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World Energy Solutions Inc. (XWES) Continues to Sign States and the Federal Government to Green Energy Auction Deals

Green energy has many hurdles to overcome as it establishes itself. One green area that appears to be having less of a difficult time, however, is brokering green energy. This aspect of the green movement may be the quiet aspect many are not aware of but could be the one to find profit first.

World Energy Solutions Inc., an operator of online exchanges for energy and green oriented commodities, works to broker a variety of green energy deals for its clients. Currently, the company is finding success with the Government Services Administration of the United States and other larger regional concerns.

Although there are several variables in the market for green energy management services, World Energy appears to have tapped a vein that works for larger concerns. Others seem to be focusing on smaller companies and municipalities for their business and are making progress albeit on a proportional scale. World Energy has tapped larger customers and is experiencing gains along the same proportional lines.

Its recent progress with the GSA began in 2001 and appears to have moved to a point where contracts for the GSA can be manipulated in so many ways that the GSA is meeting and beating green energy usage guidelines with ease. Under current contracts negotiated in several differing ways, the GSA is expected to purchase well over 200 kWh of power for its New York City facilities alone and save an estimated $3.5 million in power costs. Given that the GSA is responsible for 11% of total US government procurement dollars and manages $24 billion in US government assets, profit potential from this one client is quite solid.

Given that this form of energy transaction is a relatively new concept for many states and utilities it is not surprising that World Energy’s revenue per customer is varied. Each transaction through this unique auction system is different as far as revenue to the company is concerned. Generally speaking, however, revenue is derived through a negotiated commission based on a variety of factors but primarily upon the amount of power, natural gas or other green energy purchased per contract.

Overall, and as one might suspect, the second and third quarters are the most profitable for the company where electricity is concerned and the winter months where natural gas is concerned. For the year ending 2009, the company experienced an increase in revenue of 17% due primarily to increased auction activity. It also had a solid opportunity in 2009 to grow its customer base as price caps within the Ohio marketplace expired. In this respect the company’s customer base grew 38% with a corresponding revenue increase.

The market for brokering green energy is by no means an established system. World Energy, however, does seem to have a solid grasp on it along with many established and well financed (primarily through tax revenues) customers in place. As other states and larger operations come to see the savings these other organizations are having, this opportunity may be well worth a look.

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