Solar Equipment Brokering - A New Business Opportunity
By Melissa Ann Schmid
Within the rapidly growing solar power industry, a new business opportunity has emerged—solar equipment brokering. These entrepreneurial figures excel at connecting buyers and sellers around the world and offer value-added services to customers.
This article explores economic opportunities brokers enjoy and benefits brokers bring to their customers. We'll look at examples of broker success taken from EnergyBin's 17-year experience in connecting thousands of brokers in a secure B2B trading community. We'll conclude with practical steps that you can take to become a broker yourself.
To grasp the concept of brokering, think about how brokering plays out in the secondary market. The broker acts as an intermediary between buyers and sellers. The broker handles negotiations and transactional services on a commission basis. Liken an equipment broker to a stock market broker. But instead of trading stocks and bonds every day, the equipment broker, also known as a trader, is dealing in commodities—in this case, PV solar equipment.
The skills and knowledge of equipment brokers mirror that of stock and commodities brokers in other industries. Brokers are masters at networking. They are effective speakers who convey clear and concise information. They are active listeners who drill down to the core needs of their clients.
In addition, reputable brokers excel in sales and negotiating skills. They meet quality standards for service and follow through to ensure customer satisfaction. Brokers know where to glean market knowledge and often partner with technical experts to provide customers with accurate information.
Further, brokers are complex problem solvers. They work to meet delivery time constraints, handle transportation logistics with ease, and care for customers' unique needs—all while maintaining low overhead and transfer of goods costs.
These combined skills benefit customers by saving them money and resolving specific issues that the primary market is not designed to handle. Brokers realize cost savings in the range of 60 to 70 percent below MSRP due to their abilities to find optimal pricing via their global networks and negotiate ideal contractual terms. Some of these cost savings may be passed onto customers. Whether a customer is in the market for a single part or a full system, a broker will seek to quote a competitive price regardless of the quantity or rarity of the item.
On the other hand, customers who hire a broker to sell equipment save on overhead expenditures as well as time to deal with odd projects. For example, manufacturers may contract brokers to act as purchasing agents for their brands. This relationship saves manufacturers the personnel expenses of benefits compensation and taxes. Brokers also help manufacturers expand into new markets where brokers have established networks of buyers.
In the case of a distributor or developer with warehouse space, many brokers provide inventory management services. They come into your place of business, take note of older items that are not turning over, and offer to buy these items from you to resell.
Let's take a look at two examples of how brokers find success in the secondary market. These examples are taken from EnergyBin's trading community.
One EnergyBin member, a non-stocking broker, recently informed us that he negotiated a deal with another member. He sold panels for a 1.6-MW project at a $0.05/watt mark-up. His margin from this sale was $80,000. But he doesn't stop there. He continues to look for opportunities to match buyers and sellers and has reported that his revenues have tripled in one year's time from his efforts.
Another EnergyBin member, a stocking broker, shared that she found her niche in excess material. Prior to launching her firm, she worked in development. Noticing no plan for quality left-over material, she began buying panels from project sites for resale. Her mark-up includes value-added logistics and finance services for buyers and sellers. In five years' time, her company has been recognized as the 162nd fastest-growing private company in the U.S. (4th in the energy sector) as reported by Inc. 5000.
Perhaps you are ready to try your hand at brokering. Even if you are an established solar company, you may want to explore adding a brokering arm to your business model or partnering with a broker to provide your customers added value and reduced price quotes.
To get started, here are some recommendations:
Learn more about what it takes to be a broker. EnergyBin offers a free guide complete with broker business models and best practices. (https://resources.energybin.com/solar-resources/a-comprehensive-guide-to-wholesale-solar-equipment-brokering)
Find a mentor who will teach you the ropes. Many brokerage firms we work with are willing to take on interns or employees who want to build their careers in solar equipment brokering. Contact us for an introduction.
Connect to other brokers and material in a secure B2B trading community. Joining an exchange, like EnergyBin, is the best way to find equipment brokers, see what product is available in the secondary market, and gauge pricing. A word to the wise, be sure to select an exchange that pre-qualifies its members as reputable businesses.
Economic opportunities await you in the solar secondary market. Are you ready to dive in?
Melissa Ann Schmid is the Marketing Communication Manager at EnergyBin where she oversees marketing initiatives for the growing wholesale solar B2B exchange. She holds a Master's in International Business from Saint Mary's University of Minnesota and has broad work experience serving in strategic planning and marketing roles across multiple industries.