Innovate, Procure, Scale: A Utility Roadmap

Utilities today operate in a rapidly evolving landscape where emerging technologies promise greater reliability, enhanced customer experiences, and more resilient operations. Yet, despite a growing appetite for innovation, many utilities struggle to efficiently source, test, and scale new solutions. The root of the challenge lies not in a lack of interest, but in outdated processes and fragmented approaches that prevent innovations from achieving full-scale impact.

To break free from this cycle, utilities must shift from treating innovation projects as isolated experiments to managing them like an “air traffic control” system—ensuring strategic visibility, coordination, and seamless integration. The industry's procurement maturity lags behind other sectors, highlighting deep-seated structural and operational barriers that slow technology adoption. At the same time,

utilities cannot afford to let innovation move at the pace of a rate case

- delays in deployment mean missed opportunities for efficiency, resilience, and customer value.

Regulatory frameworks must evolve to support more agile pilot designs and accelerate the transition from testing to implementation. A modernized approach—one that streamlines procurement, removes structural bottlenecks, and fosters regulatory flexibility—is essential to keep pace with industry demands.

In this article, we present a structured strategy for accelerating innovation adoption in the utility sector. We address key procurement challenges and outline practical, scalable solutions that empower utilities to move beyond pilot stagnation and toward full-scale deployment, ensuring innovation delivers real, lasting impact.

Steps to Deploying Innovation & Key Barriers

Successfully integrating new technologies into utility operations requires more than enthusiasm—it demands a structured approach to overcome persistent barriers. While utilities recognize the potential of emerging solutions, many struggle to move beyond the pilot phase due to misaligned priorities, rigid procurement processes, and regulatory constraints.

0. Buy vs. Build Strategy: The First Decision Before Procurement

Before navigating procurement challenges, utilities must first determine whether to develop solutions internally, procure from external vendors, or pursue a hybrid approach.

In-house development offers control and suits unique infrastructure or operational needs, but partnering with vendors can reduce time to market, share development costs, and provide access to specialized expertise.

1. Problem Statement Identification

When utilities do not clearly define their needs and problem areas, vendors struggle to develop targeted solutions, resulting in mismatched expectations and wasted resources on both sides. A collaborative environment that acknowledges each group’s concerns helps align decision-making and streamlines the overall process.

2. Sourcing and Managing Inbound Solicitations

Utilities without a clear innovation strategy often resist engaging startups. Once they engage startups, decision-making can be difficult due to the high volume of solicitations from vendors, each with different value propositions and limited proof points. 

3. Negotiations

Negotiations can stall when utilities and vendors assume different scopes or deliverables. Delays risk losing momentum—or becoming obsolete—for promising technologies. Strict terms aimed at minimizing risk can inadvertently deter startups.

4. Contracting

Complex approval processes can frustrate vendors and delay implementation. While thorough reviews are necessary in regulated environments, standard procurement rules often overlook the unique needs of startups and fast-moving technologies.

5. Piloting

Pilots frequently stall due to unclear success metrics, misaligned KPIs, and limited scalability indicators. Data-sharing challenges, especially for AI vendors, further complicate progress as security concerns restrict collaboration. 

6. Deployment at Scale

Utility staff may be accustomed to longstanding methods and wary of unproven technologies. Merging operational technology systems—often critical to grid reliability—with newer IT infrastructures can be technically complex and fraught with security concerns.  

Staff accustomed to legacy methods may resist new tech through skepticism or disengagement. Integrating new IT with operational systems is technically challenging and raises security concerns. CapEx-driven utility models can also deprioritize software-based solutions that reduce operational costs without a direct capital component.

Conclusion

Utilities must rethink traditional procurement processes to effectively harness the power of new technologies. By addressing the barriers outlined in this paper—ranging from unclear problem definition and vendor sourcing challenges to misaligned performance metrics and regulatory constraints—utilities can accelerate the adoption of innovations that improve service delivery and benefit customers. Ultimately, the future of the energy sector depends on effective collaboration between utilities, startups, and regulators.

For a full breakdown of our proposed solutions to streamline the utility innovation procurement process, download the full white paper.