Voters in Ann Arbor, Michigan, create a local clean energy utility

The SEU plans to install and own solar panels on customers’ rooftops and batteries in their sheds and garages, selling those customers the power at cost, without a markup. That lets residents access solar power and backup power without dropping a load of cash up front for it or taking on debt. This kind of subscription is available from companies like Sunrun, but they do it to make money, not to sell at cost.

The most radical dimension of the plan is to use the city’s utility franchise rights to build wires between properties, so that they can share excess solar power locally. Most everywhere in the country, customer-led upgrades have to stay on the customer side of the utility meter; crossing that boundary to sell power to a neighbor violates the utility’s legally enforced monopoly. This stands in the way of visions for interconnected neighborhoods generating and selling power with each other based on who needs it at a given moment.

But Ann Arbor officials tracked down a century-old precedent that makes sharing power possible: ​“The Michigan Constitution preserves the rights of cities and villages to form their own utility or to supplement an existing utility,” Missy Stults, the city’s sustainability and innovation director, told me.

Thus, the SEU will link up different properties if the people living there want it. If a home generates more solar than it can use, it could run a line to a neighboring house that’s shaded by trees, allowing it to buy surplus power.

“We’ll be able to connect homes with each other, schools with homes, schools with each other,” Taylor said. ​“We’re going to do this in a way that is cost-effective and fully opt-in.”

This plan assumes people will be happy to offer up their roof space for panels that the SEU will own and use for broader community benefit. But doing so will let that household buy cheaper, cleaner power for itself. The battery controls present some additional complications: Will the host customer get first dibs on backup power, or will that be split among the locally connected homes as well? This is new territory for distributed energy in the U.S.

That said, the strong show of support at the ballot box demonstrates the local community is fully on board with the general direction of the SEU. It’s no accident that this idea is coming to fruition in a college town like Ann Arbor, said Liesl Clark, a former state climate leader who now serves as director of climate action engagement at the University of Michigan.

“There are a lot of people who are innovative and also are interested in having agency,” she said. ​“It is a community that was ripe for a solution like this.”

Furthermore, the city structured the plan in a way to minimize any downside for residents who don’t want to jump on the decentralized power opportunity.

“You haven’t asked me how much it’s going to cost the taxpayer,” Taylor told me as I was about to wrap up our phone call. He answered the rhetorical question: ​“Nothing!”

That pledge veers into too-good-to-be-true territory, but the SEU structure makes it possible. The city won’t levy any new taxes because it’s not buying out DTE’s assets. Instead, it’s installing new equipment based on voluntary customer commitments, and those customers pay their way, while saving themselves money.

Breaking free from utilities without all the hassle

The outcome of this effort remains far from certain. But so far, Ann Arbor has managed to pursue a low-drama, low-conflict way to break up with a monopoly utility, in contrast to high-profile recent attempts elsewhere.

The city of Boulder, Colorado, famously fought for a decade to peel off from Xcel Energy, and ultimately gave up. In 2010, California mega-utility PG&E spent $46 million to make it harder for communities to source their own electricity, though even that gargantuan sum failed to stop the rise of community choice aggregators.

Maine has grappled for years with its deeply unpopular monopoly utilities. Last year, voters nonetheless soundly rejected a ballot referendum to seize utility assets under a new public power entity. The utilities spent $40 million to fight it, and independent experts raised concerns about how the public entity would deliver on promises of a cheaper, more efficient grid after saddling itself with billions of dollars of debt.

Activists in Ann Arbor have also pushed for full municipalization — a city-level version of what Maine considered and rejected. The city is working on a second study to dig into the details of what purchasing the grid infrastructure would entail. That conversation will continue as the SEU implementation moves forward, Taylor noted.

For its part, Michigan utility DTE hasn’t declared war on Ann Arbor. Following the vote, the company stated that it will continue to invest in making the city’s grid more resilient and clean — a recent Michigan climate law requires ramping to 60 percent renewable power by 2035 and 100 percent clean electricity by 2040.

The public interest in full municipalization may explain the muted response from the utility: The SEU allows DTE to go on with business as usual, and its distribution grid will continue to play a crucial role even if kilowatt-hour sales decline from the new local solar generation.

Instead of fighting the utility colossus head on, Ann Arbor is taking a live-and-let-live approach. It’s a case where avoiding head-on conflict could make it possible to deliver the benefits of clean, local energy far more quickly.