Election Day yielded few bright spots for the transition to clean energy, but there was one in Ann Arbor, Michigan. The city of nearly 120,000 voted 79 percent in favor of a measure to create a ​“sustainable energy utility” (SEU) that will supplement the existing grid and help residents shift to cleaner, more reliable energy.

With that overwhelming approval, city officials will now figure out the governance, staffing, and leadership of the new local utility. They have already begun outreach to residents interested in participating; 600 customers had registered by Tuesday afternoon. The plan is to assemble an initial tranche of 20 megawatts worth of demand, at which point Ann Arbor will finance the purchase and installation of solar panels, batteries, and energy-efficiency upgrades to serve those customers.

Installations — on homes, sheds, schools, libraries — could happen in the next 18 to 24 months, Mayor Christopher Taylor (D) told Canary Media. Longer term, the utility hopes to construct a district-level geothermal network to heat and cool buildings without fossil fuels.

“I’m incredibly gratified by the support that voters of Ann Arbor have given to the SEU,” Taylor said. ​“The SEU is going to be both great for our carbon future and great for the pocketbook.”

The effort to fast-track local clean energy installations serves Ann Arbor’s ambitious climate goals. But it’s also a response to an uptick in power outages as extreme weather collides with for-profit utility DTE’s aging distribution-grid infrastructure. Monopoly utilities, for the most part, have shown little interest in seizing the opportunities of decentralized energy, but that’s core to the new Ann Arbor utility’s mission.

The measure’s success marks the latest episode in a sporadic national trend of communities trying to break free from the century-old model of for-profit, monopoly utilities controlling local energy systems.

Such efforts typically provoke a scorched-earth response from the incumbent utility. Utilities elsewhere have waged lengthy legal battles and spent millions of dollars on political campaigns to stop these escape attempts. When localities win their energy autonomy, they often have to pay hefty exit fees as a reimbursement for grid infrastructure built on their behalf. Communities that make it through that ringer then have to shoulder the laborious task of operating and maintaining decades-old infrastructure while trying to push ahead with new technologies.

In a bracing and punchily worded 2021 report, Ann Arbor’s sustainability office made clear that it would take a different route.

“Every dollar we don’t spend in litigation or to buy the [investor owned utility]’s old, failing infrastructure is money we can spend on new infrastructure here in Ann Arbor to generate power, distribute power, and store power — dollars we can use to immediately provide reliable, clean, and affordable public power to everyone,” the city wrote.

In short, it’s a distributed energy wish list coming to life. Ann Arbor has created a clear pathway to building more clean, local, resilient, and publicly owned infrastructure. If the city can make electricity cheaper on top of that, it will demonstrate that a better electricity system is possible even without completely overhauling the existing utility industry.

Local action for local needs

In 2019, Ann Arbor set a 2030 deadline to deliver equitable, community-wide carbon neutrality. Meeting that target requires sourcing clean electricity, driving out fossil-fuel combustion in buildings, and cleaning up transportation.

But the city’s built environment poses some challenges. Ann Arbor spans about 49,000 households, 52 percent of which are rentals. Overall housing stock averages 48 years old. That necessitates a lot of retrofits to turn these buildings into efficient systems running on clean electricity.

The SEU thus prioritizes energy-efficiency upgrades for customers. Unlike a for-profit utility, the municipally owned nonprofit has no incentive to let customers keep wasting energy. Ann Arbor aims to make efficiency more accessible with tools like on-bill financing, ​“structured to match or be lower than the monthly utility bill savings, resulting in a positive cash-flow for the customer immediately,” per the 2021 report.

The utility can buy equipment like solar panels and batteries in bulk and finance these upgrades with its AAA municipal credit rating, accessing far cheaper capital than a bunch of lone homeowners negotiating separately with private lenders. And the on-bill charge stays with the house — if someone moves out, the new resident takes over paying for the improvements that will lower their bill.

Climate goals weren’t the only factor motivating the change. The area’s aging grid has suffered a number of outages lately.

“Ann Arbor is currently served by an investor-owned utility that has a history of reliability challenges in our area,” Taylor noted. ​“We expect the SEU to provide far more reliable service.”