Variable Frequency Drive Market Size, Share & Trends Analysis Report By Product Type (AC Drives, DC Drives, Servo Drives), By Power Range, By Application, By End Use, By Region, And Segment Forecasts, 2023 - 2030

Report Overview

The global variable frequency drive market size was valued at USD 25.92 billion in 2022 and is expected to expand at a compound annual growth rate (CAGR) of 5.6% from 2023 to 2030. Increasing penetration of connected devices in various sectors such as commercial, industrial, and residential sectors, coupled with rising demand for variable frequency drive (VFD) owing to their advantages such as dynamic torque control energy-saving and adjustable speed from industries such as oil & gas, automotive and power generation are major factors expected to drive the market in a positive trajectory. Additionally, increasing investment in infrastructure development is resulting in high demand for Heating, ventilation, and air conditioning (HVAC) systems which call for solutions to improve infrastructure energy output is another factor that is expected to positively impact the market growth.

Rapid industrialization in developing countries is resulting in high growth in the manufacturing and industrial sectors, which supports the growing traction towards VFD components Likewise, the power generation sector is widely adopting variable frequency drive as they use it to smoothly start large motors and continuously adjust the speed as required by the process. Thus, increasing demand for variable frequency drive from the power generation sector is expected to augment the target market growth. Industries such as metal & mining, food processing, and oil & gas use various equipment for operations that vary in technology. VFDs are used by induction, forced draft fans, boiler feed pumps, service water pumps, and conveyors that provide high power, precise speed control, and significant energy savings.

Governments across the globe are implementing stringent regulations to lower the CO2 impact on the environment and save energy which is resulting in the adoption of energy-efficient products. Also, they are planning to meet CO2 emission and energy efficiency goals to reduce the concentration of fossil fuel emissions. This is resulting in the implementation of new rules, thereby supporting market growth. For instance, in October 2019, Ecodesign Regulation (EU) came into effect which was implemented in 2 stages the first stage in July 2021 and the second in July 2023. In the first stage, the regulation covered the IE2 efficiency class mandatory for AC drives.

The major challenges faced by the global market are the high initial cost of the variable speed drives and economic slowdown. Due to the economic slowdown, the industrial and commercial sectors witnessed slow growth which lowered the demand for VFD. Also, due to COVID-19, there was a disruption in the supply chain of raw materials which impacted the availability of products. Additionally, the lack of skilled labor and high cost associated with maintenance are factors expected to hamper the global market growth

The outbreak of COVID-19 brought severe repercussions for global market growth. Implementation of strict lockdown and shutdown of manufacturing facilities resulted in a decline in demand for variable frequency drive components. However, in the second quarter of 2021, the manufacturing sector witnessed growth gradually increasing the demand for VFD and by the second quarter of 2022, the market is expected to witness growth at its full potential.

Product Insights

The AC drives segment accounted for a revenue share exceeding 68% in 2022. This growth can be attributable to the benefits of AC drives such as providing high power, easy installation compared to others, and minimum maintenance. These benefits are attracting various industries and sectors such as automotive, food & beverage, and power generation to enhance operational efficiency. Thus, rapid growth in the industrial sector is resulting in the growing demand for AC drive which is expected to support segmental growth.

The segmental growth for DC drive products is anticipated to witness moderate growth in the target market and is expected to register a growth rate of 4.4% from 2023 to 2030. The use of DC technology in industries is limited as they have high maintenance cost in comparison to AC drive technology. Also, DC drive technology is not considered energy-efficient, and cannot operate in critical conditions these factors are anticipated to hamper the segment growth.  

Power Range Insights

The low-power range type dominated the power range segment in terms of revenue share accounting for more than 40% in 2022. Many end-use industries use low-voltage frequency drives for operating machines such as pumps, fans, belt conveyors, centrifugal compressors, and centrifugal pumps. Manufacturers have been investing heavily in developing high-performance, compact-size, and low-temperature low voltage variable frequency drives. Thus, the widespread adoption of frequency drive with low voltage in industry verticals and increasing investment in research and development activities are factors expected to help the segment dominate the market growth.

The medium power range frequency drive accounted for a significant revenue share and is forecasted to register a CAGR of 5.8% from 2022 to 2030. Medium power range frequency drive (41-200 kW) provides the advantages such as greater operational flexibility and better control which is cited as a major reason for its demand from various industries such as petrochemical, wastewater plants, and mining. is increasing. Also, high demand within the petrochemical sector is expected to support segment growth.

Application Insights

The pumps segment accounted for a revenue share of 29% in 2022. Pumps are widely used in the water treatment industry, metal industry, and oil & gas industry. These pumps are integrated with variable frequency drives which help them reduce power consumption, decreasing the cost to operate a pump and helping to operate at variable speeds without a gearbox. Thus, provided benefits of adding VFD to the pump resulting in increasing demand for variable frequency drive from the water treatment plant industry, oil & gas, etc. for throttling the flow rate and enhancing the efficiency is expected to support the growth of the target segment

The HVAC segment is anticipated to account for a significant revenue share and register a CAGR of 7.0 % from 2023 to 2030. The rapid increase in residential and commercial construction activities is anticipated to augment demand for HVAC systems. Attaching VFD to the HVAC system helps in increasing energy efficiency by controlling the speed of blower fans, pumps, or compressors.

End-Use Insights

The oil and gas end-use dominated the global market by accounting for a revenue share of 19.94% in 2022. The oil and gas sector relies on motors and heavy pumps for efficient production operations such as distribution extraction and pumping. Integrating the VFD with the aid of the different motors in enhancing the production output while lowering the energy consumed. Therefore, players' approach toward increasing profit by maximizing production efficiency is poised to augment the demand for VFD. Components the industrial segment is expected to account for a significant revenue share in the target market.

The infrastructure segment is anticipated to grow at a CAGR of 6.8% from 2023 to 2030. This growth can be attributed to increasing construction activities across the globe. Likewise, the inclination toward replacing the present mechanical drives with electric motors in the construction sector will surge the demand for the market.

Regional Insight

The Asia Pacific market was valued at USD 8,890.4 Million in 2022 and dominated the market in the coming years. Rapid industrialization among emerging economies, supportive business policies by the government and increasing construction activities are factors expected to support regional market growth. Likewise, the rising energy demand is expected to increase the adoption of VFD from energy producers which is expected to support regional growth. Besides, strong and stable economic growth due to rapid commercialization and the presence of major automotive, water treatment, pulp, and food & beverage manufacturers operating in the countries such as China, Japan, and India is expected to surge demand for VFD to improve working efficiency and reduce energy consumption.

Latin American is expected to expand at a growth rate of 6.3% during the forecast period, owing to counties such as Brazil and Mexico witnessing urbanization and privatization. Likewise, increasing demand from various end-use industries such as cement, pulp, and chemicals is expected to support the VFD market growth in this region.

Key Companies & Market Share Insights

Key players that dominated the market in 2023 include ABB, Eaton, General Electric, and Hitachi Ltd. Major player are focused on enhancing the business and increasing the customer base by the introduction of new products and product enhancements. For instance, in October 2022, Rockwell Automation Inc. announced that they have increased the output frequency of its variable frequency drive used in high-speed motor applications. The enhancement was announced in its medium voltage POWERFLEX 6000T. Some prominent players in the global variable frequency drive market include:

• ABB

• Eaton

• General Electric

• Hitachi Ltd.

• Rockwell Automation Inc.

• Schneider Electric

• Siemens AG

• The Danfoss Group

• WEG S.A.

• Yaskawa Electric Corporation

Variable Frequency Drive Market Report Scope

Global Variable Frequency Drive Market Segmentation

The report forecasts revenue growth at global, regional, and country levels and provides an analysis of the latest trends in each of the sub-segments from 2018 to 2030. For this study, Grand View Research has segmented the global variable frequency drive market report based on product type, power range, application, end-use, and region:

• Product Type Outlook (Revenue, USD Million, 2018 - 2030)

  • AC Drives

  • DC Drives

  • Servo Drives

• Power Range Outlook (Revenue, USD Million, 2018 - 2030)

  • Micro (0-5 kW)

  • Low (6-40 kW)

  • Medium (41-200 kW)

  • High (>200 kW)

• Application Outlook (Revenue, USD Million, 2018 - 2030)

  • Pumps

  • Electric Fans

  • Conveyors

  • HVAC

  • Extruders

  • Others

• End-use Outlook (Revenue, USD Million, 2018 - 2030)

  • Oil & Gas

  • Power Generation

  • Industrial

  • Infrastructure

  • Automotive

  • Food & Beverages

  • Others

• Regional Outlook (Revenue, USD Million, 2018 - 2030)

  • North America

    • U.S.

    • Canada

  • Europe

    • U.K.

    • Germany

    • Rest of Europe

  • Asia Pacific

    • China

    • India

    • Japan

    • South Korea

    • Rest of Asia Pacific

  • Latin America

    • Brazil

    • Mexico

    • Rest of Latin America

  • Middle East & Africa