How to Successfully Scale a Grid Startup - mastering the art of utility speak
Winning Startups Master Utility Speak
The startup world and the utility grid software world often operate in different universes. A utility’s first responsibility is to keep the lights on, which creates a culture built around reliability, operational discipline, and limited risk-taking. It also creates an incredibly dedicated workforce; utility employees often stay in the industry for many years, and it is not uncommon for people to spend their entire careers at one utility.
Startups, by contrast, are shaped by a fail-fast mindset. They are built to test, iterate, and move quickly. People drawn to startups are often comfortable with risk and uncertainty. That difference in operating culture can make utilities and startups seem like unlikely partners.
But many startups have successfully bridged this divide. To scale in the utility market, a grid startup must do more than present compelling technology. It must translate its solution into a clear business case, build credibility through utility fluency, prove value with referenceable customers, reduce procurement friction, and align sales efforts with the way utilities budget and plan.
Drop the Buzzwords and Explain Tangible Business Benefits
Your grid software pitch may include AI, digital twins, physics-based models, edge intelligence, electrification, DERs, cybersecure architecture, and a flowchart with 15+ boxes. None of that matters if it does not help your utility champion build an internal business justification.
Your presentation should show, in 10 slides or fewer, how your product will reduce operating costs, shorten cycle times, increase efficiency, or solve a specific operational problem. The value proposition must be simple enough for anyone in the organization to understand and advocate for internally.
Many startups are led by engineers, and in the utility world, technical products are often sold to technical buyers. That naturally creates technical conversations. Those conversations can go well, but they may not create sales momentum unless your champion can justify the business benefit internally.
Make Sure Your Team Speaks the Language of Utilities
I remember my early sales calls for LiveData Utilities. I was overwhelmed by the alphabet soup of Grid Ops acronyms: ADMS, OMS, NMS, DERMS, SCADA, EMS, GIS, AMI, EAM, FLISR, VPP, DER, and so many more. It took a while to understand what each system was, how it worked, and how all the disparate systems tied together to operationalize a utility. But once I was fluent—or at least had a basic understanding—the trajectory of our sales changed dramatically. Utilities typically pay a premium for companies that understand their domain and speak their language.
Make sure your team not only speaks the language of utilities, but has also built products that reflect a deep understanding of utility operations. If your founding team lacks strong utility expertise, hiring a sales leader with industry experience is critical to early success.
Help Your Internal Champion Build a Real Business Justification
I spent a lot of time at Oracle building our Grid DERMS business. In a lot of ways, we were ahead of the market. We talked to many solid customers that were interested in Grid DERMS, but I left many (but not all) sales calls with the same sinking feeling: our utility champion could not articulate a business justification for purchasing Grid DERMS. The customers we were selling to were excited about the concept of Grid DERMS (because it’s cool), but could not pencil out a basic economic justification.
To close a deal, you need to help your customer succinctly sell the internal value of your solution. The business case should be so clear that your advocate can explain the problem, the benefit, the cost justification, and the expected outcome without needing your team in the room.
If your go-to advocate cannot crisply explain the business justification for buying your product, you have little chance of turning interest into a signed contract.
Understand How Utilities Budget and Plan for New Initiatives
Investor-owned utilities typically work on annual budget cycles, and there is rarely unused money available for new initiatives. If a customer has budget remaining near the end of the fiscal year, move heaven and earth to capture the remaining budget surplus. Typically, the remaining budget is operating expense.
More often, you should work with internal advocates four to six months before the end of the fiscal year so your project can be included in the next planning cycle. With a longer time horizon, you may also be able to help a utility include your solution in a multiyear regulatory filing. If approved, that can create a funded path to purchase, although it may take years to materialize—which is challenging for a startup that wants to move quickly.
In reviewing this article with Chris Ricciuti, Founder and CEO of noteworthy.ai, he reminded me of the key to utility selling:
“An operating expense is a cost a utility is trying to shrink. A capital asset is something they earn a regulated return on, usually 9 to 11 percent. Same dollar. Completely different conversation. If you can structure your product so the utility capitalizes it and rolls it into rate base, you stop asking them to spend money and start offering them something they earn on.”
Secure a Referenceable Utility Customer as Early as Possible
Utilities are cautious buyers, and most don’t want to be the first organization to adopt a new solution. That makes your first referenceable utility customer one of the most important assets your startup can build.
Focus your early resources on getting a customer into production and making that customer successful. A referenceable utility carries disproportionate weight because future buyers want evidence that your product works in an environment like theirs.
Another great insight from Chris:
“The reference that carries the most weight in this business isn’t a customer quote. It’s an approved regulatory filing. Once one commission has blessed the cost-recovery argument, the next utility’s regulatory affairs group isn’t weighing a novel idea; they’re pointing at precedent. Champions change jobs. Filings don’t.
So the advice I’d give a founder landing their first utility is to treat the filing as your asset, not your customer’s. Most startups hand it off and never think about it again. It’s the most reusable thing you’ll produce in your first two years.”
Be Strategic and Disciplined with Proofs of Concept
One or two early proofs of concept may be necessary. But many startups lose years supporting pilots that never convert into revenue. Before entering a POC, create a clear written agreement on scope, ownership, timing, success criteria, and next steps.
Set a firm timeline and define when the POC ends.
Clarify what each party is responsible for providing.
Define what happens if the POC succeeds, including the utility’s expected purchase path.
Once a startup can explain value and earn trust, the next challenge is proving that value without getting trapped in endless pilots. A POC should be a bridge to adoption, not a substitute for a sale.
Make It Easy for Utilities to Contract with You
Becoming a new vendor is a significant burden for a utility. When possible, simplify your contracting process and conform to the utility’s standard terms. Time lost in contracting can make or break a startup.
Contracting with a utility will require organizational agility. You will encounter contractual, cyber, and Responsible AI review processes. Make sure you understand all of these contracting requirements as early as possible, build reusable content to respond to them, and be prepared to take on a large amount of risk. Utilities do bend the rules sometimes, but never bend the rules quickly.
Winning Startups Master Utility Speak
Many startups have become great grid software companies, but the winners do not expect utilities to adapt to startup culture. They learn the utility operating model, speak in practical business outcomes, remove friction from adoption, and make it easy for cautious organizations to say yes.
Looking for help to commercialize your startup? Contact us at lets-get-it-started@harkador.com.