US Variable Frequency Drive Market

All industries across US have pursued technological developments to deliver high energy efficiency, which has become a significant concern. The industrial sector reportedly consumes 37% of the energy consumed globally, whereas 30% is consumed worldwide by buildings. By optimizing motor speed to match specific load requirements, VFDs eliminate the need for wasteful constant-speed operation. This results in substantial energy savings, lower operational costs, and a reduced carbon footprint. As industries and governments worldwide increase energy efficiency and sustainability, the use of VFDs will continue to grow. It is expected that electrical motors in industrial applications would consume a quarter of global electrical energy. Energy experts agree that 90% of motor life-cycle expenditures for fans and pumps are spent on energy. When these motors are fitted with variable frequency drives in service conditions with centrifugal load, their efficiency improves. Motors are applied in pumps, compressors, conveyors, and machines that depend on the rotational force to function. Variable frequency drives allow motors to be run on demand for required current, rather than running full speed and then reducing output through mechanical controls like throttles, dampers, or gears.

Variable frequency drives are increasing used in the oil & gas industry. This US oil & gas industry has been under stagnant growth phase for last few years due to declining exploration and production activities. The demand for variable frequency drives in this industry depends directly on the parameters of exploration, development, and production activities, as well as capital spending by oil and natural gas companies. Activities fluctuations in oil and natural gas prices directly affect these activities. The fluctuations are experienced due to changes in the supply of and demand for oil and natural gas, governmental regulations, including policies on the exploration, production, and development of oil and natural gas reserves, weather conditions, natural disasters, and other factors. Oil and gas companies may cut or postpone major investments on the presumption of lower oil and natural gas prices over a long run, considering that most large-scale developmental projects undertaken are for a long-term period. In addition, the market growth for variable frequency drives is also directly impacted by lower capital expenditures by oilfield operators and service providers.

Stable, reliable T&D networks have been created to meet growing energy demand. The DOE can ensure a continuous supply of electricity only through a system that can manage sudden power fluctuations. Such an increase in blackouts has been caused by several reasons, including aging infrastructure, limited investments, and unclear policies to modernize the grid. More often than any other developed country, the US experiences blackouts. Power cuts in the country take longer than an hour and have risen steadily in the last few years, thus costing American businesses about USD 150 billion per year. According to the Canadian Electricity Association, at current consumption rates, it will require a USD 400 billion investment for the electricity sector over the next 20 years in Canada. Over the last ten years, electricity demand has increased by 10% even though there are more energy-efficient products and buildings than ever. Many regulations are introduced to prevent or limit power blackouts and upgrade the aging power networks within the whole world, but especially in North America.

The variable frequency drive market is highly fragmented, with many local and international players. Product quality is the primary differentiating parameter in this market. The players from the organized sector target industrial buyers and maintain high product quality by following various industrial standards. At the same time, the players from the unorganized sector offer low-cost alternatives. Local manufacturers in most countries operate in the unorganized sector and compete strongly with global suppliers. These gray market players overpower the large players in terms of price competitiveness and local distribution networks. Gray market products are sold at a fraction of the price for legitimate, branded VFDs. The result is extremely intense pricing competition, with traditional manufacturers struggling to explain higher prices that reflect R&D and compliance charges. Moreover, gray market VFDs do not come equipped with advanced features and after-sales service, which prevents innovation and uptake of newer technologies in the market. Better ways to address this are customer education, authentication of the product, cost-effective solutions, and collaborative regulation so as to protect the market and ensure a sustainable growth.