Grid software pilots get approved through five routes: a utility innovation team or venture arm, a commission-approved grid modernization plan, a ratepayer-funded demonstration program, a federal grant with the utility as applicant, or a competitive RFP. On every route the vendor must bring a scoped use case, success metrics, a security pack, data requirements and written conversion terms.
Which funding routes can pay for a utility pilot?
Choose the route first. It sets who reviews your proposal, who pays and how long approval takes.
| Route | Who approves | Published timing | Example |
|---|---|---|---|
| Innovation team or venture arm | Innovation team plus an operating sponsor | Paid demonstrations of 8 to 16 weeks (EPRI, 2026) | EPRI Incubatenergy Labs; National Grid Partners |
| Grid modernization or distribution system plan | State commission, then utility procurement | Xcel's Colorado plan covers 2025 to 2029 (April 2025) | Xcel Colorado; National Grid Massachusetts |
| Ratepayer-funded demonstration | Commission order; utility or state agency runs it | Con Edison's REV demonstration ran August 2018 to July 2025 (October 2025) | New York REV; California EPIC |
| Federal grant through a utility | DOE selection, then award negotiation | SPARK opened in March 2026 and selected projects in September 2026 (DOE) | DOE GRIP and SPARK |
| Competitive RFP | Utility or load-serving entity, often its board | 3CE: RFP in October 2025, pilot launch planned for May 2026 (3CE, October 2025) | 3CE DERMS RFP |
When does an innovation team or venture arm fund the pilot?
This route moves fastest when an operating department already owns the problem. EPRI's 2026 Incubatenergy Labs Challenge picks 20 to 25 startups for a pitch day and runs paid proof-of-concept demonstrations with member utilities (EPRI, 2026). National Grid Partners committed $100 million to AI startups and said more than 80% of its portfolio companies work with National Grid business units (National Grid Partners, March 2025).
Utilities now work with startups more often. In a survey of 166 utility innovation leaders, 42% said they worked with startups, up from 26% a year earlier, and 64% had expanded innovation budgets (National Grid Partners, October 2025). The same survey found 32% moved innovation projects from planning to implementation, up from 24% the year before; most projects still stalled before implementation.
Ask the innovation team one question on the first call: which department will run your system after the pilot, and has that department budgeted for it next year?
How does a commission-approved plan or demonstration fund the pilot?
A commission-approved plan settles how the utility recovers the cost from ratepayers before procurement starts. Xcel Energy's Colorado distribution system plan proposed an aggregator DERMS budgeted at $5 million (NC Clean Energy Technology Center, April 2025). The Colorado PUC issued its final decision approving the plan on 15 December 2025 in Proceeding No. 24A-0547E, with cost recovery through the Grid Modernization Adjustment Clause (Xcel Energy, December 2025).
In Massachusetts, National Grid told the Department of Public Utilities it would conclude its DERMS vendor RFP in 2025, then hire a business integrator and a system integrator and roll the platform out in phases (National Grid, September 2025). In Hawaii, General Order No. 7 requires commission approval to commit more than $2.5 million to a capital project. Hawaiian Electric ran its ADMS RFP from fall 2018 to summer 2019 and then applied under that rule for a project estimated at $45.8 million (Hawaiian Electric, September 2019).
Ratepayer-funded demonstrations are the second regulatory route. New York's REV order of February 2015 directed utilities to file demonstration projects. Con Edison's curbside charging demonstration ran from August 2018 to July 2025 on a $13.4 million budget, with quarterly reports to the commission (Con Edison, October 2025). California's EPIC program invests more than $130 million a year, with the Energy Commission running 80% and PG&E, SCE and SDG&E the rest (CEC, 2026). The four administrators are presenting EPIC 5 plans totalling nearly $1 billion for 2026 to 2030 at CPUC workshops on 20, 22 and 27 October 2026 (CPUC, October 2026). Read those plans before you pitch a California utility.
Is DOE grant money still a route in 2026?
Yes for transmission upgrades, and mostly through a utility applicant. DOE terminated 321 financial awards supporting 223 projects, worth about $7.56 billion, on 1 October 2025, including awards from the Grid Deployment Office (DOE, October 2025).
SPARK, the GRIP funding round that opened in March 2026, selected 31 projects in 26 states on 24 September 2026, with $1.9 billion of federal money and $3.35 billion of recipient cost share (DOE, September 2026). SPARK funds reconductoring and grid-enhancing technologies, so DERMS vendors fit it poorly. DOE called the selections its intention to fund, so award terms come later. If you join a utility's federal application, get your scope, price and data rights written into the application before submission.
What will a DERMS RFP ask you to prove?
Expect to prove integration, security and phased delivery. Central Coast Community Energy (3CE), a California community choice aggregator, issued a DERMS RFP on 24 October 2025 with proposals due 5 December 2025 and an anticipated award on 13 March 2026 (3CE, October 2025). The RFP asked for:
- compliance with utility interconnection standards, IEEE power system standards and NERC CIP cybersecurity requirements
- standard protocols such as IEEE 2030.5
- phased integration: behind-the-meter batteries, then EV charging, then thermostats and water heaters
- a schedule that reaches a 5 MW baseline in 2026 and a 25 MW target in 2030 (3CE, October 2025)
- 3CE ownership of all customer relationships and customer data
Hawaiian Electric's ADMS selection added scripted onsite demonstrations on a subset of the utility's GIS data (Hawaiian Electric, September 2019). Prepare a demonstration that runs on the utility's own network model.
What goes in the pilot proposal pack?
Send this pack before the utility asks. Index it by reviewer.
- Scope: one use case, named feeders or substations, device count, start and end dates.
- Success metrics: baseline, target, measurement method, and the utility role that signs off the result.
- Security documents: SOC 2 Type II report, penetration test summary, data flow diagram, incident response plan, software bill of materials, and a NERC CIP mapping if the system issues control signals.
- Integration plan: interfaces to ADMS, SCADA, OMS, GIS and AMI; protocols such as IEEE 2030.5 or DNP3; read-only or control mode for the pilot.
- Data needs: network model, AMI interval data and DER registry, with data ownership, retention and deletion terms.
- Cost recovery path: the budget or proceeding that pays for the pilot and for production, such as an innovation budget, rate case, grid modernization rider, EPIC grant or DOE cost share.
- Conversion terms: the production price, the metric threshold that triggers it, and the contract vehicle for production.
How do you make the pilot convert to a production contract?
Write conversion into the pilot contract. Agree the metric, the threshold and the production price before the pilot starts, and name the budget that pays for the first year of production. If the utility must run an RFP for production, match the pilot scope to the RFP requirements so your results count as evidence. National Grid's Massachusetts DERMS plan shows the shape buyers expect. Phase 1 deploys the highest-value use cases at the highest-value locations, later phases add DER and circuits, and the final phase covers most of the service territory (National Grid, September 2025).
The regulatory routes run on commission calendars, so reach the utility before it files its next plan. For timing and buyers, read how long the utility software sales cycle takes and who signs the purchase at a utility.
To find which approval route fits your product and which utilities have plans open now, start with The Diagnostic.