The single most expensive mistake I see early-stage energy founders make is treating the utility market as a single buyer.
It is not. It is at least seven distinct buyer types, with different procurement processes, different funding mechanisms, different decision-makers, and different timelines. A go-to-market plan that does not pick its segments early ends up trying to sell to all of them — and reaching none.
Here is the segmentation I use as a starting point.
The seven utility buyer types
1. Investor-owned utilities (IOUs). The largest segment by capital spend. Publicly traded, regulated by state PUCs, and run capital projects through rate cases. Long cycles, large dollars, high process burden. (For why so many pilots in this segment “succeed” but never close, see Why most utility-tech pilots succeed and stall.)
2. Public power / municipal utilities. Owned by cities or public agencies. Different governance (city council, board of trustees). Capital decisions sometimes faster than IOUs because no rate case, but smaller absolute dollars.
3. Electric cooperatives. Member-owned, often rural, frequently small. Decisions sometimes happen at a co-op general manager’s desk in a single meeting. Federal financing (RUS, NRECA) shapes what they can buy. Don’t underestimate the channel — there are over 800 of them in the US.
4. ISOs and RTOs. PJM, MISO, ERCOT, CAISO, ISO-NE, NYISO, SPP. They don’t buy “products” the way utilities do — they procure services and run markets. Selling to them looks different (often via stakeholder processes and tariff filings).
5. Federal utilities and agencies. TVA, BPA, WAPA, plus DOE, DoD installations, federal lab fleets. Procurement runs through GSA and federal contracting vehicles. Long timelines but durable dollars.
6. Independent power producers and asset owners. Not utilities, but they buy a lot of utility-scale gear and software. Different sales motion — closer to an enterprise software sale, faster cycles.
7. State-level programs and regulators. California Energy Commission, NYSERDA, Mass DOER, etc. They sometimes fund pilots and demonstrations directly. Excellent for early traction; not a long-term revenue base.
Why the segmentation matters
A startup with twelve months of runway cannot win in all seven segments. Pick two. Maybe three.
The right pick depends on:
- Where does your category get funded? If it’s in-rate-base spend, you’re heavy on IOUs. If it’s federal grant-driven, you’re heavy on co-ops and federal. If it’s resilience programs, you’re heavy on state agencies and munis.
- What’s the size of an average deal? A small co-op deal might be $50K. A large IOU deal might be $5M. Your sales motion has to match the deal size.
- What’s your sales cycle tolerance? Co-ops can close in three months. IOUs can take 18. Pick the cycle that matches your runway.
The disciplined version of this
Once you’ve picked your segments, write down which utilities in each segment you intend to win in the next 18 months. Then write down which utilities you are explicitly not going to pursue.
Most founders skip the second list. It’s the more important one. (Building those two lists is typically the first deliverable of our GTM Strategy engagement.)
The companies that win in this market are the ones that pick a tight set, build deep references inside it, and use those references to expand outward. The ones that struggle are the ones that say yes to every introductory call and end up with thirty pilots and zero deployments.
If you’re working through a utility-segmentation decision, we should talk.