Variable Frequency Drive Market by Type (AC Drive, DC Drive, and Servo Drive), Power Range (Micro, Low, Medium, and High), Application (Pumps, Conveyors, HVAC, and Electric Fan), End-user (Food & Beverage, Oil & Gas, Power Generation, Infrastructure, and Others), and Regional Analysis (North America, Europe, Asia-Pacific, and LAMEA): Global Opportunity Analysis and Industry Forecast, 2021- 2028

Global Variable Frequency Drive Market Analysis

The global variable frequency drive market is estimated to account $26,897.3 million in the 2021- 2028 timeframe, growing from $18,190.1 million in 2020, at a healthy CAGR of 5.2%.

Market Synopsis

Augmenting demand for efficient energy systems along with rising application of variable frequency drives for industrial purposes, is expected to accelerate the growth of the variable frequency drive market.

However, the capital-intensive installation during the installation of variable frequency drives is a growth-restricting factor for the market.

According to the regional analysis of the market, the Asia-Pacific variable frequency drive market is anticipated to grow at a CAGR of 5.6%, by generating a revenue of $10,304.4 million during the review period.

Variable Frequency Drive Overview

Variable frequency drive is used for regulating the voltage and frequency of electrical motors. These drives reduce the power consumption and make the working of the electrical equipment more efficient. Variable frequency drives are utilized in a diverse set of industries such as power, commercial buildings, chemical, petrochemical, mining, oil & gas, and others. Variable frequency drives do not require high maintenance and thus save a lot of operation time which is crucial in industries such as oil and gas, where delays can lead to depreciation in profits. Variable frequency drives enable production of oil to be consistent throughout the year due to their low maintenance.

The Impact of COVID-19 on the Global Variable Frequency Drive Market

The Covid-19 pandemic is having a moderate impact on the frequency conversion market as it has caused a decline in industrial demand. However, several large companies are using their strategic steps to help society recover from the chaos of COVID19. For instance, in April 2020, ABB, a large Swedish engineering and automation company, launched ABB Ability Collaborative Operations, a range of metal-centric digital solutions and maintenance services designed to help steel and aluminum manufacturers improve their operations. ABB Ability Collaborative Operations works remotely in real time with ABB's team of industry experts to ensure safety, monitor assets, and simplify maintenance. This is a step in reducing the company's operational risks. During the COVID19 crisis, the above support and business development can create many investment opportunities in the market.

Growing Need for the Optimization of Energy Systems to Surge the Market Growth

The global variable frequency drive industry is expected to witness a significant growth mainly due to the growing demand for efficient energy utilization of electrical equipment such as motors, pumps, fans, and others. Variable frequency drives are utilized with electric motors for changing the applied voltage which is supplied to the motor. They adjust the fan speed of the motor and reduce the power requirement exponentially as the power required is only consumed by electrical equipment such as motors when a variable frequency drive is utilized. In recent developments, for instance, in March 2021, US based firm Honeywell, announced about developing a power source, the Honeywell 1-Megawatt generator, to be used in aviation. The product is expected to be launched in third quarter in 2021.The generator will be combined with the Honeywell HGT1700 auxiliary power unit, used Airbus A350 XWB aircraft, to form a turbo generator, 2.5 times more powerful than the version the company unveiled in 2019. These factors are expected to aid the growth of the variable frequency drive market.

To know more about global variable frequency drive market drivers, get in touch with our analysts here.

The Capital-Intensive Installation of Variable Frequency Drives is Predicted to Restrain the Market Growth

Variable frequency drives are majorly utilized for commercial purposes in domains such as electrical turbines in powerplants, pumps in oil & gas industry, compressors in water filtration system of commercial buildings, and others for speed, motion, and torque control of the electrical equipment. The large variable frequency drives are costly and the cost of setup of variable frequency drive includes end-to-end services from installation to after-sale services. The high cost can hamper the growth of variable frequency drive market.

Advent of Industrial Internet of Things (IIOT) in the Variable Frequency Drive Market to Create Massive Investment Opportunities

The global variable frequency drive market is growing at a fast pace due to increasing adoption of technologies such as Industrial Internet of Things (IIOT). During the COVID-19 pandemic, manufacturing and process operations firms witnessed the need of remote operations of various power control and electrical systems due to social distancing norms laid out by various government bodies. Technicians will be able to control the frequency from remote places. It will introduce real-time monitoring, visual control, and predictive maintenance. The system can predict the need of maintenance of the drive when the chances of equipment failure are high. These features are expected to improve the domain of operational efficiency, mass customization, remote diagnostics, and others. These factors are expected to create new scope of opportunities for the global variable frequency drive market in the forecast period.

To know more about global variable frequency drive market opportunities, get in touch with our analysts here.

Source: Research Dive Analysis

The AC drive sub-segment is predicted to have a dominating market share in the global market and register a revenue of $12,347.9 million during the forecast period from $9,079.8 million in 2020.
AC drive is used to control the speed of electric motors that helps to reduce energy utilization and generate energy with efficiency when used in turbines for power generation plants and reduction of mechanical stress on motor control applications. The AC drive sub-segment is predicted to hold a major market share in the variable frequency drive in terms of type of drive segment. AC drive is one of the most used electrical equipment in diverse industries such as oil & gas, agriculture, steel, robotics, and others, as these drives are important part of devices such as pumps, hydraulic systems, fans, and others.These factors are expected to bolster the growth of the sub-segment during the forecast period.

The servo drive sub-segment is anticipated to have the fastest market growth and generate a revenue of $11,490.6 million by 2028, growing from $7,049.3 million in 2020. The growth of the servo drives sub-segment for the global variable frequency drive market is mainly attributed to its wide application in domains where high efficiency, accuracy, and high speed of the electrical device is required, such as robotics and motors used in electronic equipment like central processing units (CPU) of personal computers. The increasing requirement of motors where precision is required is expected to contribute to the expansion of the sub-segment.

Source: Research Dive Analysis

The low range sub-segment of the global variable frequency drive market is projected to have the fastest growth and surpass $8,437.4 million by 2028, with an increase from $5,451.9 million in 2020. There is growing applicability of low power range drives in industries such as petrochemical, oil & gas, water & sewage treatment, sugarcane processing, and others due to characteristics such as minimized maintenance, reduced energy consumption, improved process control, and others. These factors are expected to increase the demand for low range variable frequency drives and further increase the market growth.

The medium power range sub-segment is anticipated to have a dominating market share in the global market and register a revenue of $9,518.4 million during the analysis timeframe. Industries such as steel, power generation, and others require electric drive with high power, low energy losses, and improved efficiency. These conditions are fulfilled by medium power range variable frequency drives. The growing demand in these industrial sectors such as steel, power generation, oil & gas, and others are expected to contribute in the expansion of the medium power range sub-segment.  

Source: Research Dive Analysis

The HVAC systems sub-segment of the global variable frequency drive market is predicted to being the most dominant sub-segment and expected to surpass $7,911.8 million by 2028, with an increase from $5,205.1 million in 2020. The heating, ventilation, and air conditioning (HVAC) systems sub-segment is expected to grow at a significant rate CAGR of 5.5% in the forecast period. The growing demand for energy efficient temperature control solutions for residential and commercial buildings across the globe is anticipated to increase the demand for the HVAC systems. Variable frequency drives are utilized for reducing the energy consumption and regulation of power as per requirement for optimization of performance of HVAC systems. These factors are expected to increase the demand for HVAC systems and further surge the market growth.

The conveyors sub-segment of the global variable frequency drive market is projected to have the fastest growth and surpass $5,626.5 million by 2028, with an increase from $3,606.0 million in 2020.
Increasing urbanization and development of new industries such as e-commerce are anticipated to contribute to the growth of the conveyors sub-segment. In major e-commerce companies such as Amazon Inc. conveyor systems are used in the warehouses for transportation of packaged goods from one location to another. The rise of the e-commerce industry increases in emerging developing countries such as China and India due to increase per capita income, improved lifestyle, and increasing ease in the foreign direct investment, resulting in the expansion of the e-commerce companies such as Alibaba Group, a major e-commerce firm in China. These e-commerce companies need conveyors for their efficient operations. These factors are expected to aid the growth of this sub-segment.

Source: Research Dive Analysis

The infrastructure sub-segment is predicted to have a dominating market share in the global market and along with the fastest growing sub-segment is expected to register a revenue of $7,519.2 million by 2028, growing from $4,868.1 million in 2020, growing with a healthy CAGR of 5.8% during the analysis timeframe. Due to the growing demand for equipment such as conveyors, lifts, centrifuges, and mixers in the sectors of infrastructure development including railways, bridges, dams, and others in the developing nations like China, India and middle east countries like Saudi Arabia and United Arab Emirates, the utilization of variable frequency drive enabled electrical appliances is anticipated to increase. These devices are used in construction to operate with the help of variable frequency drive for energy efficiency speed, motion, and torque control during their operations. These characteristics of variable frequency drive make them suitable in construction sector and contribute in the expansion of the infrastructure sub-segment market.

Source: Research Dive Analysis

The Market for Variable Frequency Drive in Asia-Pacific to be the Most Dominant as Well as Fastest Growing Region

The Asia-Pacific variable frequency drive market reported $6,768.5 million in 2020 and is projected to register a revenue of $10,304.4 million by 2028. The market in the region is predicted to grow with a healthy growth rate of 5.6%. The extensive growth of the Asia-Pacific variable frequency drive market is mainly driven by the substantial emphasis on areas such as industrial investment and industrial policy making. The development of industrial infrastructure in different sectors such as oil & gas industry, construction, and electrical appliances manufacturing in the emerging and developed countries of the region like China, India, Japan, and South Korea is aiding the growth of the variable frequency drive market in the Asia-Pacific region.

Competitive Scenario in the Global Variable Frequency Drive Market

Product development and mergers & acquisitions are common strategies followed by major market players.

Source: Research Dive Analysis

Some of the leading variable frequency drive market players are ABB, Rockwell Automation, Inc., Johnson Controls International plc, Honeywell International Inc., Eaton Corporation plc, General Electric, Schneider Electric, Danfoss, Siemens, and Amtech.

Porter’s Five Forces Analysis for the Global Variable Frequency Drive Market:

• Bargaining Power of Suppliers: The suppliers in the variable frequency drive market are high in number. Moreover, several companies are working on new product technologies to avoid changing the supplier if the there is a hike in the price of a particular component. 
  Thus, the bargaining power suppliers is moderate.
• Bargaining Power of Buyers: Buyers have moderate bargaining power as they expect quality services as per the price. This enforces the variable frequency drive providers to offer the best service in a cost-effective way. Thus, buyers have the option to opt for the products that best fits their preference. 
  Thus, the bargaining power of the buyers is moderate.
• Threat of New Entrants: The demand in the variable frequency drive market is high because it is a highly lucrative market. But the investment required in this market is high as it requires infrastructure development at a large scale.
  Thus, the threat of the new entrants is moderate.
• Threat of Substitutes: There is no alternative product currently for variable frequency drive solutions, which can be utilized at the scale of variable frequency drive. 
  Thus, the threat of substitutes is low.
• Competitive Rivalry in the Market: The competitive rivalry among industry leaders is high, majorly between the global players including Honeywell International Inc., Eaton Corporation plc, and General Electric. These companies are launching their new products in the international market and strengthening the position worldwide. 
  Therefore, competitive rivalry in the market is high.