The European heating, ventilation and air conditioning (HVAC) industry is undergoing unprecedented change. The dynamics driving the change – technological innovation in building design and energy conservation – are altering the market and ultimately affecting equipment and applications.

Escalating energy prices across Europe are underlining the need to implement electric drives to minimize energy bills and achieve better efficiency. At the same time, efforts to minimize its carbon footprint will compel the HVAC sector to limit energy usage.

These trends highlight the importance of electric drives as an advanced and cost-effective energy-reduction solution to control HVAC components.

However, the cost of implementing electric drives for low-range HVAC applications is sometimes perceived as being too high. To encourage wider use, market participants will need to manufacture low-cost, off-the-shelf solutions for specific tasks.

“Several factors, including spiraling energy costs and mandatory compliance with energy-efficiency standards, together with a focus on air quality and its impact on human health, are boosting the European HVAC electric drives sector,” notes Frost & Sullivan Research Analyst Ramasubramanian Natarajan. “Regional trends, such as infrastructural growth in Eastern Europe, are reinforcing market potential.”

“Convincing end-users to implement drives in their HVAC applications, especially during economic slowdowns, is a challenge for drives manufacturers,” adds Ramasubramanian.

Declining prices are another market growth obstacle. Intense competition is causing the prices of drives to drop, affecting the profit margins of manufacturers. This is being exacerbated by the entry of low-cost Asian competitors that have gained a significant proportion of the domestic customer base for European manufacturers over a short span of 4 to 5 years.

Penetration into regional markets in Eastern Europe is viewed as a strategic response to these challenges.

“Many drives manufacturers are shifting their manufacturing bases to Eastern Europe to reduce their production outlays and to cater to the increased automation needs of this region,” explains Ramasubramanian. “Moreover, the heavy investments being made in infrastructure, expansion of industrial and production bases and other discrete industries, of which HVAC drives are an integral part, are luring HVAC drives manufacturers to Eastern Europe.”

According to Frost & Sullivan research, the European  electric drive market serving the HVAC industry earned revenues of $275 million in 2010 and is estimated to reach $612 million in 2017.