One of the bottle-necks in efficient energy recovery is attributed to the low thermal conductivity of common coolants. When the thermal conductivity of coolant is improved, the flow rate of coolant required and hence, energy required for pumping can be reduced. Nanofluids are novel class of fluids, preparedby dispersing nanoparticles in liquids like water, ethylene glycol-water mixture, oil etc. aimed at increasing the thermal conductivity of such coolants. In order to maximize the advantages of nanofluids, the particles chosen for dispersion must possess high thermal conductivity and maintain excellent colloidal stability. Cupric oxide has very high thermal conductivity (78 W mK-1) compared to that of water (0.6 W mK-1) and hence dispersion of cupric oxide in water will serve to conserve energy. We have developed cupric oxide-water nanofluids using a two-step method. Cupric oxide nanoparticles were synthesized by reduction of cupric acetate. Scanning electron micrographs revealed the presence of needle-shaped particles of 60 nm wide and 252 nm long. These particles were dispersed using ultrasonication and by the use of Cetyl Trimethyl Ammonium Bromide (CTAB) as dispersant. Stability was ascertained by visual observation of nanofluids stored undisturbed. The zeta potential was measured to be -30 mV. Electrostatic repulsion and steric repulsion are expected to be responsible for colloidal stability of CuO-water nanofluids. Particles with aspect ratio >1 provide higher enhancement in thermal conductivity as evident from Hamilton and Crosser model. Hence dispersion of these nanostructures in water will improve the thermal conductivity appreciably. [ABSTRACT FROM AUTHOR]