Ann Arbor hopes to bring rooftop solar to the masses by creating a utility

• This fall, Ann Arbor residents resoundingly approved creating a ‘sustainable energy utility’ to provide solar power to city residents
• Optional participation in the utility allows residents to draw power from utility-owned solar panels on their roof, ideally at a lower cost than their current DTE Energy bill
• The utility plan comes as Ann Arbor races to get off fossil fuels and residents grow frustrated with DTE’s reliability and cost

In the shadow of a presidential election dominated by rhetoric about job-killing EVs and the virtues of fossil fuels, the residents of one Michigan city voted this fall to embrace solar energy.

Seventy-nine percent of Ann Arbor voters approved creating a community “sustainable energy utility,” on the promise that plastering the city’s rooftops with solar panels will yield cheaper, cleaner and more reliable electricity.

In the coming months, city officials will begin planning the new municipal utility as they race to make the city carbon neutral by 2030, and as residents demand an alternative to DTE Energy, a monopoly utility whose customers endure frequent power outages and high rates. 

DTE officials have acknowledged shortcomings in delivering reliable energy, while defending recent rate hikes as necessary to make system improvements that will reduce outages.

Ann Arbor officials believe the opt-in utility, which will supplement DTE’s existing service, can deliver lower electric bills and fewer power outages. Solar power is cheaper than fossil fuels, and homes with rooftop panels are immune to outages caused by storms knocking down power lines.

Related:

• Michigan near tops in nation for outages. Utilities want to raise rates
• Audit finds DTE Electric and Consumers Energy outages ‘worse than average’
• Highland Park looks to energy independence as outages plague residents

Trouble is, home solar systems are expensive to install, meaning they’re off-limits to those who can’t afford $15,000 in upfront costs. The city utility aims to overcome that problem by owning and operating the rooftop panels, and then billing customers for the power they generate. 

Bridge Michigan spoke with Ann Arbor Sustainability and Innovations Director Missy Stults about the plan. The conversation has been edited for brevity and clarity.

Why did city officials want to pursue a sustainable energy utility?

We have to nest it in the climate goals and the reality of our electric system. Our charge in the Office of Sustainability and Innovations is to think about how we get to 100% renewable electricity powering the community. In the course of thinking about how to do that, we also have to acknowledge that the current electric system that we have is not particularly reliable. It is old. It needs significant upgrades. It's not resilient to the kinds of climate impacts we're experiencing. 

In today's day and age, a reliable, resilient system is a decentralized system. It's solar and storage on a single building. It's small-scale microgrids. And the good news is, with advancements in clean energy technology, things like solar and storage are cheaper than they ever have been before. 

Can you explain the mechanics of how the utility will function?

It will be 18 months before you'll see solar on roofs from the utility. First you've got to have the basics in place. You’ve got to have billing, you’ve got to have customer service, you’ve got to have your staff, you have to have your technical leads. 

Just shy of 700 households or businesses have signed up to express an interest in the sustainable energy utility. We’ll start by contacting them, and we’ll develop recommendations based on their energy needs. For example, that could be rooftop solar and storage and maybe a little bit of insulation so you're more efficient and you don't need as big of a system. And you get to look at that recommendation and decide whether to sign up.

How is that different from a homeowner simply deciding to install solar panels on their own?

That homeowner owns their solar panels, which means they need to have the capital or the credit to buy that system and pay it back over time using the savings they’re realizing on their electricity bill.

But a lot of people don't have the capital, or don't have the credit score, or maybe they have really pretty trees that are going to block the sun. The SEU can help with that because the utility owns the system. You don’t have to put any capital down. You just pay your bill for the electricity you get from that system, and hopefully it’s less than what you're paying right now. 

Eventually we could have neighborhood micro grids (a system in which multiple households are connected to a shared solar array), so the residents with the really pretty trees could still receive solar power from a system in their neighborhood. 

So Ann Arbor may one day build larger solar arrays that support whole neighborhoods?

Yes. But that’s phase two, because at that point you have to have poles and wires, or an agreement with DTE to use their poles and wires to move those electrons from the solar array to the customer. So we want to start with bread and butter: Behind the meter, solar and storage on commercial business, institutional and residential roofs, and carports. 

There's a movement in place in Ann Arbor to ditch DTE altogether and fully municipalize the city’s energy system. Can you talk to me about that?

We are in the interview process right now with firms to do a valuation of the DTE system. That will help us understand exactly what it would cost if we decided to go that path — to basically buy DTE’s energy assets (power lines and other infrastructure) that serve Ann Arbor.

If we eventually moved forward, it would likely involve a multiyear court process, because the utility is almost certainly not going to agree with you about what it’s worth. Then let's say the court battle comes to some sort of conclusion and we get a final cost figure. We would then go to the voters. 

Participation in the SEU is voluntary. How many people need to opt in to achieve its goals of cheaper energy and a lower carbon footprint for the city?

The price point we want to hit is 16 cents a kilowatt hour (slightly lower than DTE’s average rate). There are two variables to achieving that: First, we need roughly 20 megawatts of demand, which is about 2,000 households or one big institutional user. And assuming we take on debt to pay for the infrastructure, we need to have a 5% interest rate or lower.

As for the carbon footprint, the entire city of Ann Arbor uses somewhere between 440 and 480 megawatts of electricity a year. We’ve done the studies showing we could generate 400 megawatts of green energy if every rooftop had solar panels.

That's not going to happen. But that's also not considering things like carports that we might be able to utilize. 

So there is huge potential. It has to grow over time. But what’s nice is, if the rates are lower, neighbors talk. And so that's going to be its own selling point.