DNV KEMA Releases 2012 Retail Energy Channel Partner Market Study

Study Predicts Indirect Non-Residential Electric Sales Will Surpass 50 Percent

BURLINGTON, MA--(Marketwire - Jun 4, 2012) - DNV KEMA Energy & Sustainability recently released its annual report of the channel partner market, which examines the indirect sales sector of competitive energy markets. The study estimates the size of the channel partner market, assesses channel partner satisfaction with retail energy providers, and identifies significant market trends.

Channel partners -- aggregators, brokers, and consultants -- are the intermediaries between energy buyers and sellers. DNV KEMA's research on this segment of the energy industry has shown that the share of indirect sales has grown steadily in the past five years. In 2007, an estimated 43 percent of all competitively served non-residential electricity sales went through channel partners. In 2011, it is estimated that 49 percent or over 250 TWh of competitive non-residential electricity sales flowed through the indirect channel. Data from DNV KEMA's study suggest that the channel partner share in 2012 will exceed 50 percent for the first time in retail power market history (see Figure 1).

Key findings from the 2012 study are as follows:

  • Channel partners play various roles in deregulated energy markets. Channel partners bring customers to retailers via prospecting, advising, organizing, and, ultimately, facilitating the purchase of energy for end users. As market makers in a variety of commercial, industrial, and institutional segments, channel partners serve all open non-residential U.S. power markets. Some channel partners also serve residential markets either as brokers or aggregators.

  • The channel partner industry is highly fragmented. Driven by low barriers to entry and industry immaturity, the channel partner landscape is heavily populated by firms with fewer than 10 employees and less than $1 million per year in revenue. Among approximately 600 firms, it is estimated that fewer than 10 manage more than 10 million MWh annually. More than 75 percent of channel partner firms have fewer than 1,000 customers; a third of the firms have fewer than 100. Although some larger firms expanded geographically, many small firms remain local providers.

  • Channel partner satisfaction with retail energy providers is lower than other business-to-business customer relationships. Seventy-two percent of channel partners gave at least one retail energy provider an overall satisfaction score of 1 or 2 (out of 5), and the overall average net score for the retail industry is 15.7 percent. Top performing retail energy providers include MP2 Energy, Washington Gas Energy Services, and First Choice Power (see Figure 2).

The complete DNV KEMA Channel Partner Market Study 2012 report -- with detailed analyses, market size estimates, and a full list of retail energy provider rankings among numerous categories -- is available to DNV KEMA Retail Energy Advisory Service subscribers.

About DNV KEMA Energy & Sustainability
DNV KEMA Energy & Sustainability, with more than 2,300 experts in over 30 countries around the world, is committed to driving the global transition toward a safe, reliable, efficient, and clean energy future. With a heritage of nearly 150 years, we specialize in providing world-class, innovative solutions in the fields of business & technical consultancy, testing, inspections & certification, risk management, and verification. As an objective and impartial knowledge-based company, we advise and support organizations along the energy value chain: producers, suppliers & end-users of energy; equipment manufacturers; as well as government bodies, corporations, and non-governmental organizations. DNV KEMA Energy & Sustainability is part of DNV, a global provider of services for managing risk with more than 10,000 employees in over 100 countries. For more information on DNV KEMA Energy & Sustainability, visit www.dnvkema.com.

Since 1995, DNV KEMA's Retail Energy Practice has offered strategic and operational consulting and research services to the retail energy market. The Retail Advisory Service client base includes 23 of the top 25 North American energy retailers, as well as numerous utilities, merchant generators, vendors, investment firms, brokers, and other stakeholders in competitive retail markets. The practice also hosts the annual DNV KEMA Retail Executive Forum where senior leaders from across North America gather to discuss key issues and challenges facing retail energy markets.

For more information on DNV KEMA's Channel Partner Market Study and Retail Energy Market Advisory Service, please contact:

Soner Kanlier, vice president
Tel: +1-781-418-5758
Email: soner.kanlier@dnvkema.com

Young Kim, associate director
Tel: +1-781-418-5744
Email: young.kim@dnvkema.com

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Figure 1. Estimated U.S. Non-residential Competitive Electricity Market Size (TWh) and Penetration of Channel Partners (%) Figure 2. Channel Partner Satisfaction with Retail Energy Providers Net Scores (ratings of 4 and 5 minus ratings of 1 and 2)*<br>* Note about net scores: Channel partners were asked to rate their 'overall satisfaction' with retail energy providers with whom they do business. Answers are based on a 5-point scale (5 - Excellent to 1 - Poor). 'Net Score' is Excellent (5) / Above-Average (4) minus Below-Average (2) / Poor (1). Retail energy providers with insufficient sample sizes were removed.