Have you ever shopped around for electricity plans and seen pricing per killowatt-hour (kWh) that changed when you checked it the very next week? Like gasoline for your car, the cost of electricity fluctuates due to market conditions as a result of supply and demand. From a customer's perspective, it may seem like an arbitrary rising and falling of electricity charges, but a lot of researching and calculating goes into determining electricity pricing for commercial and residential customers.
That's where an energy broker comes in. What is an energy broker? While the primary role of an energy broker is to track the market value of electricity produced by suppliers, they also perform other duties that can affect how customers receive electricity. To help you make more informed decisions about your electricity usage and choosing a retail electricity provider (REP), we'll teach you what an energy broker in Texas does and how it affects you and the larger deregulated electricity landscape in the state.
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What Does an Energy Broker Do?
In short, an energy broker is an intermediary between suppliers who produce electricity and distributors who transmit it to customers. They not only examine variables that affect the fair market price of electricity but also help distributors — or consumers, when they're picking an electricity plan — secure the best pricing per kWh. This process is known as energy procurement, and when it's done efficiently, it helps ensure that consumers aren't paying too much for electricity. Some energy brokers even offer consulting services to help consumers make their electricity usage more efficient and environmentally responsible.
Commercial vs. Residential Energy Brokers
While some energy brokers work in the residential sector, most operate on a larger scale. They help large businesses and organizations with massive electricity needs to procure it at a fair price. Since that fair price can change daily, most organizations have trouble keeping up with the electricity marketplace and need the professional services of a broker. Often, energy brokers can also help facilitate the sale of electricity from suppliers to distributors or consumers but are not actually involved in the sale.
As an electricity customer in a deregulated market, your "experience" with an energy broker in Texas is likely unnoticeable. These professionals work to facilitate the sale of electricity from producers to retail electricity providers, which then send the electricity to your home. While you may think your REP is responsible for setting the price of your electricity per kWh, it's actually energy brokers who determine this cost. However, you can also hire a residential broker to deliver customized electricity pricing based on your energy usage. As energy procurement experts, brokers have strong relationships with electricity suppliers, and they negotiate custom residential plans you typically won't get when you're choosing an electricity provider yourself. (You can visit our blog to learn more about retail electricity providers.)
Energy Brokers vs. Energy Consultants
The main difference between energy brokers and energy consultants is that brokers connect suppliers and distributors. Consultants only assess the electricity usage of businesses and organizations and recommend improvements to reduce the use and cost of electricity. Both jobs require extensive knowledge of the energy market and how it operates in local areas. However, some energy brokers also offer consulting services in addition to their intermediary role — in these cases, having a broker and a consultant would be redundant.
Energy consulting typically begins with an audit of an organization's energy usage, looking for any obvious waste of electricity and areas that could be improved by obtaining a new supplier. The broker or consultant will then make recommendations on how a business can make changes to reduce their operating costs through better management and finding better pricing. In today's environmental climate, these energy professionals will typically also make recommendations to incorporate more renewable and green electricity sources to help the company become more ecologically sound.
Should I Hire an Energy Broker?
Most companies don't have employees that are up to date with the fast-paced electricity market and need outside help navigating it. If your regular monthly electricity charges meet or exceed $20,000, an energy broker may be a wise investment for your business. Large office spaces, factories, and other commercial and industrial buildings can use this amount of electricity, but there's also a common residential use for energy brokers. If you operate and manage a rental property where residents don't manage their own electricity contracts, an energy broker could find you great electricity pricing to save you and your residents money.
Energy brokers in Texas don't charge fees for their services; they make a commission percentage that's already built into the pricing per kWh that consumers or distributors pay for their electricity. So, if you find an energy broker that can provide pricing that's lower than what you would get directly from a distributor, you may not even notice that you're paying for their services.
How to Become an Energy Broker
Not everyone has the skillset and the mindset it takes to become a successful energy broker. But if you're skilled in market and data analysis, sales, negotiation, and communications, you could be a great fit for a career in energy procurement. There are two tangible qualifications that most energy brokers possess:
- A Relevant Bachelors or Masters Degree: Most brokerages hire candidates with BAs or MAs in the fields of economics, finance, or business, which align with the skills needed to efficiently analyze the electricity market. Since renewable energy brokers are in higher demand year after year, it can also help to have degrees or certificates in environmental studies or renewable energy.
- An Energy Broker License: Some states require energy brokers working in the state to be licensed, and Texas is one of them. However, you are not required to be licensed if you're working as a broker for an energy brokerage firm, as long as the firm itself is licensed. If you are working independently as an energy broker or for a company that does not solely provide energy procurement services, you must be licensed.
While it is possible to become an independent energy broker or work as one for a company outside the energy sector, most brokers work for energy brokerage firms. These firms have the resources and connections with electricity suppliers that are often required to succeed as an energy broker. Once you become established in your position as an energy broker, you'll have more career paths open to you, including the connections and experience needed to open your own energy brokerage firm.
