A commercial energy broker is someone who plays a key role for organizations. They negotiate better energy rates to save their clients money on energy bills. These brokers work for a wide range of companies in states with deregulated energy markets, which is where market participants (customers) have the power to choose their own electricity provider for their energy needs.
You may be wondering more about commercial energy brokers, including what they do, how they earn a salary, what a day in the life of one is like, and whether one could help you. Join us as we delve deeper into commercial energy brokers and what they could mean for you.
What Does a Commercial Energy Broker Do?
A commercial energy broker serves as the middleman between a company and energy providers. This person may also go by the title of energy consultant or utility broker. As the expert intermediary between their client and the energy supplier, energy brokers understand the electricity market, so they’re better equipped to negotiate a deal, such as a flexible energy contract or one that uses renewable energy.
Much like how a real estate agent knows the housing market and helps with getting a good deal on property, an energy broker can help companies get a better deal on their electricity and natural gas (if applicable). Commercial energy brokers guide their clients through the entire process, such as:
- Gathering information about the organization’s consumption
- Collecting tenders from the right suppliers
- Initiating the switch when their client makes a choice
A commercial energy broker may also offer other services, such as energy monitoring and metering technology, to help track and reduce a company’s energy usage.
Commercial Energy Broker vs. Residential Energy Broker
A commercial energy broker and retail energy broker are similar in that they help clients save money. As their names suggest, a commercial broker works with commercial clients while a residential energy broker works with individuals who need energy solutions for their home or apartment.
Some energy brokers offer price comparison websites, such as Energy Savings, which focuses on customers in the state of Texas. With more than 140 retail electricity providers (REPs) in the Lone Star State, it can be incredibly difficult to sift through all the options. Energy Savings works to find the right energy plan for businesses as well as residential customers.
How Do Power Brokers Make Money?
Many energy suppliers partner with energy brokers, but how do these power brokers earn money while getting their client the best price for their energy? They do so by adding a commission fee or brokerage fee to the business owner’s negotiated energy rates.
For example, an energy broker may negotiate a deal that drops an organization’s energy costs from $0.05 per kilowatt hour (kWh) to just $0.035 per kWh. However, the energy brokerage firm can then negotiate an agreement with the company that includes a fee of $0.001 per kWh, bringing its total energy rate to $0.036 per kWh. The organization is still saving $0.014 per kWh, and the commercial energy broker is earning $0.001 per kWh the organization consumes.
What’s the Life of a Commercial Energy Broker Like?
A day in the life of a commercial energy broker can vary greatly, but they typically have a handful of tasks related to the energy industry that take up most of their daily working lives.
These tasks include:
- Minimizing costs and maximizing availability by forecasting energy supply and demand
- Adjusting prices base on current market conditions
- Managing delivery or receipt of wholesale power or retail load scheduling
- Purchasing or selling energy or energy derivatives for their clients
- Analyzing client utility bills and utility rate structures to find optimal rate structures
- Answering client questions regarding commercial electricity and energy sales procedures, energy markets, or alternative energy sources
- Working with energy buyers and sellers to coordinate energy transactions
- Developing and delivering energy sale proposals
What’s the Highest-Paid Energy Broker?
The median energy broker salary, which includes commercial and residential energy brokers, is $68,649. However, salaries can range from $57,876 to $79,444. Energy broker salaries generally vary by seniority level, with entry-level energy brokers at the lower end of the salary range and energy brokers at the top seniority level earning the highest.
How Stressful Is Being a Broker?
In a Career Explorer survey, energy brokers rated their enjoyment of their work environment a 3.3 out of 5 stars. Of those surveyed, 52% of energy brokers rated their workplace satisfaction at 4 of 5 stars, showing most enjoy their job and aren’t overly stressed.
In the same survey, energy brokers rated their personality fit with their job as 3.5 of 5 stars and 62% of all those surveyed rated their personality fit as 3 or 4 stars out of 5 stars. This indicates that most energy brokers feel their jobs fit their personalities.
What Are the Pros and Cons of Being a Commercial Energy Broker?
As with many careers, being a commercial energy broker has a range of pros and cons. Let’s review the upsides and downsides of this profession to see how they measure up.
Pros of Being a Commercial Energy Broker
- Great career path: The energy sector is growing quickly, giving energy brokers many career options.
- Income potential: Top-earning energy brokers can earn more than $79,000 annually — some even earn in the seven figures. Plus, as a commission-based job, the annual salary is virtually limitless.
- Job options: On top of having a growing career path, an energy broker has many alternative job options. These include roles in energy efficiency, emerging energy technology, and more.
Cons of Being a Commercial Energy Broker
- Market volatility: Energy prices can fluctuate greatly, leading to severe market volatility. This dramatic rise and fall of energy prices can make it tough to sell energy. The lack of confidence in what energy prices will do makes this harder, leading to dwindling customer confidence.
- Prospecting: A career as an energy broker requires finding new customers through prospecting. As a new broker, this can be challenging because you can’t rely on a proven track record of success yet.
- Competition: Many electricity brokers and other energy brokers exist in states with energy deregulation. This means there’s a lot of competition, which can make the job more challenging.
- Pay: The pay as a commercial energy broker can be relatively high, but the problem is it is commission-based pay. This means if you make no sales, you generally have no earnings.
Is Power Broker a Real Job?
Yes, being a power broker — aka an energy broker or independent energy broker — is a real job. A power broker negotiates the best energy prices for their client, whether it involves traditional electricity, natural gas, or renewable energy. They then add a brokerage fee to the newly negotiated rate, which acts as their commission.
Is an Energy Broker an In-Demand Job?
An energy broker falls under the Securities, Commodities, and Financial Services Sales Agent career umbrella. According to the U.S. Bureau of Labor Statistics (BLS), this career umbrella has an estimated job growth of 10% from 2021 through 2031, which is faster than the average career in the U.S.
What Education and Training Do I Need to Get a Job as an Energy Broker?
Most organizations hiring energy brokers require candidates to hold at least a bachelor’s degree in business, economics, finance, marketing, or another energy-related field. Courses that will help you in this role include marketing, business management, economics, communications, mathematics, and English.
In addition to this level of education, some energy brokers get an energy risk professional certification from the Global Association of Risk Professionals, which displays an understanding of risk analysis and reducing financial risks for organizations. Energy brokers can also get the Certified Professional Manufacturers Representative (CPMR) designation from the Manufacturers Representatives Educational Research Foundation, which displays competence in providing outsourced sales.
What Are the Benefits of Hiring a Commercial Energy Broker?
If you’re considering becoming a commercial energy broker or are working with a company that’s thinking about hiring one, you might be wondering what benefits it provides. Here are just a few benefits a commercial energy broker can offer an organization.
Valuable Energy Resource
Energy can be a huge expense for an organization, so having an expert in the industry working for you can be invaluable. They may focus on selling energy, but they also have vast knowledge of the industry and know how to help an organization save both on energy usage and on electricity bills.
No Shopping Around
Energy prices can change quickly, which makes finding the right provider and rate a tedious process. You’ll have to contact multiple suppliers, receive quotes, organize quotes, and finally call the one with the best price hoping the price hasn’t changed. Commercial energy brokers have all this figured out and can find you the best electricity rates without you being involved in every time-consuming aspect of the process.
Supplier Relationships
Can an organization attempt to negotiate its own energy rates? Sure, but as a single account, you may lack the leverage needed to convince the utility company to give you a discount. An energy broker, on the other hand, handles a large number of accounts, making them valuable to the utility companies. This can lead to a stronger relationship and more pull when negotiating your organization’s energy rates. They also better understand the energy market and can use that to their advantage when negotiating an electricity rate.
Energy Strategy
Commercial energy brokers do more than getting a better price on energy. They can also offer strategic direction based on an organization’s energy needs. They then combine these needs with complex risk management analysis to find the best energy provider and contracts, ensuring longer-term savings without having to constantly switch providers.
The Bottom Line: Commercial Energy Brokers Help Companies Save on Utility Bills
Commercial energy brokers play a big role in helping organizations save money on their utility bills. They negotiate with local energy suppliers in states with deregulated energy markets. They then earn a salary by adding a small brokerage fee to the new rate. This fee works as a commission for the energy broker, sometimes resulting in a six-figure annual salary.
This rewarding role is not without its downsides, such as having to deal with a volatile market and lots of competition. However, it’s a profession that comes with relatively high satisfaction and a strong outlook.
If you’re considering hiring a commercial energy broker to reduce your business energy bills, you may want to also consider switching energy suppliers. Moreover, an energy broker like EnergySavings can help organizations and individuals negotiate lower energy rates.
Brought to you by justenergy.com
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- Source: https://justenergy.com/blog/commercial-energy-broker-who-what-when-where-and-why/
