Report Details How Sustainable Energy Utility Would Benefit Ann Arbor, Mich.

October 29, 2021

by Paul Ciampoli
APPA News Director
October 29, 2021

A sustainable energy utility (SEU) for the City of Ann Arbor, Mich., is feasible and would yield a variety of benefits for the city, a new report concludes. While the SEU would be a publicly owned municipal utility, the report notes that the SEU would differ from a traditional municipal utility in that it would supplement the current investor-owned utility (IOU).  

City Has Aggressive Carbon Neutrality Goal

The City of Ann Arbor has adopted an aggressive goal of a just transition to community-wide carbon neutrality by the year 2030, known as A2ZERO.

“Achieving this goal will require ambitious and transformative practices,” the report, “Ann Arbor’s Sustainable Energy Utility: A Publicly Owned, Locally Powered, Reliable, Clean, Fast and Equitable Power Model For Our Community,” said.

In the course of reviewing pathways to achieve A2ZERO, especially within the power sector, an idea emerged of creating a SEU, a non-profit, publicly owned, municipal utility that focuses on providing affordable, 100% renewable, reliable, and locally sourced power.

“A SEU is not your parents’ — or your grandparents’ — kind of utility. It is a model that uses modern energy technology to give residents reliable, truly local, clean, equitable, and nearly always cheaper energy — quickly,” the report, which was released by the City of Ann Arbor in October 2021, said.

The idea for an Ann Arbor SEU emerged after an Ann Arbor Energy Commission meeting in early spring of 2021. In that meeting, the Commission was presented with details about laws that constrain Ann Arbor’s utility options, different forms of community energy procurement, and what possibilities might exist to reach Ann Arbor’s goals given those restrictions. While neither speaker explicitly spoke about a SEU, the ideas presented in that meeting spurred research into the creation of a municipal utility built entirely on clean, local, distributed energy technologies.

Shortly after the Energy Commission meeting, staff in the Ann Arbor Office of Sustainability and Innovations (OSI) reached out to two locations where SEUs are up and running: Delaware and the District of Columbia. “While these SEUs operate in areas with more flexible legal frameworks than Michigan, these conversations provided valuable information into how existing SEUs operate, their strengths, and opportunities for enhancement,” the report noted.

Following these conversations, OSI created a conceptual model of a Michigan-specific SEU and reached out to five experts in various areas of energy-related law, policy, and technology to gather their professional insights into the viability of the model. All conveyed excitement at the prospect of an Ann Arbor specific SEU, and a willingness to engage with the city to more fully explore the concept.

What Is An SEU?

A SEU is a publicly owned municipal utility. What’s different, however, is that a SEU does not own or utilize large-scale poles and wires.

“Instead, a SEU generates power through local renewable energy installations such as SEU installed solar/battery systems that provide power to your home or business, and microgrids or geothermal systems that allow you and your neighbors to share power generated in your neighborhood,” the report said.

“In addition to providing power from local renewable energy, the SEU could provide services such as more holistic energy waste reduction (efficiency) upgrades, support with beneficial electrification, and billing and payment options that DTE doesn’t offer (e.g. on-bill financing).” DTE is the IOU that currently serves Ann Arbor.

A SEU would supplement DTE, allowing residents and business owners more than one choice about where they get their energy. “This approach allows us to immediately reduce climate pollution by focusing on new, local, clean energy installations, improve our resilience during major grid events, improve the comfort, safety, and long-term value of our homes and businesses, help lower-income residents make their bills more affordable, and invest in our local economy,” the report said.

Because the city would not be procuring existing infrastructure from DTE, “we will be able to move much more quickly into action than would otherwise be possible — putting generation into place to advance our 2030 goal,” the report noted.

Services That A SEU Could Provide

Because a SEU is a municipally owned utility, it can offer many things not currently available to Ann Arbor residents, the report noted.

In designing a model SEU, staff envisioned it helping residents and businesses reduce energy usage, utilize renewable energy, electrify buildings and transportation systems, improve resilience, save money, and improve indoor comfort, health, and safety.

More specifically, staff envisioned a SEU that offered some or all of the things that residents have said they want:

  • Improved resilience during power outages, by increasing residents’ access to solar and energy storage; 
  • Microgrids between neighboring households, where solar and storage are shared;
  • Robust energy waste reduction programs and rebates to support residents — even those who don’t own their dwellings — with improving indoor comfort, health, and safety, all while saving money;
  • On-bill financing to help lower the costs and increase the flexibility of paying for a clean energy transition;
  • District level geothermal systems so that neighbors can jointly tap into the earth to heat and cool their homes and businesses;
  • Community solar programs that allow neighboring residents to benefit from solar installed at community centers, in parks, or in shared areas around the city;
  • Support for beneficial electrification and associated training and rebate programs to help people transition to cleaner and safer all-electric homes and businesses; and
  • Energy justice initiatives, including broad and deep access to renewable energy, the creation of programs for low-income and underserved residents, and the expansion of weatherization services.

“Regardless of where we begin, one thing is clear: a SEU must provide electricity,” the report said.

“Because of this, we propose starting the SEU immediately by providing four core services: 1) creating solar and storage systems to boost resilience at single locations; 2) piloting microgrids in target neighborhoods; 3) creating robust energy waste reduction offerings; and 4) setting up on-bill financing offerings.”

The report is available here.

APPA Offers Municipalization Resources

The American Public Power Association offers resources related to municipalization on its website. Click here for details on those resources.

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