CSUâ€™s Mechanical Engineering Department and the U.S. Department of Energyâ€™s National Renewable Energy Laboratory are developing a new model for utility companies to profit financially by selling less energy.
â€œThe utility companies have operated on the traditional business model of build a widget for the lowest cost, then sell it for the highest cost,â€ said Michael Callahan, NREL senior project leader.
Callahan said utility companies are motivated to sell more electricity to make more money, but they arenâ€™t necessarily encouraging customers to use less energy.
â€œThatâ€™s the complete opposite of energy conservation, though,â€ he said.
Callahan has teamed up with researchers at CSU and other key members of the community to lead a study evaluating various renewable energy options that will still generate the financial gains that utility companies will be happy with.
Hoping to be a neutral third party between utility companies and the public, the goal of the study is to develop alternative business models that would create a solution for all involved, including utility companies who want a profit, customers who want a deal and the environment that needs a break.
Though developing tangible energy conservation ideas like rooftop solar installations is an important component of the project, Callahan said itâ€™s also about financial and policy analysis.
â€œWe need to develop incentives for utility companies to promote energy conservation instead of more energy use. Weâ€™re just getting started,â€ Callahan said. â€œWeâ€™re figuring out whatâ€™s already been done and what are the hurdles. By September, we hope to have the model built for estimation revenues and expenses.â€
Though Ray Duthu, a mechanical engineering graduate student who is part of the research team, humorously refers to himself as â€œjust the grunt workerâ€ on the project, he plays an important role in the process.
â€œThe goal is to create some sort of tool set to replicate what utilities are doing, using different variables,â€ he said. â€œWe need to come up with some different packages.â€
Duthu doesnâ€™t consider his research to be particularly â€œearth-shatteringâ€ but it is intricate.
â€œWe know how much it costs to replace a light bulb, but what are all the other factors to consider? What are all the costs and benefits?â€ he said.
Thomas Bradley, assistant professor in the Department of Mechanical Engineering, said that the team has dual goals: to understand the financial conditions that utilities operate under and to propose ways to reform utility business models.
â€œThere are lots of creative ways to come up with such business models,â€ he said. â€œAlso, in general, we all benefit from conservation because it makes our society more efficient, less costly and less polluted.â€
Staff writer Emily Johnson can be reached at firstname.lastname@example.org.