2019 has once again been a year of significant change for third-party intermediaries (TPIs) operating in the business market, with revenues available from negotiating business energy contracts growing. Research from Cornwall Insight’s TPIs in the Business and Industrial Energy Supply Markets report found that when negotiating these contracts in 2019, TPIs could target £395mn/year, a significant 20% more than the previous year.
The small and medium enterprise (SME) sector fared better than the industrial and commercial (I&C) sector. The total revenue for TPIs operating in this segment was £225mn, an increase from £155mn in 2018. In contrast, revenues for the I&C have stagnated dipping slightly from £175mn in 2018 to £170mn in 2019.
Molly Lloyd, Analyst at Cornwall Insight, said:
“The growth in revenue for the SME market is partly due to the higher commissions seen in this sector. Suppliers that are competing to attract TPIs to promote their contracts to businesses has pushed typical commissions for new acquisition contracts significantly above inflation. With higher payments of commission being secured by TPIs selling multi-year contracts.
“The larger SME TPIs are now managing contract portfolios of a similar size to small and medium suppliers and therefore have more influence to seek better terms from suppliers including commissions.
“Revenues from SME energy brokerage for TPIs are at the highest levels Cornwall Insight has recorded. TPIs are now serving over 40% of SME energy contracts, up from just 13% recorded in our first 2014 TPI market report.
“The I&C sector has once again seen continued competitive pressure on commissions, reflecting the drive from larger customers to get quotes from multiple TPIs as well as suppliers.
“With SME energy contracts yet to face the diversification challenges seen in the I&C market, it appears that there still is plenty of growth potential for this market.”
Business and Industrial Energy Supply Markets
This service provides insight into the size of the business market and how the different players succeed in each sector. It outlines the proportion of the market using TPIs and what this means in terms of earnable revenue.
The report helps readers understand the broader challenges in the sector, from changes in regulation and discussions around a code of practice to the opportunities to grow whether organically or through a merger acquisition.