Variable Frequency Drive Market Analysis

A variable frequency drive (VFD) or also referred to as adjustable-frequency drive (AFD) is a type of adjustable-speed drive used in electro-mechanical drive systems to control torque and AC motor speed by changing motor input frequency and voltage. VAD is categorized into two types namely electronic drive DC and electronic drive AC. Electronic drive AC is a simple power converter that uses silicon control rectifier (SCR) to convert AC power to DC power. AC drives function on AC power input and transforms it into DC. DC drives are electrical instruments used to control the speed of a DC motor.

The global variable frequency drive (VFD) market is estimated to be valued at US$ 18,878.1 million in 2021 and is expected to exhibit a CAGR of 8.4% over the forecast period (2021-2028).

Recent Developments:

In June 2019, CG Power and Industrial Solutions Limited introduced Emotron VSX & VSM Series variable speed drives for use in the critical application that provides enhanced protection and cost-saving ability.

In May 2021, SFC Energy AG, a leading supplier of hydrogen and methanol fuel cells for stationary and mobile hybrid power solutions has received an initial order for their fully integrated Variable Frequency Drive systems (VFDs) from an Alberta Oil Producer. The order is for electric submersible pumps (ESPs)

In May 2019, Toshiba Mitsubishi-Electric Industrial Systems Corporation (TMEIC) introduced TMdrive-Guardian, an outdoor enclosure for its popular TMdrive-MVe2 medium voltage (MV) variable frequency drive (VFD).

Figure 1. Global Variable Frequency Drive (VFD) Market Value (US$ Mn), by Region, 2020

Asia Pacific held dominant position in the global variable frequency drive (VFD) market in 2020, accounting for 40.9% share in terms of value, followed by North America and Europe, respectively.
Global Variable Frequency Drive (VFD) Market- Drivers

Increasing energy efficiency is expected to drive growth the global variable frequency drive (VFD) market during the forecast period. Constantly increasing energy prices has led to the necessity of energy-efficient motor control systems. Process engineers and other executives managing the operation department are increasingly preferring deployment of variable frequency drives, in order to reduce energy consumption. This acts as an alternative to throttling devices such as dampers and valves and fixed speed controllers. For instance, in May 2015, Len Busch Roses deployed Danfoss’s variable frequency drive to regulate airflow in its snapdragon greenhouse with better precision. This helped Len Busch to reduce its energy costs by 22%.

Extending areas of applications of VFD is expected to propel the global variable frequency drive (VFD) market growth over the forecast period. Since the prices of VFDs are decreasing, the application areas have broadened significantly. Consumers are familiar with the advantages of VFDs and are deploying it for indoor applications as well. VFDs, when installed along with a flow-meter, ensure appropriate water volume and eliminate energy wastage due to worst-case design philosophy.

Market Opportunities

Advent of smart grid technology can provide lucrative growth opportunities. Smart grid technology is being increasingly adopted in emerging applications of VFDs in smart grids. This is done to vary the phase angle and voltage required. This, in turn, ensures more efficient transmission of electricity. Thus, market players can capitalize on these opportunities and gain a competitive edge in the market.

Provision of one package solution can offer major business opportunities. Key players in the market are focused on launching bundled solutions in order to reduce customer buying efforts, thereby enhancing overall customer experience. Key players such as ABB, Siemens, and Rockwell Automation are offering combined motor-drive packages designed as per intended application. By offering a one-stop solution, players seek to enhance customer experience and generate higher revenues.

Variable Frequency Drive (VFD) Market Report Coverage

Report Coverage	Details
Base Year:	2019	Market Size in 2021:	US$ 17,805.3 Mn
Historical Data for:	2016 to 2019	Forecast Period:	2021 to 2028
Forecast Period 2021 to 2028 CAGR:	8.4%	2028 Value Projection:	US$ 33,158.1 Mn
Geographies covered:	North America: U.S., Canada Latin America: Brazil, Argentina, Mexico, Rest of Latin America Western Europe: Germany, U.K., France, Italy, and Rest of Western Europe Eastern Europe: Poland, Russia, and Rest of Eastern Europe Asia Pacific: China, India, Japan, Australia, South Korea, ASEAN, Rest of Asia Pacific Middle East and Africa: GCC Countries, Israel,  South Africa, North Africa, Central Africa, Rest of Middle East
Segments covered:	By Drive Type: AC Drive, DC Drive, Servo Drive By Voltage Range: Low Voltage Range, Medium Voltage Range By Application Type: Standard, Regenerative By End-use Application: Pump, Fan, Compressor, Conveyor, HVAC, Other Applications By End-use Industry: Oil & Gas, Food Processing, Automotive, Mining & Metals, Pulp & Papers, Applications Others (Power generation, chemical processing, etc.)
Companies covered:	Fuji Electric Co., Ltd, Schneider Electric, Mitsubishi Electric Corporation, Toshiba International Corporation, Siemens AG, Emerson Industrial Automation, ABB Ltd., Johnson Controls Inc., American Electric Technologies Inc. (AETI), Rockwell Automation Inc., Danfoss India, General Electric Company, Honeywell International Inc., and Hitachi Limited
Growth Drivers:	Increasing energy efficiency Extending areas of applications of VFD
Restraints & Challenges:	High initial costs of medium voltage VFDs Technical challenges related to VFDs

Market Trends

Global oil and gas expenditure is decreasing across upstream, downstream, midstream, offshore and liquefied natural gas sub-sectors. However, the demand for industrial automation products, especially in low and medium voltage drive, is expected to remain steady. Currently, AC variable frequency is witnessing a major surge in the petrochemical industry. Air compressor and aerostatic press are both main equipment in the petrochemical industry, which work uninterruptedly and thus, consume maximum electricity. Deploying VFDs is helping end users reduce energy consumption in these applications by 20–30%.

Low voltage drives hold a dominant position in the global variable frequency drive market. This is owing to widespread applications across several industries such as food and beverages, oil & gas, and mining and metals. Furthermore, low voltage range is expected to witness significant growth in the near future, owing to rampant expansion in industrial base and manufacturing capacities across emerging economies.

Figure 2. Global Variable Frequency Drive (VFD) Market Share, By Drive Type, 2020

Key Takeaways of the Graph:

• The AC Drive segment held dominant position in the market and accounted for 70.7% share in the global variable frequency drive (VFD) market in 2020. The segment is expected to reach US$ 23,210.7 million in 2028, owing to its product characteristics that make them compatible for all types of AC induction motors.

Market Dynamics- Restraints

High initial costs of medium voltage VFDs is expected to hinder the global variable frequency drive (VFD) market growth over the forecast period. Although prices of VFDs have declined over the last decade, medium voltage VFDs come with a high price tag. Medium voltage VFDs are typically used in industrial sector and are expected to increase during the forecast period. However, high initial costs associated with medium voltage VFDs are a major hindering factor. Moreover, end users are preferring low-cost products made in China to manage budgets.

Technical challenges related to VFDs is expected to hamper growth of the global variable frequency drive (VFD) market during the forecast period. A majority of VFDs emit a series of pulses that are rapidly switched. In the presence of long cable between the motor and VFDs, these reflected pulses can lead to voltage production that exceeds line voltage, causing stress in motor windings and the cable. This, in turn, is leading to insulation failures, particularly for motors operating at 480 volts or higher. If these details are overlooked during installation phase, performance of VFDs can significantly hamper productivity of process systems, which can further lead to revenue losses.

Competitive Section

Major companies involved in the global variable frequency drive (VFD) market are Fuji Electric Co., Ltd, Schneider Electric, Mitsubishi Electric Corporation, Toshiba International Corporation, Siemens AG, Emerson Industrial Automation, ABB Ltd., Johnson Controls Inc., American Electric Technologies Inc. (AETI), Rockwell Automation Inc., Danfoss India, General Electric Company, Honeywell International Inc., and Hitachi Limited.

Key Developments

1. Major companies in the market are focused on agreements and contracts, in order to gain a competitive edge in the market. For instance, in January 2017, Mitsubishi Electric Sales Canada Inc., a subsidiary of Mitsubishi Electric Corporation of Japan, entered into an agreement for corporate marketing with the National Hockey League (NHL) to promote its Electric brand of commercial and residential products among NHL fans.
2. Key players in the market are involved in product launches, in order to expand the product portfolio. For instance, in January 2017, Fuji Electric Co. Ltd. introduced FRENIC-Ace, which is a full-featured drive with integration capabilities including applied power ratings, variable frequency drives with a sensor, PM synchronous motor control, 2-channel onboard RS485 communication port, and others.