Low-voltage motor suppliers unsure of impact of energy efficiency regulations

With so many conflicting signs in the current economic environment, IHS reports that motor suppliers are unsure on how effective the recent and impending energy efficiency requirements will be.


Integral horsepower low-voltage (LV) motors make up an estimated 28% of annual global electric energy consumption. However, with an increasing number of motors set to undergo stricter energy efficiency regulations by 2017, this percentage is likely to decline. Even a 1% efficiency gain for a low-voltage motor can save thousands of dollars in electricity costs over the lifetime of a motor, according to the recently released report “The World Market for Low-voltage Motors” by IHS Inc. (NYSE: IHS). With varying energy efficiency legislation in different regions around the world, it is very important to track the success of this initiative to sell more energy-saving motors. With so many conflicting signs in the current economic environment, motor suppliers are reportedly uncertain as to how effective the recent and impending energy efficiency requirements will be. 

Figure 1: The world market for low voltage motors by efficiency class: Unit shipments 2014 to 2019. Courtesy: IHS Technology

Economic difficulties in China and the Eurozone have slowed the global market’s demand for LV motors in the past few years. These difficulties have been further compounded by loopholes that exist in the regulations that have significantly diminished the intended impact of the regulations in China, Europe and even the United States. Technological advances have led to more energy efficient motor designs, substantially increasing the price of these units. However, the economic difficulties counteracted any substantial revenue growth in 2014, and downward pricing pressure from motor users remains a constant struggle for suppliers.

While Europe and the United States have taken measures to prevent motor suppliers from taking advantage of legislative loopholes, this study has found that it is not uncommon for such regulations to take three to five years to become truly effective. As a direct result, companies that can adapt to the new, upcoming requirements are likely to enjoy larger revenues as efficiency standards and customer focus on lifecycle costs remain the key drivers for this market.

Because of this, suppliers need to offer very attractive selling prices and installation costs in order to remain competitive. Based on detailed interviews and economic indicators, IHS has forecast future growth for the majority of low-voltage motors being affected by existing and impending efficiency legislation. The figure below shows that IE1/NEMA High Efficiency motors are declining rapidly throughout the forecast period (2015 to 2019). By 2019, IHS forecasts that both IE2/NEMA High Efficiency and IE3/NEMA Premium Efficiency motors will each account for a larger share of the global market than the less efficient IE1 product type.

Figure 2: IE1/NEMA High Efficiency motors are declining rapidly throughout the forecast period (2015 to 2019). Courtesy: IHS Technology

The global motor market is highly fragmented and very mature, so change often occurs slowly. However, certain sectors react quite differently to innovation than others. An example of this can be seen within the pump, fan and compressor markets, which account for more than two-thirds of motor applications annually. Because of their usual continuous-duty requirements, motor control devices, such as variable frequency drives (VFDs) and higher-efficiency IE4/NEMA Super Premium class motors, are more common than in other motor applications. Because of its heavy use of these products, the HVAC industry will experience the fastest penetration rate of higher-efficiency equipment, whereas the heavy industries such as power generation, metal processing, and mining, will be less quick to adopt newer technologies.

Figure 3: Projected world market for low voltage motors by application - market breakdown and growth from 2014 to 2016. Courtesy: IHS Technology

The 2015 Low-voltage Motors report breaks down the LV motor market into three separate classes of industry sectors: the discrete industry sector (OEMs); the process industry sector (end user); and the “other” industry sector. More than 75% of LV motors shipped in 2014 were sold into the discrete sector, which make these motors the most likely target of higher-efficiency requirements because the greatest impact in energy savings can be achieved in this category. These motors tend to operate between 1 to 10 HP and are typically the lowest-cost motors.

The key trend is that motor suppliers are venturing into other product categories and offerings in order to remain competitive. As further motor efficiency improvements are both expensive and, in some cases, excessive, it is logical to offer VFDs and even pumps, fans or compressors with above-average efficiency. This shift is identified as an increased focus on systems efficiency, which provides end users with more options and also allows motor suppliers to better understand their customers’ needs. The wrong equipment is purchased too frequently because the end user does not have the means to determine the proper equipment requirements for their applications. Motor suppliers now have an opportunity to train their customers and ensure that the right-sized equipment is utilized in the appropriate environment.

- Preston Reine is an analyst for industrial automation at IHS Technology. IHS Technology is a CFE Media content partner. Edited by Chris Vavra, production editor, CFE Media, cvavra@cfemedia.com.

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