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Research / Discovery

CSU, NREL collaborate to research utility business models for energy efficiency and renewable energy

March 7, 2011

If more utility companies were financially motivated to promote rooftop solar installations and energy conservation measures, they could be leading the charge for creating clean energy jobs. But the industry is likely to need new business models and regulatory reforms that make energy efficiency and renewable energy beneficial for all, according to Colorado State University and researchers at the U.S. Department of Energy's National Renewable Energy Laboratory (NREL).

Thomas Bradley, assistant professor of mechanical engineeringWith a grant from the Joint Institute for Strategic Energy Analysis (JISEA), Thomas Bradley, assistant professor of mechanical engineering at Colorado State, and Michael Callahan, NREL senior project leader, will lead a team to evaluate the costs of energy efficiency and renewable energy programs for utilities and how incentives could be structured to positively impact customers as well as utilities.

JISEA is a global institute “dedicated to analyzing, speeding and smoothing the transition to sustainable energy worldwide.”

The study will evaluate the cost, pricing and revenue of energy efficiency and renewable energy programs. Some utility companies want to change how they do business so that they can benefit from conservation and renewable electricity generation programs, Bradley said.

Colorado’s Renewable Energy Standard requires large utilities to generate 30 percent of their power from renewable energy sources by 2020.

“Most utilities in the country get paid per unit of electricity sold, a condition which does not encourage conservation because reduced sales means reduced revenues,” Bradley said. “We’re looking at existing and new ways that we can reform the electricity market, utilities’ rate structures and their finance operations to develop a business environment that provides structural incentives for energy conservation, renewable energy and smart electric grids.”

Researchers plan to work closely with utility companies on the project and are continuing to seek utility partners, said Callahan, who recently obtained a master’s degree in the Global Social and Sustainable Enterprise program at Colorado State. This business program is designed to teach students entrepreneurial, sustainable, market-driven approaches to address great social and environmental challenges.

“The outdated monopolistic business models don’t fit the new world of increasing efficiency and greater distributed generation,” Callahan said of the research with Bradley. “Think of how technology changed the video rental store business to online movie streaming. Similarly, clean energy technology will require new business models.”

Duke Energy, for example, instituted a program called “Save-a-Watt” to increase energy capacity though energy efficiency measures while also benefiting ratepayers, the utility and society, according to an independent report.

“Part of the system-level solution is to expand and deploy economic, financial and regulatory models that support our technological advancements,” Callahan said.
At NREL, Callahan works in project development and finance in the Deployment and Market Transformation Group, with the goal to deliver more energy efficiency and renewable energy projects to the private sector.

Bradley joined Colorado State in 2008 after obtaining his doctoral degree at the Georgia Institute of Technology. His research interests include the development, analysis and management of renewable energy systems.


Contact: Emily Wilmsen
E-mail: Emily.Wilmsen@colostate.edu
Phone: (970) 491-2336