The future of the B2B energy broker market in the UK

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9 July 2013, Gas, Electricity

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For large volume customers, the trend has been for brokers to provide an end-to-end service involving energy procurement/contract analysis, invoice validation, usage monitoring, carbon management, and sustainability analysis. To have the resources to provide these services, which rely on detailed market knowledge and technical software, the broker must take advantage of economies of scale. Only the largest brokers in the market can provide a full service, so for small to medium brokers to compete consolidation is essential. This trend means that small independent brokers that only provide a cost saving/invoice validation service will be squeezed out of the major energy user (MEU) market, as larger customers are seeing less value in this one-dimensional proposition.

The trend doesn't hold for smaller business-to-business (B2B) energy customers. Datamonitor does not expect broker offerings in the SME market to change significantly, as SME brokers primarily provide a convenience service in terms of time savings in finding the best deal and reducing paperwork. However, like the MEU market, there will be SME broker consolidation as the larger brokers look to widen offerings for businesses outside of just energy (e.g. insurance, phones, merchant services) to help with customer retention from the broker's point of view.

In the full report, Datamonitor forecasts the percentage of B2B power and gas customers using the intermediated channel from 2013 to 2018 (with base year data from the Energy Buyer Research 2005-12) and splits this by Big Six and new entrant suppliers. The drivers for using a broker and the effects on customer satisfaction are also analyzed based on supplier and broker interviews and Energy Buyer Research data.

This piece is based on "The Future of the Broker in the UK B2B Energy Markets" report, which is available to purchase in our store. / / @DatamonitorEN

Source: MarketLine

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