Electric bills are rising in Ann Arbor, Michigan, just like in other cities. But a new city program is starting to install city-owned solar panels and batteries at homes, a move that could save some residents hundreds a year. The first projects are underway now.
For residents, it’s a way to get the benefits of solar without the upfront investment. “Any other way, I couldn’t afford to do it,” says Bruce Schauer, age 80, who saw the advantages of adding solar panels and a battery, but wouldn’t have gotten a system otherwise. After his system is installed in the next couple of weeks and starts sending power to his home, he expects to save around $400 a year on his electric bills.
“I’ve looked into solar in the past, but the upfront cost is huge,” says Myles Burchill, another resident who will get a system added in the coming weeks. “I would have loved to do it as soon as we moved in. With this opportunity, we don’t own the panels, but we get the benefits of paying lower rates. And if we don’t use all the electricity, the potential for [the local utility] to pay us.”
The installations are happening first in a pilot in Ann Arbor’s lower-income Bryant neighborhood, where around 150 homes will add solar and batteries this year. The program will scale to around 1,000 homes next year, and then several thousand per year after that. The pilot is the first step for the city’s new Sustainable Energy Utility, which aims to speed up the grid’s transition to renewable energy.
“It’s bringing clean, affordable and resilient energy to residents quickly who need it the most, and who’ve traditionally been left out of the energy transition,” says Shoshannah Lenski, executive director of the Sustainable Energy Utility, also known as A2SEU.
Ann Arbor realized that by creating its own power company, it could add clean energy faster than the existing local utility, DTE Energy. DTE doesn’t plan to reach 100% clean energy until 2050 (and includes gas in its definition of “clean”). Instead of building large-scale wind and solar projects—which typically take several years to get approval and be built—the city also realized that it could more quickly create a distributed network of rooftop solar, batteries, and geothermal power throughout neighborhoods.
As the program scales up, by buying equipment in bulk, it can negotiate lower costs. (For the pilot, solar panel and battery costs are being covered by a grant.) The city hopes to also negotiate lower costs with installers, who will be able to efficiently work on several homes in a neighborhood at once and avoid marketing costs, since the city will deliver customers. The city can also save on financing. “We can use municipal financing, with its lower cost of capital, to take on debt to install these systems,” says Lenski.
Residents who sign up still have accounts with DTE. But the solar panels on their roof will cover their electricity needs first, sending extra power into the batteries for use at night and in cloudy weather. Any extra solar power after that can be sold back to DTE. In some cases, the system may cover nearly all of a household’s energy use. In other cases, it will just shrink the amount of power drawn from the grid.
In the pilot, the city utility will charge a flat rate of $75 a month for the service from April to September, when it’s sunniest, and $25 a month over the fall and winter. Since the equipment is owned by the city, there’s no upfront cost. Residents will get solar without adding to their electric bills, and many may end up paying less in total. They’ll also get battery backup if the grid goes down, which has a financial value. “Maybe two, three times a year the power goes out,” says Schauer. “Last year, we lost $250, $300 worth of food.”
DTE has raised its rates repeatedly in recent years, and proposed another $474 million rate hike on April 28, two months after its last 4.6% increase went into effect. The utility’s power rates per kilowatt-hour are the highest in the Midwest.
While those rates go up, the city is offering guaranteed rates for the next four years. “Relying on renewable energy only, the A2SEU rates will never be subject to the volatility of fuel prices,” Lenski says.
The approach is unique, but the city gets calls every week from other communities that are now being to consider doing something similar. “Part of the fun and part of the challenge is that we’re having to write our own playbook as we go,” she says. “We’re really hoping to do this in a way that we can document our learnings and share those with other communities that may want to follow in our footsteps.”