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Article Published 12/17/2018 12 min read

A Comprehensive Guide to Wholesale Solar Equipment Brokering

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Melissa Ann Schmid melissa@energybin.com

Introduction


The solar industry is the fastest growing industry in the world. Growth presents new business opportunities, such as wholesale solar equipment brokering. Whether you are a full-time solar broker, a solar company who wants to adopt broker best practices, a broker from another industry interested in expanding into the solar industry, or you are curious to learn more about equipment brokering, this guide will provide you with information to maximize your wholesale solar equipment brokering efforts. The information presented is based on industry research and over fifteen years of direct experience working with more than 13,000 equipment brokers. This guide is updated regularly to offer timely and relevant information.

 

Solar Equipment Brokering Defined

 

Throughout the global solar industry, a new player has emerged – the solar equipment broker – and has gained credibility as a viable business opportunity for those who possess the skills and knowledge to best leverage their firms.

To grasp the general concept of brokering, think about how brokering plays out in other industries, such as securities or real estate, where the broker acts as an intermediary between a buyer and a seller. The broker handles negotiations and any corresponding services of a transaction on a commission basis. The broker’s ideology rests on the principle of “buy low, sell high.”

Many types of solar brokers exist, and they tend to offer a wide array of services based on their core competencies, such as site assessments, array design, permitting, financial options, tax incentives and rebate filings, vetting installers, and collecting full system quotes. However, for the purpose of this guide, we are primarily focused on the function of buying and selling solar equipment on behalf of clients.

Without the necessary equipment, a solar array is nonexistent. The costs associated with solar equipment, including hardware costs, transportation costs, and inventory costs, directly impact quotes to clients and their decisions to invest in solar.

 

Why the Solar Industry needs Equipment Brokers

 

Regardless of what capacity solar brokers are operating in, keeping tabs on the best equipment deals and mastering efficient supply chain processes is crucial for maintaining a competitive edge in the solar industry. Assuming that local installers have access to the best solar equipment deals is, in many cases, not true. Rather, a solar broker would want to seek out the optimal deal for clients, either by tapping into his/her network or by accessing the network of a broker who specializes in equipment brokering.

Equipment brokers are common throughout other commodity industries and tend to use the internet to gain global access to products and streamline transportation logistics processes. For instance, our experience is based on over fifteen years of working closely with more than 13,000 equipment brokers in the IT industry who connect daily on the BrokerBin B2B exchange platform to network and trade product. We have witnessed first-hand how the entrant of brokers into the IT industry has cut costs by as much as 70%.

Because of their specialized expertise in market intelligence and handling goods, equipment brokers are poised to benefit the solar industry while reaping individual benefits as well. From our initial two years’ experience working with brokers on the EnergyBin B2B exchange platform, we have proven evidence of cost reductions starting at 20%. As more brokers expand into the solar industry, we expect project capital costs to continue to drop by as much as 70%.

Learn more about how equipment brokers benefit the solar industry. 

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Common Characteristics of Equipment Brokers

 

On EnergyBin, we have been tracking a number of equipment brokers who have emerged since the online B2B exchange launched in 2016. Although we have observed a number of different business models, we have noticed some consistencies from broker to broker that mirror the core competencies of the IT brokers we work with on BrokerBin.

  • These brokers are using EnergyBin to network and keep tabs on market intelligence in addition to attending trade shows and other networking events.
  • They are quick to reach out to their account representatives for leads and consider EnergyBin representatives as an extension to their teams.
  • Brokers are listing inventory on EnergyBin and sending out Want-to-Buy and Want-to-Sell emails for specific equipment.
  • Their listed inventory for sale is competitively priced and usually lower than what can be found through the traditional supply chain.
  • Their equipment for sale is guaranteed in quality per industry standards and almost always backed by the manufacturer’s warranty. In some cases where the manufacturer’s warranty does not apply, brokers have the means to provide a warranty backed by their assets.
  • Brokers are representing clients throughout the world.

 

Equipment Broker Knowledge and Skills

 

The basic skills and knowledge of equipment brokers tends to mirror that of brokers in any industry. The following list of skills and knowledge directly contribute to a broker’s success.

Communication Skills – Brokers are masters at networking, whether via email, phone or in person. They are effective speakers who engage their audiences to convey clear and concise information. They are astute to interpersonal and social perceptiveness cues. They are active listeners and are able to drill down to the core needs of their clients.

Sales and Negotiating Skills – Brokers are knowledgeable of the principles and methods of prospecting leads, product demonstration, presenting influential proposals, persuading others to change their minds or behavior, negotiating and closing deals.

Customer Service – Brokers thoroughly conduct customer needs assessments. They meet quality standards for services. They follow up with customers to ensure customer satisfaction is intact.

Critical Thinking – Brokers know where to glean the knowledge they need to effectively and efficiently operate in the industry. Some brokers specialize in a technical or scientific product, excel at tracking pricing trends, equipment use and installation techniques, while others build partnerships to gain the expertise they themselves lack.

Complex Problem Solving – Because brokers are intently focused on maintaining low overhead costs and transfer of goods costs, they are resourceful in problem solving to overcome any obstacles that interfere with efficient processes.

Additional skills and knowledge may be needed for specialized services offered by the broker, depending on the scope of the broker’s firm.

 

Buying and Selling Solar Equipment

 

In our experience, we have seen many types of equipment broker business models where brokers operate in one or more capacities. Because of the nature of their work, many brokers do not confine themselves to only buying or selling equipment.

Rather, brokers have the freedom to buy and sell. They tend to base the decision to buy and/or sell on the needs of their clients, unless a significant reason presents itself to conduct business otherwise.

Note that a broker may be engaged in the purchase or sale of equipment without ever taking ownership of the product, as he/she is acting on behalf of his/her client, who assumes financial responsibility. Here are a few scenarios that illustrate why a broker would take part in buying and selling solar equipment.

  • Procurement Facilitator for a Client: A broker has a client who is ready to invest in a solar array. The broker will obtain quotes for the equipment options that best match his/her client’s needs and specifications. Once the client has selected a quote, the broker will proceed with negotiating the price and terms of sale.

Read about how Texas Green Energy provides multiple quotes to kW customers to help them make smart financial decisions.

  • Purchasing Agent:  A broker is contracted by a Developer or EPC to act as a purchasing agent for a specific project design. The broker is responsible for procuring the specific product needed, negotiating the price and terms of sale, completing the contract agreement, and scheduling transportation logistics.

A broker is commissioned by a distributor or supplier to purchase inventory for resale because the broker has connections that would put the distributor/supplier at a competitive advantage beyond their regular sourcing channels.

A broker is hired by a Contractor or Installer to locate a hard-to-find replacement part (single or multiple quantities) for an existing array and to satisfy a customer’s need.

  • Buyer: A broker decides to purchase inventory (and take ownership of the product) at a designated price that he/she knows has a strong potential to resell at a higher price. The broker may or may not have a buyer lined up to sell the product to, but because of the strength of his/her network, the broker is confident that such a purchase would be to his/her benefit.
  • Seller: A broker represents either a single organization or multiple companies and sells a range of products on their behalf. In some cases, the broker may never take ownership of the product and will simply charge a commission fee to each client.

In other cases, the broker may search for specific brands that he/she represents to buy the inventory low and then sell at a higher mark-up. The broker is resourceful at locating product via online marketplaces/exchanges as well as going into companies’ warehouses, taking note of their stock and making an offer to purchase any product that matches the brands the broker is looking for. The broker may receive technical product training from the companies he/she represents, or may partner with a technical expert provided by a solar company.

  • Reseller: A broker sets up a sales channel to resell product that he/she acquired at a low bid, for example surplus product, clearance product or excess equipment from a cancelled project, and adds a mark-up to the resale price.

In some cases, the broker may add value to the product by providing in-house quality assurance testing and a warranty. A broker engaged in reselling will target other brokers, developers, EPCs, solar contractors, residential and commercial installers, and DIY consumers as prospective customers.

Read about how ATEN Solar, a surplus reseller, leverages its network to gain new customers and pricing insights.

  • Refurbished Goods Seller: A broker will purchase recycled product, scrap or damaged equipment, repair and repackage the product for resale. The broker will test the product for quality assurance and may add a warranty as well.

 

Solar Equipment Brokering Best Practices

 

The following insights are taken from our experience working with equipment brokers for over fifteen years and what we have learned about the solar industry. These best practices are meant to be guiding principles for brokers aiming to achieve high-level business goals and sustainability in a competitive field.

 

  1. Connect to solar companies and other brokers on an online B2B exchange.

Membership to an online B2B exchange comes with many benefits, including the ability to:

  • Connect with buyers and sellers who are ready to deal.
  • Network with solar companies who are looking for sales representatives and resellers to represent their products.
  • Search for the best solar equipment deals and hard-to-find replacement parts for your customers.
  • List inventory for sale.
  • Gain insights on market intelligence including pricing, and supply and demand.
  • Keep an eye on your competitors’ activities.

It is important to join an exchange network that vets its members.  At EnergyBin, for example, there are several qualifications that a company must meet in order to receive an invitation to join the exclusive network. 

Also take note that some B2B exchanges offer ongoing support in matching buyers with sellers.  However, be aware that such added services may come with transaction fees, which are usually a percentage of the sale that takes a big chunk out of earned revenues. 

 

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  1. Attend solar events to network with solar companies and learn about the latest product technology and market trends.

A wide array of solar events exist that offer networking and learning opportunities.  Because the solar industry is a relationship-oriented industry, attending solar events is worth the investment of time and resources.

If you have never been to a solar event, we recommend that you spend your first time visiting with as many solar companies as possible.  Walk the exhibit floor.  Attend sessions on industry trends, innovations and other topics of interest.  Participate in product demonstrations.

A note to the wise, with so many solar events to choose from, it is important to scrutinize each event to determine if it is a good fit for your business.  In the end, if you don’t come away with a reasonable number of qualified leads, that event is probably not worth your time to attend.

 

  1. Stay up-to-date on industry trends and market intelligence.

Read trade publications.  Subscribe to newsworthy blogs and newsletters.  Read industry reports.  Participate in webinars. 

As previously mentioned, valuable data on market intelligence is a benefit of belonging to an online B2B exchange.  Knowing pricing, product specs, and supply and demand is critical to a broker’s daily operations and business strategy.  With this information in hand, the broker is able to successfully buy low and sell high again and again.

 

  1. Know the general policies affecting your market(s), such as Investment Tax Credits, tariffs, rebates, permits, and other legislation.

In the U.S., brokers are faced with policies and legislation on federal, state and local levels.  Many of the trade publications will keep subscribers up-to-date on such issues.  In addition, joining a trade association, like Solar Energy Industries Association, is a good way to not only get the latest news on policies but also get involved in advocacy efforts.

For international transactions, we would recommend that you partner with a customs broker if you are lacking such expertise.  Customs brokers specialize in moving product across borders efficiently and are well versed in international trade legislation.

 

  1. Add value to the customer experience.

Don’t just preach the lowest price!  The solar industry is intent on providing price feasibility AND quality product and service.  The lowest cost panel is not always the best choice for the customer if it falls short of their energy consumption needs. 

Many solar brokers have created business models with added services to provide a holistic experience for their customers.  Consider ways you can add value based on your core competencies.

 

  1. Form partnerships with others who excel at strengths you don’t have – think Adam Smith’s Law of Comparative Advantage!

The famous economist, Adam Smith, first coined the concept of comparative advantage in The Wealth of Nations (published in 1776).  Essentially, he argued that a country should engage in international trade for any given commodity when another country has succeeded in producing that same commodity with greater efficiency.  This same concept can be viewed from a micro-economic level with respect to individuals and companies.

For example, if you are a master at solar equipment procurement but lack the skills needed to design solar arrays, consider partnering or subcontracting with a solar design engineer to create a value-added service to your customers.  You don’t need to know everything there is to know about solar.  But you should know who you can contact in your network when you have specific questions or needs.

 

  1. Know your customers’ needs through and through.

The decision to create value-added services as components of your overall business model strategy will come down to how well you know the needs of your ideal customers.  If you are just starting out in solar, take time to research those companies and/or individuals who would be your ideal customers.

As you meet with customers, ask them qualifying questions that fully address their needs, and clarify what you heard them say.  Review expectations and next steps.  Follow up with meeting recap correspondence and additional questions to further gain clarity and ensure you satisfy their expectations.

 

  1. Keep tabs on what your competitors are doing.

The solar industry is highly competitive.  Taking the time to identify and analyze your competitors will help you stay one step ahead of them.  Check out their websites from time to time.  Watch their activity on online B2B exchanges.  Subscribe to their newsletters.  Follow them on social media.

 

  1. Streamline processes and seek ways to continually reduce costs.

Those companies who “race to the bottom” on solar equipment costs tend to fail in the solar industry.  However, companies must strive to reduce costs without sacrificing quality.  In order for solar to become a mainstream consumable, the overall cost to install a solar array must come down.  Plus, those companies that continuously improve their processes and reduce costs gain a competitive advantage.

 

  1. Look at the big picture of what solar power brings.

It’s not just about the initial solar array.  Think about all the add-on renewable energy commodities from electric vehicle chargers to energy storage units to smart thermostats and more that you can offer to customers who value clean energy solutions. 

Many solar installers who meet with homeowners and businesses consult their customers on green solutions to achieve optimal energy efficiency.  With new green technology hitting the market, more opportunities to buy and sell come into play.

 

 

This page will be frequently updated with additional information for wholesale solar equipment brokers and anyone interested in becoming an equipment broker in the solar industry.

 

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