The global variable frequency drive market is projected to reach USD 24.3 billion by 2025 from an estimated USD 19.2 billion in 2020, at a CAGR of 4.8% during the forecast period. This growth can be attributed to factors such as growing regulations towards energy efficiency, upgradation & modernization of aging infrastructure for safe & secure electrical distribution systems, and increasing rate of industrialization and urbanization. However, stagnant growth of the oil & gas industry and decrease in the exploration & production activity is hindering the growth of the variable frequency drive market.
COVID-19 Impact on the Global Variable frequency drive Market
The COVID-19 pandemic has slowed the growth of the power industry. This is primarily due to nationwide lockdowns that have been imposed to prevent further spike in the spread of the disease. The renewable energy industry, which until recently was growing at a rapid pace, has been witnessing slow growth over the past few months. This slowdown is mainly due to economic contractions, which have resulted in the reduction of power demand from various end-user industries. With decrease in power demand, it is estimated that there would be very negligible investments from utilities for replacing aging grid infrastructure and new renewable installations.
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The Asia Pacific region is estimated to be the largest and fastest growing variable frequency drive market during the forecast period. The region has been segmented, by country, into China, India, Japan, South Korea, Australia, Indonesia, and the Rest of Asia Pacific. The growth of this region is primarily driven by countries such as China, South Korea, and Japan, which are considered as the main manufacturing hubs for variable frequency drives. Over the past few years, this region has witnessed rapid economic development as well as the growth of the transmission & distribution sectors, thereby resulting in an increase in the variable frequency drive market. The automation in manufacturing sector in countries such as China, South Korea, Japan, and India is taking place at a humongous rate, thereby driving the variable frequency drive market.
The variable frequency drive market, by end-user, is segmented into oil & gas, industrial, power, and infrastructure. The industrial segment is expected to hold the largest market share in 2020 and is projected to grow at the highest CAGR during the forecast period. This is primarily because electric motor systems account for about 60% of the global industrial electricity consumption. The use of drive systems enhances energy efficiency and offers better process control and regulation by reducing downtime. The infrastructure segment is expected to hold the second largest market share in 2020 and is projected to grow at the second highest CAGR during the forecast period.
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The AC drive segment of the variable frequency drive market is expected to grow at the highest CAGR during the forecast period, as they are used in a wide range of applications such as pumps, fans, compressors, and conveyors. The Asia Pacific region is expected to hold the largest market share of the AC drive segment between 2020 and 2025 because of the installation of new electrical infrastructure and installation of renewable energy generation units. Hence, with the new upcoming electrical infrastructure on the cards, major tenders would be released by the utilities and the oil & gas and mining sector industries creating the demand for variable frequency drive.
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