North America Variable Frequency Drive Market is Estimated to Witness High Growth Owing to Rapid Industrialization and Growing Focus on Energy Efficiency
The North America variable frequency drive market is estimated to be valued at US$ 5,754.8 Mn in 2024, exhibiting a CAGR of 4.4% over the forecast period (2024-2031). The market is witnessing high growth owing to rapid industrialization across various sectors such as manufacturing, oil & gas, mining, and others. Furthermore, growing focus on energy efficiency and reducing operation costs is fueling the demand for VFDs in the region.
Market Dynamics:
The growth of the North America variable frequency drive market is primarily driven by rapid industrialization across various sectors and growing focus on energy efficiency. Rapid industrial development in countries, such as the U.S. and Canada, is generating significant demand for VFDs from industries to control voltage fluctuations and optimize motor speeds. Moreover, rising emphasis on reducing energy consumption and operation costs is pushing industrial operators to adopt VFDs at a wide scale. VFDs help save energy by optimizing motor speeds as per load requirement. Additionally, growing construction activities in the region are also augmenting the need for VFD integrated machinery and equipment.
Increasing Demand for Energy Efficiency is Driving Growth in North America Variable Frequency Drive Market
As energy costs continue to rise, industries and building owners are looking for ways to reduce their energy consumption and lower operating costs. Variable frequency drives help optimize motor speed to match the load required, resulting in significant energy savings compared to constant speed motors. VFDs allow motors to use only as much power as required for the application, resulting in average energy savings of around 40-50%. With rising focus on sustainability and reduction of carbon footprint, VFDs are being increasingly adopted across various industries such as oil & gas, mining, food processing, automotive, and others to lower their energy bills. This growing demand for enhancing energy efficiency is a major driver for the North America variable frequency drive market.
Implementation of Stringent Regulation around Motor Efficiency is Another Key Growth Driver
Stringent regulations around motor efficiency standards are also pushing the adoption of VFDs. Standards, such as National Electrical Manufacturers Association (NEMA) premium efficiency, International Efficiency (IE) classification, and European Commission Regulation 640/09, require the use of high efficiency motors. VFDs help comply with these regulations by modulating motor speed as per the load requirement. They minimize motor wastage and maximize efficiency. The implementation of stringent regulations to curb energy wastage and reduce carbon footprint is working as another major market driver in the region.
High Initial Cost of VFD Installation Acts as a Significant Market Restraint
The initial capital cost of installing a variable frequency drive system can be considerably high compared to direct online (DOL) starters. This high initial cost acts as a major restraint in the market, especially for small and medium enterprises with limited budgets. VFD systems not only include the cost of the drive itself but also require additional electrical infrastructure upgrades and installation services. This high upfront investment creates reluctance among some end-users and hinders the growth potential of the market.
Regular Maintenance and Troubleshooting Requirements also Limit Wider Adoption
Unlike DOL starters which have negligible maintenance needs, VFD systems require periodic maintenance and troubleshooting. Components like capacitors, cooling fans and IGBTs have finite lifespans and may need timely replacement. Regular check-ups are also required to monitor drive performance. This ongoing maintenance leads to additional operating costs over the lifespan. The need for trained personnel and service support further adds to the cost. The maintenance hassles and expenses associated act as another market restraint.
Growing Focus on Renewable Energy Creates New Opportunities
Rising focus on transitioning to clean and renewable sources of energy like solar and wind is opening new growth avenues for VFD markets. VFDs play a vital role in maximizing the efficiency of variable speed renewable energy systems. They help optimize motor operations to match fluctuating loads from sources like wind turbines and solar PV arrays. The increasing focus on integrating renewable energy throughout North America is fueling new installation opportunities for VFD systems in solar farms and wind farms. This presents a major market opportunity for participants.
Replacement of Obsolete Motors Presents Huge Growth Potential
A huge portion of motors currently installed across various industries and buildings in North America are obsolete and energy inefficient. Replacement of these old and wasteful motors with new high-efficiency VFD controlled motors can significantly boost energy savings. This replacement of aging infrastructure offers a massive opportunity for growth in the coming years. Manufacturers are targeting these replacement opportunities through incentives, financing options, and implementation of MotorMaster+ programs. The replacement wave presents the largest market potential for VFD systems in North America.
Key Developments:
- In August 2023, Danfoss A/S, a leading global provider of engineering solutions, launched the VLT Real-time Clock MCB 117 option for its entire range of VLT drives. This new feature enhances data accuracy by incorporating a dependable, battery-backed system clock, which facilitates error analysis and troubleshooting. The addition allows for the improved understanding of events and identification of root causes, due to its straightforward installation and synchronization, providing valuable operational insights across Danfoss's comprehensive lineup of VLT drives.
- In September 2022, Fuji Electric Co., Ltd., a prominent manufacturer of power electronics and energy solutions, revealed its work on a virtual power plant (VPP), which it considers crucial for accelerating the widespread use of renewable energy technologies. The company believes that VPPs, which bundle and remotely control distributed power resources such as solar power generation facilities, storage batteries, and electric vehicles owned by consumers, can help stabilize the power grid and enhance disaster resilience as renewable energy sources become the primary source of electricity.
- In May 2022, Schneider Electric, a global leader in digital transformation and energy management, reaffirmed its commitment to helping customers future-proof their operations by expanding its service portfolio with the EcoStruxure Service Plan specifically for variable speed drives (VFDs). Previously offered for other electrical assets, this plan now delivers proactive maintenance, expert support, and digital monitoring tailored to the unique needs of VFDs.
Key Player:
ABB Ltd., Delta Electronics, Inc., Eaton Corporation, Fuji Electric Co., Ltd., General Electric Company, Hitachi, Ltd., Honeywell International Inc., Inovance Technology, NIDEC Corporation, Parker Hannifin Corporation, Rockwell Automation, Inc., Schneider Electric SE, Siemens AG, TMEIC Corporation, and Yaskawa Electric Corporation
