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Solar Equipment Brokering – A New
Business Opportunity
By Melissa Ann Schmid
Guest Column
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 valueadded
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-comprehensiveguide-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.
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12 enerG I SPRING 2020 I www.altenerG.com
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