Plan for 18 to 24 months at an investor-owned utility, the range a utility software CEO gave Latitude Media in November 2025. Municipal utilities and electric co-ops have no published range. Investors who back utility vendors say their cycles run shorter, because fewer approvals sit between the program lead and a purchase order.
How do the three utility types compare?
One small survey gives a number across utility types. In Grid Catalyst's September 2025 study, 17 of 24 startups had tried to run a utility pilot. Half of those projects took up to one year from first contact to approval, and 30% took more than a year. The sample mixes utility types, so treat it as a floor for pilot approval. A full production contract comes later.
| Utility type | Typical cycle | Who decides | Main delay | How to shorten |
|---|---|---|---|---|
| Investor-owned utility | 18 to 24 months to contract (Latitude Media, Nov 2025); about 6 months to a pilot (The Impact, Jul 2021) | C-suite, business users, IT, procurement and regulatory affairs (Salesforce Ventures, Jan 2024) | Cost recovery through a rate case; cloud fees booked as operating expense | Enter through an innovation program or a state pilot docket |
| Public power (municipal) | No published range; shorter by investor accounts (Enduring Planet, 2026) | A city council or an independent utility board (APPA) | Competitive solicitation and small staff | Sell through a cooperative purchasing contract or a joint action agency |
| Electric co-op | No published range; shorter by investor accounts (Enduring Planet, 2026) | The person who runs the program, under a member board | Small staff and thin budgets | Sell through the generation and transmission (G&T) co-op that supplies it |
Size your pipeline and cash runway against the top of the investor-owned range.
Why do investor-owned utilities take so long?
The regulator decides how the utility pays for software. An investor-owned utility recovers costs in rates, and it earns a return only on what regulators let it put in rate base. On-premise software counts as capital. Cloud subscriptions have usually counted as operating expense, which earns no return (Utility Dive, December 2016).
Regulators have moved, slowly and unevenly:
- NARUC passed Resolution CI-1 at its November 2016 meeting, asking states to give cloud and on-premise software similar treatment. It is non-binding (NEEP, December 2016).
- New York's May 2016 ratemaking order let the unamortized balance of prepaid software leases enter rate base and earn a return (NEEP, December 2016).
- FERC's Office of Enforcement issued guidance on December 20, 2019 (Docket AI20-1-000) that utilities may capitalize cloud implementation costs such as integration, configuration and customization. Service fees generally stay as expense.
- Illinois went the other way. On July 15, 2020 the Illinois Commerce Commission voted 3-2 to shelve a rule that would have let utilities book 80% of cloud fees as regulatory assets (Inside Chicago Government, August 2020).
A December 2025 working paper estimates 41 utilities won approval to put cloud costs in rate base. It also cites a Cloud for Utilities survey of 152 utilities in which 58% chose on-premise software because cloud spend earned no return.
Pilots carry the same problem. One investor-owned utility told the Grid Catalyst researchers it must wait several years for a rate case to recover pilot spend. Ask your champion two questions early. Which budget line pays for this? When does the next rate case file?
What does security review add?
Expect a vendor security review at an investor-owned utility, and a heavier one if your software touches grid operations. NERC's CIP-013 supply chain standard covers high and medium impact bulk electric system cyber systems. The utility's procurement process must address six vendor items (NERC guidance, October 2020): incident notification, incident response coordination, access revocation, vulnerability disclosure, software integrity checks and vendor remote access.
Utilities can assess vendors with the NATF Energy Sector Supply Chain Risk Questionnaire. NATF approved version 7.0 on May 19, 2026. Fill it in before your first meeting with IT and attach your SOC 2 report. Security review then runs alongside the business case.
How do you shorten the cycle at an investor-owned utility?
Enter through a program the utility built for new vendors. Grid Catalyst describes Xcel Energy's Rapid Innovation Framework, a team that walks a vendor through Xcel's internal security and procurement standards for a demonstration. It also cites PG&E's R&D Strategy Reports, which publish problem statements from each department. Match your pitch to a listed problem.
State pilot dockets help too. Connecticut's Innovative Energy Solutions program cuts a typical pilot from at least four years to two, according to its administrator (Utility Dive, December 2025). Grid Catalyst reports that the program allows up to $25 million per annual cycle and up to $5 million per project. In Vermont, Green Mountain Power can start a pilot under $5 million with 15 days' notice to the regulator and no prior approval.
Then run this sequence:
- Find the budget owner and the budget line before the first demo.
- Ask whether a rider or pilot docket can fund the work between rate cases.
- Send the security questionnaire and SOC 2 report with the proposal.
- Write a pilot-to-production plan with the production price, success metric and contract vehicle agreed before the pilot starts.
- Map every signer early. Our piece on who signs the purchase at a utility covers the roles.
For pilot design, read how DERMS vendors get a utility pilot approved.
How do you sell faster to public power and co-ops?
Sell through the bodies that already buy for them. Public power utilities make up 59% of US utilities but serve 15% of customers (APPA, October 2026). NRECA counts 830 distribution co-ops and 60 G&T co-ops serving 42 million people (September 2026). Most of these buyers are small, so one channel deal reaches many.
A city-owned utility is a government entity, so it can buy from cooperative purchasing contracts. Sourcewell runs the competitive solicitation so its government members need not run their own. Co-ops fall outside that route. Grid Catalyst suggests that smaller consumer-owned utilities pool evaluation through a joint action agency or a G&T co-op, so pitch those first.
APPA's DEED program funds public power research and pilots. It approved $487,203 for seven projects in April 2026. A member utility applies, and your product can be the project.
Can grant money pull a deal forward?
Yes, when the utility pays little out of pocket. Startups in the Grid Catalyst survey named direct utility funding as a factor in 80% of successful pilots. As of October 2026, DOE lists a $10.5 billion GRIP program and announced nearly $2 billion for the SPARK funding opportunity on March 12, 2026. Smart Grid Grants are open to for-profit entities as well as utilities. Offer to write the technical section of the utility's application.
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