Market Trends of Variable Frequency Drives Industry
This section covers the major market trends shaping the Variable Frequency Drives Market according to our research experts:
Rapid Industrialization and Increased Use of VFDs Across Major Vertical Industries to Drive the Market
- The rise of automation in the manufacturing sector has driven the growth of the market. For instance, according to the International Federation of Robotics, the annual installation of industrial robots increased from 382,000 in 2019 to 384,000 in 2020. According to the IFR forecasts, global adoption is expected to increase significantly, with 518,000 industrial robots operational across factories worldwide by 2024.
- A significant trend impacting the market is the focus on smart manufacturing practices. According to the India Brand Equity Foundation (IBEF), the Government of India set an ambitious target of increasing manufacturing output contribution to 25% of the Gross Domestic Product (GDP) by 2025 from 16%. The Smart Advanced Manufacturing and Rapid Transformation Hub (SAMARTH) Udyog Bharat 4.0 initiative aims to enhance awareness about Industry 4.0 within the Indian manufacturing industry and enable stakeholders to address challenges related to automation material handling.
- With the global impact of Industry 4.0, IoT, and smart manufacturing practices, the manufacturing industry is moving toward automation. VFDs are a right fit with this evolving trend.
- The market is also witnessing an increased focus on process optimization. A VFD reduces downtime in the oil and gas industry because the gas turbines require frequent maintenance, while VFDs and motors require very little maintenance. This enables more production, lowers maintenance expense, and improves productivity, thus encouraging various oil and gas companies to incorporate VFDs.
- Focusing on the energy-savings benefits of the VFDs, various governments partnered with manufacturers of VFDs and related products for installation in multiple sectors, which is driving the growth of the market studied. For instance, Danfoss partnered with the Kolkata Metro Rail Corporation (KMRC) and Chennai Metro Rail (CMRL) to offer varied drive solutions.
- VFDs are being applied to several new applications. Applications with grid interfaces, like frequency converters and pump storage, employ VFDs. New industries like carbon capture, hydrogen generation, and transportation are also anticipated to rely on VFDs.
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Asia-Pacific is Expected to be the Fastest-growing Market
- The variable frequency drives market is anticipated to hold a significant share in China, owing to the increasing operations primarily across power generation and the oil and gas industry, along with bold spending toward establishing manufacturing facilities.
- China's focus on infrastructural expansion has translated into FDI in numerous manufacturing and industrial sectors. Active backing from the Chinese government has empowered a higher number of value-addition industries, achieving overall industry growth, including several Chinese industrial sectors such as wind and solar power, telecommunications, automotive, petrochemical processing, and steel productions, among the top contributors to the progress of its economy. Therefore, these industries have the highest impact on the demand for variable frequency drives. As a result, China continues to be the most profitable market for VFDs.
- The Indian VFD industry is entering a growth phase with increasing energy prices, leading to a necessity for energy and operational-efficient motor control systems and drives. End-user awareness of surplus drive benefits, such as enhanced process control performance, minimized maintenance requirements, and improved motor and equipment life, stimulate VFD adoption.
- The market for residential ACs in Japan is one of the largest worldwide. Furthermore, the ownership of ACs in Japan is high due to expectations of thermal comfort and sociocultural preferences. Renewable energy generation in the country is taking place at a humongous rate. This needs to be integrated into the existing national grid, leading to the introduction of additional electrical infrastructure, which may ultimately drive the variable frequency drives industry.
- There has been continuous regulation enforcement by government bodies within the Asia-Pacific countries in terms of energy consumption in the past few years. This may bring good growth opportunities for the variable frequency drives industry in the next 5-7 years.
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