One of the most common questions we get asked is “what is energy brokering?” or “how does energy brokering work?”
There are a number of different elements to the answer to this question, so we have broken this down below to help explain this better.
Commercial & Industrial Clients (C&I): Businesses that are classified as commercial & industrial or C&I are typically larger businesses that consume over 100,000 kWh per annum on their electricity.
Examples of C&I Clients: Manufacturing, hospitality, agriculture & farming & logistics.
How energy brokering works for C&I clients:
Our energy brokers create a unique energy tender process for our commercial and industrial clients. We engage up to 10 top-tier energy retailers to participate and submit independent pricing offers in a bidding process so that we can obtain the best energy rates for the customer.
Once we have all the rates back from the energy retailers, we input the rates through our innovative tender software platform, which calculates each retailer offer and provides detailed cost analysis and savings summary report, this report is then sent to the client for their consideration to accept the retailer offer of their choice. This removes any bias and provides the customer with full transparency on each retailer offer available to them.
Wholesale energy market:
The offers/rates that the retailers submit in the tender process are reflective of the wholesale energy market, each retailer hedges its own cost by purchasing energy in blocks from the NEM (national energy market), which they can then sell back to consumers via c/kWh rates in fixed contract agreements for up to 5 years. These blocks of energy that they purchase are important to what they can offer the clients as the wholesale cost of power is extremely volatile and can change on a daily basis.
This makes it important that the client engages a reputable energy broker like Enercom Energy Solutions so that we can guide you through the process and ensure that you go to tender at the most optimal time and choose the right energy retailer.
Timing the market
Timing the market or forward contracting as we call it in the industry, allows consumers to lock in rates at the best opportunity when the market is at its lowest point. When commodity wholesale prices are low this correlates to the rates that retailers will offer being low.
We encourage our clients in some circumstances to lock in their contract rates 6,12 or even 24 months in advance of their current energy agreement expiring. This can mitigate their risk of paying much more by holding off and missing dips we see in the wholesale commodity market.
Retailer Offer Validity for C&I customers
Due to the market being volatile and the retailers hedging their cost, a C&I offer is typically only valid for 3-5 business days, which is usually enough time for the client to review the offer and make a formal decision on which retailer they want to go with and how long they want to lock in the rates for. We then send the client the contracts through our digital signing platform which saves paper contracts and also speeds up the process significantly and ensures the rates can be secured in a timely manner.
Our energy brokering services have been able to save millions of dollars for our clients. We have assisted hundreds of Australian businesses, government entities and not-for-profit organisations to negotiate the best possible outcomes for their future energy contracts.
You can check out some of the savings we have achieved for our C&I clients here https://enercomenergysolutions.com.au/case-studies/
Our expert energy brokers come with years of knowledge and experience to help guide you through your energy journey.
We are passionate about what we do and our energy brokers work closely with our clients to form strong and trusting relationships as a priority, after that it’s about finding the best possible energy solutions for your business.