Variable Frequency Drive (VFD) Market Size, Share & Industry Analysis, By Type (AC Drive, DC Drive, Servo Drive), By Power Range (Micro, Low, Medium, High), By Application (Pumps, Electric Fan, HVAC, Conveyors, Extruders, Others), By End-user (Power Generation, Infrastructure, Oil & Gas, Food & Beverages, Mining, Agriculture, and Others), and Regional Forecasts, 2024-2032

The global variable frequency drive (VFD) market size was valued at USD 21.03 billion in 2023 and is projected grow from USD 22.36 billion in 2024 to USD 40.02 billion by 2032, exhibiting a CAGR of 7.5% during the forecast period. Asia-Pacific dominated the variable frequency drive market with a share of 40.56% in 2023.

Variable frequency drives (VFD) are electrical equipment used with electric motors, which change the applied voltage supplied to the motor. It helps to control the operating speed to reduce energy consumption. VFD combines software solutions to monitor the functioning of speed, and thus improves its overall efficiency.

The COVID-19 pandemic had been unprecedented and staggering, with variable frequency drives experiencing lower-than-anticipated demand across all regions compared to the pre-pandemic levels. The implementation of travel bans & other restrictions, shelter-in-place-orders, and shutdowns slowed down the manufacturing industries and caused trade disruptions across the globe, thereby hampering the variable frequency drive market growth. End-use industries, such as oil & gas and power experienced a negative impact due to the spread of the COVID-19 virus, weakening their business growth. Other industry verticals, such as infrastructure also experienced a negative impact during this period. Based on our analysis, the global market exhibited a decline of -3.6% in 2020 as compared to 2019.

Variable Frequency Drive (VFD) Market Trends

Increase Demand for Energy-efficient Solutions Spur Market Opportunities

The primary electricity consumption as energy is dominated by buildings and industrial infrastructure, and it is anticipated that electric-powered motors consume around 45% of the world’s electricity in buildings and industrial applications. The growth in public awareness for the need for action on climate change and the use of sustainable technology is expected to deliver greater benefits for the environment while the global economy will propel the demand of VFDs, as adding variable speed drives, particularly in pump, fan or compressor applications that are widespread across all industries and buildings, can typically reduce power consumption by an additional 25%. The design of modern, high-efficiency motors, paired with variable-speed drives, tends to be flexible and reliable, resulting in the drive's use for HVAC systems in buildings with advancement in energy savings features.

Variable Frequency Drive (VFD) Market Growth Factors

Increasing Digital and Automation to Spur Market Growth

The increased shift toward digitalization, connectivity, and automating industrial processes by different industry verticals has witnessed a growing demand in VFDs, helping them remotely monitor the process. In complex industrial applications, such as large buildings HVAC systems, the resulting data can be optimized with a significant gain in efficiency and energy savings by controlling and monitoring the motor by variable drives, making them become smart motors and even allowing them to be controlled remotely or even automatically, further optimizing performance, system efficiency and energy savings. According to Efficiency Technology's database, around 300 million motors are utilized in various industries, large buildings, and infrastructures worldwide, and 30 million new electric motors are sold for industrial purposes every year. By reducing the motor speed according to the needs of the application, variable frequency drives have the potential to save significant energy and reduce operating costs in a variety of motor-driven applications. Increasing industrialization and rising demand for energy efficiency are expected to drive the demand for variable frequency drives and boost the market growth.

Various industry players are also performing research & development activities to include leading technologies such as the Industrial Internet of Things (IIoT) to these devices. This extension can widely help reduce downtime, energy consumption, wear & tear, and efficient machine optimization and predictive maintenance to the systems. For example, in April 2020, ABB integrated a seamless safety functionality and communication for its all-compatible variable speed drives in machine manufacturing and automation and simplifying the engineering design process in machine manufacturing and automation.

Government Regulations and Policies for Energy Saving to Spur Market Growth

Favorable government regulations and policies are expected to enhance the market growth as it acts among the main drivers of industrial investment in energy efficiency around the globe. This is particularly true of the rules implemented by large industrial producers such as China, Europe, India, and the U.S. For instance, the European Union (EU) Ecodesign Directive’s latest Ecodesign Regulation (EU) 2019/1781 came into effect in October 2019, including variable frequency drives and a wider range of motors, improving the environmental performance of products from household appliances to engineering products. The Energy Conservation Building Code (ECBC) sets minimum energy standards for upcoming commercial buildings with a connected load of 100 kW or a contract demand for 120 kVA or more. Effective implementation of the code provides residents with comfort through the adoption of passive design strategies and the integration of daylighting.

In addition, investments made in drives & motors are often an attractive proposition due to their ease of installation. They can generally be installed without requiring any additional modification of an existing industrial system, thereby leading to the rapid uptake of the system.

RESTRAINING FACTORS

High Installation Cost of VFD System to Limit Adoption

VFDs provide a wide range of energy efficiency benefits; the cost associated with installing VFD devices may hamper the market growth. The use of these drives in any industry and application leads to better efficiency of the process; however, during the upgrade and expansion of any projects, the power requirement is often changed, which may result in deployment of the drive as per user requirement for the distribution system, which will increase the total cost of installation. Moreover, VFDs for applications such as HVAC experience lower power factors, harmonics, and operational noise, which could also affect the distribution capacity of the system, resulting increase in overhead cost.

Variable Frequency Drive (VFD) Market Segmentation Analysis

By Type Analysis

AC Drive to Hold Dominant Market Share Due to Quick Installation and Cost-effective Factor

The market is segmented into AC drive, DC drive, and servo drive based on type. The AC drive segment accounted for the major share of the market in 2021, owing to its extensive use for a large number of applications. The DC drive also accounts for a significant share of the market due to its simple circuit, making it one of the most economic and highly efficient drives compared to other drives. Servo drive is another segment in the VFD market with its major robotics and automation use.

By Power Range Analysis

Low Power Range to Hold Dominant Market Share due to its High Durability and Performance

The market is divided into micro, low, medium, and high power ranges based on power range. The low power range dominates the global market. Easy configuration and less installation time lead to its adoption in general purpose applications and make it one of the premier choices in various industry verticals. Due to their efficient installation in general purpose applications, medium power range drives are set to experience substantial growth during the forecast period. The micro power range of drives is flexible for various operations due to less-complex designs and easy machines integration. It is expected to witness a sizeable growth during the forecast period. The high power range of drives is considerably better in controlling and easy to maintain, due to which, it is expected to grow considerably in the forthcoming years.

By Application Analysis

Pumps to Hold Dominant Market Share Due to Cost-Saving Factor

The market is segmented into pumps, conveyors, HVAC, electric fans, extruders, and others based on application. The pumps segment holds the largest variable frequency drive market share. The use of VFD to effectively regulate the pressure flow coupled with significant cost saving makes it one of the most viable options in pumps application. Increasing the use of electric fans in various industrial, commercial, and industrial activities will propel VFDs' market growth for electric fans. With the growing demand and need for adjustment in motor speed as per the system load to reduce the overall energy consumption by the system, the HVAC system is set to account for a significant share in the global market and grow during the forecast timeframe. Applications such as conveyors and extruders that have largely been accepted in general-purpose industries, including textile, mining, and machinery processing, are expected to experience significant growth with increased demand for energy efficiency across these industry verticals.

By End-user Analysis

Power Generation End-user to Hold Dominant Market with Increase in Electricity Demand

Based on end-user, the market is segmented into power generation, infrastructure, oil & gas, food & beverages, mining, agriculture, and others. The power generation sector uses VFDs every step of the way, from the fuel to the grid, to smoothly start large motors and continuously adjust the speed as required by the process. With rising electricity demand across countries in Asia Pacific, North America, Europe, power generation will continue to dominate the market segment during the forecast period. Subsequently, the adoption of the VFDs has increased across end-user industries such as infrastructure, oil & gas, agriculture, among others, with the growing focus on digital connectivity and automating the process is also prevailing the adoption of drives. The growing landscape of these industries globally is complementing product adoption. Other end-user industries such as the machinery industry, processing industry, textile, pulp & paper also use this drive for process efficiency.

REGIONAL INSIGHTS

Regions analyzed for the market in this report comprise North America, Europe, Asia Pacific, Latin America, and Middle East & Africa.

Electricity is set to experience a surge in demand during the forecast period. The majority of this increase will occur in the fast-growing Asia Pacific region, resulting in the largest share of the VFD market.

The growth of renewable energy in North America and Europe is expected to result in significant market share for this region.

Countries in Latin America will experience investment activities across mining and oil & gas industries. The growing landscape of these industries across the region leads to a considerable market share during the forecast period.

The Middle East & African countries are in the phase of infrastructural development. Saudi Arabia has initiated its Vision 2030 plan for sustainable growth. Along with this, South Africa is one of the rich lands for mining minerals. These industrial activities are likely to propel the market across the region.

List of Key Companies in Variable Frequency Drive (VFD) Market

Key Participants are Concentrating on Enhancing their Product Capacities

The market comprises various key players delivering scale products for numerous applications, shaping the competitive landscape. Major key players operating in the market are WEG, Danfoss Corporation, Honeywell International, and ABB, focusing on improving product capability to maintain their variable frequency drive brand. For instance, in November 2021, ABB collaborated with Shipbuilder Asenav and live fish transport service to boost aquaculture sustainability in southern Chile. The collaboration led to the introduction of the Patagón IX wellboat powered by ABB’s drives and motors, helping them improve energy efficiency in live fish transport vessels. 

List of Key Companies Profiled:

• Eaton Corporation (Ireland)


• Hitachi Hi-Rel Power Electronics (India)


• Rockwell Automation (U.S.)


• Johnson Controls (Ireland)


• Anaheim Automation Inc. (U.S.)


• WEG (Brazil)


• ABB (Switzerland)


• Nidec Motor Corporation (Japan)


• Siemens (Germany)


• Danfoss Corporation (Denmark)


• Honeywell International Inc. (U.S.)


• TMEIC (U.S.)


• Fuji Electric Corp. of America (Japan)


• Schneider Electric (France)


• Yaskawa Corporation (Japan)


• Toshiba International Corporation (U.S.)


• General Electric (U.S.)


• Mitsubishi Electric Automation, Inc. (U.S.)

KEY INDUSTRY DEVELOPMENTS:

• October 2023 – Siemens launched the new high-performance variable frequency drive, SINAMICS G220, which is designed to meet the current and future challenges in every industry. Thanks to its improved hardware and software, the SINAMICS G220 takes digital drive technology to a new level, making users’ applications more efficient, secure, and future-proof.


• April 2022 - Johnson Controls, the global leader of smart, healthy, and sustainable buildings, announced the latest upgrade of the YORK® YVAA variable speed screw chiller across its global product line. The award-winning chiller features greater operating efficiency, a smaller footprint, and integration with refrigerants that have low global warming potential.


• September 2021 - Danfoss introduced the new VACON 1000 medium-voltage drive. The new addition of these drives is the preferred choice for industrial medium-voltage general purpose applications, especially for variable torque loads such as pumps and fans.


• August 2021 - Emerson announced the launch of its original Copeland 110cc variable speed scroll compressor with a 36kW inverter drive solution. Both were manufactured in China and made available for global distribution. The new products were intended to save energy and provide environmentally friendly improvements to a wide range of commercial air conditioning solutions, including chillers, data centers, and compact air conditioning systems.


• May 2021 -  Nidec Motor Corporation announced its brand cooperation in the U.S. by extending the line of heating, ventilation, and air conditioning and refrigeration (HVACR) solutions for the aftermarket segment.

REPORT COVERAGE

The global variable frequency drive market research reports present a comprehensive industry assessment by offering valuable insights, facts, industry-related information, and historical data. Several methodologies and approaches are adopted to make meaningful assumptions and views to formulate the research report. Furthermore, the report covers a detailed analysis of market segments, including applications and regions, helping our readers get a comprehensive overview of the global market.

REPORT SCOPE & SEGMENTATION