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AC drives market will be worth more than $16bn by 2011

15 June, 2007

The global market for AC drives will climb from $10.7bn last year, to $16.1bn by 2011, according to a new forecast from the ARC Advisory Group. In a two-part study, ARC predicts that sales of high-power drives – those with ratings above 200kW – will expand faster than those of low-power drives, although the smaller drives will still constitute a larger market in terms of both drives shipped and total revenues.

According to ARC, the global market for high-power AC drives will grow at a CAGR (compounded annual growth rate) of 9.1% over the five years to 2011. This market, which was already worth more than $4.7bn last year, will expand to almost $7.4bn by 2011.

The CAGR for low-power AC drives market over the same period is forecast to be 7.9%, taking revenues from nearly $6bn in 2006 to more than $8.7bn by 2011.

ARC says that the growth in both segments is being driven largely by demand from key sectors such as the chemical, cement, metals, pharmaceuticals, power generation, oil and gas, water and wastewater, and metal and mining industries.

In particular, says ARC, the need for AC drives is being fuelled by the "astounding" global growth in demand for energy and basic materials. As well as controlling speeds and cutting energy costs, AC drives also offer other attractions such as soft-start capabilities, high power factors, and reliable operation. "Of all these factors, energy savings is an easily measurable component for the return on investment (ROI)," says ARC senior analyst Himanshu Shah, the main author of the new reports. "The payback period for an AC drive investment, based on energy savings alone, is very attractive."

According to ARC, the pressure to improve financial performance is leading to a significant change in the way that end-users approach everything that they use to control their production, engineering, and maintenance operations. AC drives help them to control their processes better and because the drives are usually reliable and easy to maintain, they help to cut their total costs of ownership (TCO).

While energy savings are boosting demand for AC drives, the growing infrastructure needs of developing countries have created a huge demand rivalling that of developed countries. Airport facilities and road-building projects are driving demand for products from the metals, mining, cement, and oil industries, ARC points out. The expanding economies of emerging countries are also creating a greater need for automated buildings, while the need for more electricity is driving huge investments in the power sector. All of these industries need AC drives.

ARC says that Eastern Europe, the former Soviet Union, and the Middle East continue to represent strong growth opportunities for AC drives suppliers. China is still one of the biggest growth markets and will remain so for several years, while India’s economy is likely to continue growing.

Asia’s strong demand for energy and basic materials, coupled with its low labour costs, means that the region will increase production of metals, chemicals, and paper. Large numbers of AC drives are needed for the production of those materials.

ARC says that the low-power AC drives market is highly fragmented and suggests several techniques that suppliers are using to differentiate themselves from each other and to offer better value to users and OEMs.

The higher-power AC drive market is less fragmented, but the suppliers are all primarily targeting applications in industries such as oil and gas, metals and mining, power generation, cement, paper, wind energy, water and wastewater, and marine. Strategies they are employing include: adding medium-voltage drives to their portfolios; offering energy audits for the retrofit market; and incorporating application-specific features in their drives.

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