How Do Energy Consultants Get Paid?
If you’ve ever considered hiring an energy consultant to help manage or reduce your business’s energy costs, you might have
If you’ve ever considered hiring an energy consultant to help manage or reduce your business’s energy costs, you might have
If you’ve ever considered hiring an energy consultant to help manage or reduce your business’s energy costs, you might have wondered how much it will cost. Or, instead, can an energy consultant help you save enough money to offset the costs of the energy consultant and their fees?
More to the point, how does an energy consultant get paid?
It’s a fair question and one of the most common questions we get asked here at Energy Professionals – “what’s your fee?”
Understanding how an energy consultant gets paid can give you more confidence in working with an energy consultant and help you see how their services can benefit your business without adding a hefty price tag.
So, while last week I wrote a pretty detailed article discussing how an energy consultant can help you reduce energy costs, today’s article focuses more on how energy consultants typically get paid and what this means for you as a business owner.
One of the best things about working with an energy consultant is that you usually don’t need to make an upfront payment.
Energy consultants are typically compensated by the energy suppliers they work with, not directly by your business.
This means you get access to expert advice, market insights, and tailored energy solutions without paying a consulting fee.
So, how does it work exactly?
Now, energy consultants and energy consulting firms have to make money, just like any business. So, you may wonder how energy consultants earn money if they do not charge you directly for their consulting.
When an energy consultant helps you secure lower energy rates or implement an energy-saving solution, such as an LED lighting retrofit, they get paid a commission or a fee from the energy solution providers.
Here are three examples of how this can work:
One of the primary services energy consultants offer is finding competitive energy rates for businesses in deregulated states.
They do this by negotiating with suppliers and leveraging their industry relationships to negotiate and get you the best deal.
When you sign a contract with a new supplier at the negotiated rate over a specific time, the supplier compensates the energy consultant. This payment is usually a tiny fractional fee or commission incorporated into the energy low energy rate they secure for you.
The rate you pay is generally lower than what you’d pay through your local utility, and it’s still lower than if you had tried to negotiate on your own, so you would benefit from the savings without paying the consultant directly.
Many energy consultants also assist with identifying and implementing energy efficiency upgrades or renewable energy solutions.
Whether installing energy-efficient lighting, upgrading HVAC systems, or integrating renewable energy sources, energy consultants work with various solution providers and installers.
When these solutions are implemented, and you pay the installer, the energy consultant usually receives a commission from the equipment supplier or installer to facilitate the deal.
Again, because they’re negotiating on your behalf, you usually save money, both in the price of the work and installation and in the long run, by saving on energy costs.
Now, some energy consultants, like Energy Professionals, offer ongoing energy management services. These services involve continuing to monitor energy usage, analyze bills, and provide strategic advice.
In this case, they use advanced utility bill management software to capture your bills and their data, analyze and report on them, and help manage and reduce energy costs through ongoing services.
Because software is involved and an energy consultant continuously manages your accounts, ongoing management services often charge a small fee. This usually applies to larger companies with many locations spread nationally or across various states.
When a fee is involved, energy consultants often do not accept additional commissions or payouts from suppliers and installers. This fee-based model helps ensure the energy consultant negotiates on your behalf 100% of the time and is completely price agnostic.
You might be wondering, “Why wouldn’t I just go directly to an energy supplier?”
The answer lies in the value an energy consultant brings.
Because they’re paid by the energy suppliers and energy solution providers, consultants are motivated to secure the best energy rates and solutions for you.
Being in the business, they have access to a broader network of suppliers and industry insights, often leading to better deals than if you approached suppliers alone.
Additionally, energy consultants do all the heavy lifting—researching market rates, negotiating contracts, managing paperwork, and implementing solutions. You benefit from their expertise and experience without having to invest a lot of time or money.
Energy consultants also protect you against all the small print in contracts that would not benefit your business’ energy strategy or energy-saving goals.
Not every energy consulting company uses the same model, so it’s always good to ask. The best energy consultants are transparent about how they get paid.
They’ll explain upfront how their fee structure works, so you know exactly what to expect. Some may offer you a breakdown of the energy rate, showing how much goes to the supplier and how much is paid as a commission.
This transparency helps build trust and ensures that there are no surprises down the line.
In short, energy consultants get paid by the energy solution providers rather than by you directly.
Their fees are built into the energy rates they help you secure or the solutions they implement, so you don’t need to worry about upfront consulting fees.
This model allows you to take advantage of their expertise, negotiate better rates, and implement cost-saving measures without added financial strain.
By working with an energy consultant, you’re tapping into their market knowledge and industry connections, which often results in significant savings for your business.
It’s a smart way to reduce energy costs and manage your energy more effectively without incurring high fees.
When you think about hiring an energy consultant, you can do so knowing that their payment structure is designed to benefit you.
James Lightning
Senior Editor, Energy Professionals
(844) 674-5465
info@energyprofessionals.com
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