How Ann Arbor, Michigan, is creating its own clean energy utility

When Krystal Steward started knocking on her neighbors’ doors in Ann Arbor, Michigan, in 2021 to discuss energy efficiency and sustainability improvements, she was met with many blank stares.

She was new to this herself, she said. But the longtime social worker kept her new outreach work for Community Action Network, a local nonprofit dedicated to serving disadvantaged communities. Gradually, she began getting people in her neighborhood to participate first in home energy assessments, then in a city program to replace appliances, make structural repairs, and more.

“At first it was kind of difficult – a lot of people were reluctant. If someone knocks on your door and tells you they can fix your house for free, most people don’t believe it,” Steward said. But, she added, “once one person tried it, they would tell their neighbors and others would jump on board.” »

Bryant’s district is now ready to pilot a first-in-the-nation program that officials hope will accelerate the city’s transition to renewable energy and offer a new model for how local governments can control their energy future.

The idea is technical, but has sparked excitement in Bryant and Ann Arbor: a new sustainable energy utility created by the city, known colloquially as SEU. Rather than replacing the private utility that serves Ann Arbor, it is intended that this municipal agency will operate in tandem, providing an additional service that residents can subscribe to.

If they do so, they will remain connected to the regular grid, but will be equipped with solar panels, battery backup systems or other infrastructure, using this energy for their domestic use and opening up the possibility of selling any excess. The city, in turn, would pay for the installation and maintenance of these systems, which Ann Arbor would continue to own — a vision of energy production and storage distributed throughout the city.

The plan will begin in the coming months in Bryant, a 1970s-era community with about 260 housing units, many of which are officially considered “energy-burden.” A quarter of residents spend more than a third of their income on utilities, in a neighborhood that is one of Ann Arbor’s only unsubsidized affordable housing areas, according to Derrick Miller, executive director of the Community Action Network.

The SEU is a major step in a years-long process to address Bryant’s concerns about energy affordability and sustainability, then expand the approach citywide.

“When we started talking about how to decarbonize the neighborhood about four years ago, it seemed weird. Now we feel like no one can stop us,” Miller said.

Two parallel utilities

The appeal of SEU became clear in November 2024, when a ballot measure on the proposition was approved by nearly 80% of Ann Arbor voters. A little more than a year later, city officials are ready to implement that vision, said Shoshannah Lenski, SEU executive director.

In late February, the city announced it was accepting expressions of interest from residents and businesses to participate, accompanied by a series of community meetings, animated videos and advertisements on posters at local theaters.

Customers who join will receive two utility bills – one for the electricity provided by these new city-owned clean energy systems, and one for any electricity they still draw from the regular grid – which Lenski and his colleagues say will be a smaller amount than what they currently pay.

“Just like customers don’t own a power plant, the city owns and funds the system in advance, and they pay for that electricity through a monthly bill,” Lenski said. She noted that the model could prove particularly useful for renters, who are often excluded from green energy incentives. Listing large multifamily buildings will be important to quickly expanding the size of the SEU, she said.

In addition to installing clean energy systems on participants’ homes, the SEU could build its own microgrids, which would set it apart from other municipal clean energy programs. For example, the agency could install solar panels on a school to provide electricity when students and teachers are in the building, and that energy could be transmitted to other SEU customers when classes are over.

Supporters say the strategy allows Ann Arbor to expand its green energy system with less financial risk — and less risk of political or industrial resistance.

“When combined with DTE’s planned investments in clean energy, these voluntary, paid programs help accelerate the growth of the entire economy. decarburization while maintaining reliability and affordability,” Ryan Lowry, a spokesperson for DTE Energy, which currently provides energy to the city, said in an email.

It may seem surprising that DTE, Michigan’s largest electric utility, supports the SEU. But industry experts noted that many investor-owned utilities are grappling with unprecedented new demand for electricity. The fact that a local government is trying to help manage electricity needs could be seen as an asset, they suggested — even if the DTE will have no formal role within the SEU.

So far, more than 1,500 people in Ann Arbor have indicated they are interested in signing up. SEU plans to serve about 100 to 150 customers in Bryant this year, expanding to 1,000 next year, then growing by several thousand per year after that.

40% missing

This approach answers a question posed when Ann Arbor adopted an ambitious climate plan in 2020.

That framework called for an electricity grid powered entirely by renewable energy within a decade, but a city analysis in 2023 warned it risked missing that goal by more than 40 percent. To achieve this, the city should push DTE to accelerate its renewable energy development, or rely on state officials to do so – Or break away from DTE entirely and create a separate city-owned utility, an idea that has some support in Ann Arbor.

But from the city’s perspective, those options seemed too risky or uncertain, Lenski said — until officials realized that Michigan’s constitution allows municipalities to create and operate their own utility, even if there is another.

“That’s where the idea of ​​SEU came from,” she said.

When researchers at the University of Michigan compared the four options, they found that the SEU model had the greatest potential to reduce energy prices and emissions, improve reliability and help low-income communities.

“Overall, it was about getting some of the benefits of local control without some of the costs,” said Mike Shriberg, a professor who led the research, emphasizing that a similar model should be possible in every state.

However, some fear that this strategy does not go far enough. Supporters who want the city to break away from DTE and replace its services with a wholly owned Ann Arbor utility are seeking a ballot measure in November to begin that process. (Organizers are currently collecting signatures.)

Brian Geiringer, executive director of the advocacy group Ann Arbor for Public Power, said the SEU plan still leaves too much responsibility for the city’s energy transition to DTE.

But if voters approve the creation of an all-public utility, he said, it wouldn’t mean the end of SEU: The two approaches could work together, with a production-focused SEU in Ann Arbor and a utility that can make its own purchasing power decisions.

“If you draw a circle around Ann Arbor, the SEU does things inside the circle. And we want the city to control what comes in from outside the circle,” Geiringer said.

Local control

Like Ann Arbor, hundreds of cities are scrambling to implement climate goals – and facing similar gaps between ambition and pragmatism, particularly when it comes to controlling energy sources.

“Cities have set these goals, and utilities are not obligated to follow them,” said Matthew Popkin, head of U.S. cities and communities at RMI, an energy think tank.

“The Ann Arbor SEU is therefore an example of cities taking more control of their future without dismantling or acquiring existing utility systems,” Popkin said. “It’s a really interesting model.”

Other models also exist. In Washington, D.C., for example, a program called DC Sustainable Energy Utility has been operating for 15 years and oversees the city’s efforts to help residents use less energy.

The initiative is much narrower than Ann Arbor’s vision, operating not as a utility but rather as an organization hired by the city to boost energy efficiency and increase access to clean energy through grants and rebates.

The program is a central part of the city’s goals to reduce its greenhouse gas emissions, said City Manager Benjamin Burdick, and has helped reduce some 10 million tons of emissions while saving residents more than $2 billion through reduced energy use.

Nationally, “the conversation we’re hearing is about how to continue to talk about climate in an affordable way,” he said. “Programs like the DC SEU will continue to allow us to double down on our efforts.”

The work in Ann Arbor is now getting its own attention across the country.

“What caught my attention about Ann Arbor’s efforts were the references to citizen participation and co-investment in their own network,” said Jim Gilbert, a retired medical product designer in Boulder, Colo., who is now helping the city evaluate Ann Arbor’s model.

Boulder has faced recent power outages due to worsening climate impacts and aging infrastructure, and Gilbert said an SEU could offer a path forward.

Back in Ann Arbor, as the city prepares to launch the first pilot of its SEU, the plan is to reach half of Bryant’s neighborhood by the end of the year — and local residents are “all in,” Krystal Steward said.

Older members of the community are particularly enthusiastic, she said, noting that many of them are on fixed incomes and will particularly benefit from lower energy bills.

“It’s hard for me to keep up,” Steward said. “Now it’s no longer me asking residents to register: they’re blowing up my phone. »