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Question

How do commercial electricity sales typically work?

I'm considering commercial electricity sales as a part time job. Sales commissions look decent enough and I love analyzing commercial load profiles, with software (EnergyToolbase) to help. 

I'm thinking about targeting larger businesses, bringing detailed knowledge of onsite solar + storage and facility load issues to an otherwise cold(ish) call sales process. I like selling solar + batteries, but ultimately I like selling cost-effective things and shepherding a business into a better rate plan seems like an enjoyable way to work from home. The broker company I'd be working covers most deregulated retail electric provider markets.

Does anyone here do this professionally? I'd imagine its a challenge to get the right person to agree to switch their commercial provider, but then again, on a de-regulated grid it seems the most savings comes from switching providers every few years.

I'm concerned about what I don't know about this process. My background is more electrical design and installation. Are there political issues regarding electrical procurement of larger clients (i.e. $10k/month electric bills) that I should be aware of? Do these sorts of clients need help identifying the right rate structure for their load or are they already looking at this sort of data internally as a standard pratice?

Any conversation about commercial electricity sales is appreciated.

I included this picture for fun.

Answers

Hi

Do you hear about Vertual Power Plant VPP? 

It seems similar to your thoughts. Someone manages few generation facilities and selling it to load centers at spot prices.

Load centers call for hourly tenders according to supply/demand balance under their control.

John Cromer's picture
John Cromer on Jul 10, 2020 9:49 pm GMT

I'd say that's more "upstream" whereas I'm really looking at commercial electricity bill payers. I'm trying to determine if commercial rate payers on deregulated grids where they have different buying options have taken advantage of rate shopping, or if they haven't why not? 

In theory it makes sense to me that rate shopping on a deregulated grid would result in a lower electric bill, but how frequently is that actually taking advantage of? 

I went through some electricity brokering training recently and there was nothing at all on actual load management modeling which I think is necessary for commercial rate shopping. Since I'm very good at demand modeling I'm wondering if that might have haveuhave immeadiate usefullness in commercial electricity sales.

Hi John,

Amal, may have a point. If your value proposition is cost reduction, then there maybe a valid argument in not owning the asset directly and buying the energy at a discounted rate from a facility that has an oversupply and can not find a home for the excess energy.

This way, your potential customers may be able to access lower power rates, without the need to invest in the asset. Otherwise, your product/solution offering is reduced to:

  1. Matching rates between different retailers and outlying the best one to your clients (which you have outlined), and
  2. Capital investment into solar/battery and selling the payback period which is dependent on many things such the geography/site configuration/etc.

With a VPP offering (subject to the regulations) you maybe able to tap into your existing client network and access their excess energy and obtain a win for both sides without the need to invest too much into capital and without having to constantly rate shopping.

John, some large companies, instead of purchasing electricity through their local utility, procure electricity using Power Purchase Agreements (PPAs) negotiated directly with power producers. The terms generally include provision of a certain quantity of electricity, measured in megawatthours (MWh), during a specific period of time.

Brokers negotiating the terms of these contracts need to be careful about liability for false claims, however. For example, the Federal Trade Commission is increasing scrutiny of "100% renewable" claims achieved by virtue of Renewable Energy Credits (RECs).

What are RECs? Because it's virtually impossible to power a business with 100% renewable electricity, when it's not available providers purchase "credit" for electricity from renewable energy sources, which is then sold to fossil fuel generators to meet state standards. Critics point out that because two entities receive credit for generating clean electricity when it's only deserved by one, "100% renewable" electricity purchased via a REC swap is actually only 50% renewable. Though the FTC has taken a hands-off approach to enforcing fraud in these instances, it's best to include a disclaimer acknowledging "100% renewable" electricity, as it is used to promote PPAs, may include up to 50% electricity from non-renewable sources.

More about PPAs:

The Evolving Structure of Power Purchase Agreements

More about RECs and consumer fraud:

"Carbon offset and REC marketing activities raise several consumer protection issues. These issues stem both from claims for offset and REC products themselves and from claims for other products based on offset and REC purchases (e.g., ‘‘our snacks are made with green electricity’’). 

 

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