives in medium and heavy industries, such as power generation, oil and gas, food and beverages, infrastructure, pulp and paper, and automotive is expected to boost the segment growth over the forecast period. Besides, AC drives offer low maintenance cost, easy integration, and reduced levels of vibrations and noise, thus further driving the demand for variable frequency drives.
The DC drive segment is estimated to register a minimal growth rate over the forecast period. The demand for DC drive is limited owing to high cost of DC technology as compared to the AC technology. Besides, a large number of technical irregularities and high maintenance costs associated with DC frequency drives are also anticipated to hamper the segment growth over the forecast period. Moreover, limited functionalities associated with DC motors is driving down the share of VFDs using the DC power.
The low power range segment comprises of variable frequency drives that can drive motors with power ranging from 6 kW to 40 kW. The segment accounted for more than 40% of the revenue share and is anticipated to dominate the market throughout the forecast period. Low power variable frequency drives are mostly used for applications such as pumps, fans, crane, machine tools, fluid machines, metal processing machines, printing machines, and food processing machines. Thus, owing to the widespread adoption in vertical sectors, the low power segment is estimated to dominate the variable frequency drive market over the forecast period.
The medium power range segment comprises variable speed drives with power ranging from 41 kW to 200 kW. The segment is projected to expand at the highest CAGR of 6.8% over the forecast period owing to growing demand for variable frequency drives from end-use sectors, such as power, oil and gas, marine, and chemical sectors. Besides, medium power drives are used to adapt the speed of the motor to the actual need, thus reducing CO2 emissions and optimizing energy consumption.
The pumps segment accounted for a dominant share of the market in 2019. In industries such as wastewater, oil and gas, etc., the hydraulic drives assimilated with pumps are being substituted by variable frequency drives, to smoothen the operations of the motors and simultaneously lower the energy consumption. Besides, the variable frequency drive also eliminates the need for a throttling valve, cuts maintenance costs, and simplifies piping installation and design. Thus, increasing advantages associated with the integration of the VFD with pumps coupled with growing demand from major end-use industries is expected to support market growth.
The HVAC application segment is estimated to expand at the highest CAGR of 8.0% over the forecast period. Increasing residential and non-residential construction across the developed and emerging economies are expected to increase the demand for the HVAC systems. VFD is considered one of the most effective and finest energy management tools to intensify energy efficiency as well as the operational performance of HVAC. Thus, the rise in demand for HVAC systems is anticipated to surge the demand for VFDs over the forecast period.
Based on end use, the market for VFD is segmented into oil and gas, industrial, power generation, infrastructure, food and beverages, automotive, and others. The oil and gas segment is expected to hold a dominant share throughout the forecast period. The oil and gas industry majorly relies on applications such as production, distribution, and refining, which use heavy power motor-driven pumps and pumping systems. Thus, to drive these electric motors at optimum performance with the lowest possible energy consumption, VFDs are integrated to maximize the operating profit, thereby fueling their demand over the forecast period.
The infrastructure segment is projected to expand at the highest CAGR of 7.8% from 2020 to 2027, owing to increasing demand for variable frequency drives from the construction industry. Besides, ongoing replacements of hydraulic and mechanical drives by the electric motors in the construction industry will surge the demand for energy-efficient devices to achieve the energy-saving goals set up by the governments of respective countries.
The Asia Pacific market was valued at USD 7.7 billion in 2019, holding a dominant share of the overall variable frequency drive market. Rising demand for energy optimization, supportive government regulations and policies, and increasing focus on developing the manufacturing sector are the key factors leading to the market growth in the region. Besides, Asia Pacific exhibits strong economic growth owing to the rapid development in commercialization and industrialization in India, China, Japan, Australia, and Indonesia, which is anticipated to surge the demand for VFDs across various end-use industries.
The Latin America market is projected to expand at the highest CAGR over the forecast period owing to increasing industrialization in emerging countries such as Brazil and Mexico. Besides, growing demand for variable frequency drive across major end-use industries such as iron and steel, chemical, oil and gas, and automotive is also expected to drive the VFD market growth in the region.
The market is highly dynamic owing to the presence of private as well as public companies. Key industry players include ABB; Eaton; General Electric; Hitachi, Ltd.; Rockwell Automation, Inc.; Schneider Electric; Siemens AG; The Danfoss Group; WEG S.A.; and Yaskawa Electric Corporation. Market players are highly focused on research and development activities to develop innovative products and expand product offerings. For instance, in April 2019, The Danfoss Group introduced enhanced programmability and functionality for AC drives and control systems through TwinCAT automation software to provide more flexibility to the use of its drives.
Besides, companies are also focused on strategic collaboration, expansion, and acquisition to strengthen their position in the global market. For instance, in July 2019, Eaton, a power management company, acquired 100 percent ownership of Innovative Switchgear Solutions, Inc., a manufacturer of MV electrical equipment serving the North America commercial, industrial, and utility markets. This acquisition will enable the company to expand product offerings in the medium voltage electrical equipment segment.
Base year for estimation
Actual estimates/ Historical data
2016 - 2018
2020 - 2027
Revenue in USD million and CAGR from 2020 to 2027
North America, Europe, Asia Pacific, Latin America, Middle East & Africa (MEA)
U.S., Canada, Germany, U.K., China, Japan, India, South Korea, Brazil, Mexico
Revenue forecast, company share, competitive landscape, growth factors and trends
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This report forecasts revenue growth at the 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, Grand View Research 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 Million, 2016 - 2027)
Power Range Outlook (Revenue, USD Million, 2016 - 2027)
Application Outlook (Revenue, USD Million, 2016 - 2027)
End-Use Outlook (Revenue, USD Million, 2016 - 2027)
Oil & Gas
Food & Beverages
Regional Outlook (Revenue, USD Million, 2016 - 2027)
Middle East & Africa (MEA)
b. The global variable frequency drive market size was estimated at USD 22.5 billion in 2019 and is expected to reach USD 24.1 billion in 2020.
b. The global variable frequency drive market is expected to grow at a compound annual growth rate of 6.5% from 2020 to 2027 to reach USD 37.5 billion by 2027.
b. Asia Pacific dominated the variable frequency drive market with a share of 34.1% in 2019. This is attributable to rising demand for energy optimization, supportive government regulations and policies, and increasing focus on developing the manufacturing sector.
b. Some key players operating in the variable frequency drive market include ABB; Eaton; General Electric; Hitachi, Ltd.; Rockwell Automation, Inc.; Schneider Electric; Siemens AG; The Danfoss Group; WEG S.A.; and Yaskawa Electric Corporation.
b. Key factors that are driving the market growth include increasing investments in infrastructure development and increased usage of VFDs across major industry verticals.
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