We are independent & ad-supported. We may earn a commission for purchases made through our links.
Advertiser Disclosure
Our website is an independent, advertising-supported platform. We provide our content free of charge to our readers, and to keep it that way, we rely on revenue generated through advertisements and affiliate partnerships. This means that when you click on certain links on our site and make a purchase, we may earn a commission. Learn more.
How We Make Money
We sustain our operations through affiliate commissions and advertising. If you click on an affiliate link and make a purchase, we may receive a commission from the merchant at no additional cost to you. We also display advertisements on our website, which help generate revenue to support our work and keep our content free for readers. Our editorial team operates independently of our advertising and affiliate partnerships to ensure that our content remains unbiased and focused on providing you with the best information and recommendations based on thorough research and honest evaluations. To remain transparent, we’ve provided a list of our current affiliate partners here.

What Is Wholesale Energy?

Malcolm Tatum
Updated May 17, 2024
Our promise to you
About Mechanics is dedicated to creating trustworthy, high-quality content that always prioritizes transparency, integrity, and inclusivity above all else. Our ensure that our content creation and review process includes rigorous fact-checking, evidence-based, and continual updates to ensure accuracy and reliability.

Our Promise to you

Founded in 2002, our company has been a trusted resource for readers seeking informative and engaging content. Our dedication to quality remains unwavering—and will never change. We follow a strict editorial policy, ensuring that our content is authored by highly qualified professionals and edited by subject matter experts. This guarantees that everything we publish is objective, accurate, and trustworthy.

Over the years, we've refined our approach to cover a wide range of topics, providing readers with reliable and practical advice to enhance their knowledge and skills. That's why millions of readers turn to us each year. Join us in celebrating the joy of learning, guided by standards you can trust.

Editorial Standards

At About Mechanics, we are committed to creating content that you can trust. Our editorial process is designed to ensure that every piece of content we publish is accurate, reliable, and informative.

Our team of experienced writers and editors follows a strict set of guidelines to ensure the highest quality content. We conduct thorough research, fact-check all information, and rely on credible sources to back up our claims. Our content is reviewed by subject-matter experts to ensure accuracy and clarity.

We believe in transparency and maintain editorial independence from our advertisers. Our team does not receive direct compensation from advertisers, allowing us to create unbiased content that prioritizes your interests.

"Wholesale energy" is a term used to describe the purchase and sale of different types of energy in a wholesale market environment. A number of different types of participants are involved in this type of market situation, including sellers of different types of energy, buyers who make use of those resources, and investors who are involved with companies and other entities who buy and sell large amounts of energy products. Considered a lucrative type of investment, wholesale energy can take on many forms, including electricity, natural gas, and even steam.

With wholesale energy, sellers provide bargain prices to sellers, usually in exchange for commitments to purchase significant amounts of energy products within a specified period of time. In many cases, utility companies may be both buyers and sellers in this arrangement. For example, a power company that services a given territory may contract to purchase excess electricity from another power company associated with a different territory, paying a whole price for the purchase. This approach allows the company with excess energy to earn a return from the sale, while also increasing the ability of the buyer to effectively provide energy to its customer base.

Proponents of the sale of wholesale energy see this arrangement as a means of allowing providers to secure the resources necessary to meet consumer demand without having to invest additional resources into building additional plants or production facilities. At its best, the wholesale energy market makes it possible to more equitably distribute energy products to end users who make use of those products. At the same time, buyers and sellers are able to position themselves to generate some revenue from the deal, with sellers earning a decent return from the sale and buyers purchasing the products at prices that make the resell to end users lucrative.

Detractors of the concept of wholesale energy sales in an open market note that this approach circumvents some of the checks and balances that are often included in governmental regulations designed to protect consumers. For example, it is possible that a buyer of wholesale energy could attempt to increase the rate charged for the service to the maximum amount allowed, even if the wholesale price paid for the energy is very low. This is especially true in areas where one energy provider has a monopoly on sales to customers. While this is a possibility when there are no laws or regulations that help to cap the type of rates energy providers can charge, many jurisdictions now have regulations in place that help to minimize this type of pricing activity and prevent suppliers from increasing rates over a certain amount.

About Mechanics is dedicated to providing accurate and trustworthy information. We carefully select reputable sources and employ a rigorous fact-checking process to maintain the highest standards. To learn more about our commitment to accuracy, read our editorial process.
Malcolm Tatum
By Malcolm Tatum
Malcolm Tatum, a former teleconferencing industry professional, followed his passion for trivia, research, and writing to become a full-time freelance writer. He has contributed articles to a variety of print and online publications, including About Mechanics, and his work has also been featured in poetry collections, devotional anthologies, and newspapers. When not writing, Malcolm enjoys collecting vinyl records, following minor league baseball, and cycling.
Discussion Comments
Malcolm Tatum
Malcolm Tatum
Malcolm Tatum, a former teleconferencing industry professional, followed his passion for trivia, research, and writing...
Learn more
About Mechanics, in your inbox

Our latest articles, guides, and more, delivered daily.

About Mechanics, in your inbox

Our latest articles, guides, and more, delivered daily.