Affordable clean energy in Ann Arbor: Can a city-created utility deliver?

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As Ann Arbor residents debate whether the city should take even greater control over its energy future — including a newly announced petition drive to create an elected board for a potential city-owned electric utility — the city is already moving forward with a different, voter-approved experiment in local energy governance.

That effort is the Ann Arbor Sustainable Energy Utility, a city-created utility designed to help residents and businesses access solar, battery storage, and eventually geothermal energy without upfront costs, while remaining connected to DTE’s electric grid.

The city hired Shoshannah Lenski in December as the utility’s first executive director. Lenski previously served as Ann Arbor’s energy and climate director and has spent much of her career working at the intersection of local government, clean energy deployment, and climate policy.

In her prior role with the city, she helped shape Ann Arbor’s broader carbon-neutrality strategy and build the case for establishing the Sustainable Energy Utility.

In this interview with Planet Detroit, Lenski explains how the utility is expected to work in its early years, how it differs from a traditional municipal electric utility, and why she sees locally driven energy models as increasingly important amid federal clean energy rollbacks and rising reliability concerns.

This conversation is lightly edited for length and clarity.

What is the Sustainable Energy Utility today, and what will it be in the near future?

Right now, we are very much in a startup phase. We’re a voter-authorized entity within the city, we have a clear mandate for what we’re supposed to deliver, and we now have staff in place. What we don’t yet have are assets or active operatio

That starts to change this year. By the end of 2026, we expect to be actually delivering solar energy and battery storage to a pilot group of customers. The goal is to learn from that first phase and, if it goes as planned, begin expanding services across the city in 2027.

It’s also important to say what we are not. We are not trying to replace DTE or replicate the entire poles-and-wires system. We’re intended to be a supplemental utility that adds services people don’t currently have access to.

How will residents pay for the utility?

The Sustainable Energy Utility is designed to be ratepayer-funded, similar to other city utilities like water or sewer. It’s opt-in — people choose whether to become customers.

Right now, we’re operating largely on grant funding. As we roll out services, customers who sign up will pay a monthly rate for the energy services they receive. City Council will serve as the governing authority for rates, and we’re working through that rate design now, with the hope of having rates authorized later this year.

Why would someone sign up if they still have to pay DTE?

There are a few different motivations, and they won’t be the same for everyone.

Some people really want to contribute to Ann Arbor’s clean energy and carbon neutrality goals. They care deeply about climate action, but for a variety of reasons — cost, roof conditions, renting — installing solar on their own hasn’t been feasible. We’re trying to make participation much easier.

Another big factor is reliability. Ann Arbor has a long history of outages, including outages that last longer than people expect or can comfortably manage. For some households, that’s a major disruption, especially as extreme weather becomes more common. Pairing solar with battery storage can provide a level of resilience that people simply don’t have today.

How does the utility improve grid resilience beyond individual homes?

In the near term, most of what we’re building will serve individual buildings — a home or a business with its own solar and battery system.

But the longer-term value of being a utility is that we can eventually build small-scale distribution infrastructure where it makes sense. That allows energy to be shared across property lines, which individuals can’t legally or practically do on their own today.

For example, one building might have an excellent roof for solar and generate more energy than it needs, while a neighboring building can’t host solar at all. As a utility, we can create systems that enable local energy sharing. That kind of flexibility opens the door to community-scale solutions, not just individual ones.

How does the utility fit into the current political climate around clean energy?

I think it fits very directly.

As federal support for clean energy becomes less certain, it’s increasingly clear that state and local governments, along with community-based entities, have to step up. We’re seeing that across the country.

Ann Arbor voters gave this utility overwhelming support — about 80% voted to authorize it. That tells us people are willing to try something new and even a little risky if it moves the city forward. We also see the utility as a way to help stabilize local clean energy businesses during a turbulent time for the industry.

What are the biggest risks?

The biggest risk is simply that there’s no roadmap. No one has done this exactly this way before.

We’re going to try things, learn from them, and adjust. I fully expect there will be moments where we say, “That didn’t work the way we thought it would,” and then pivot. That’s not unusual — it’s the reality of building something new. The risk isn’t that everything collapses, but that we have to stay flexible and willing to adapt.

How are affordability and equity built into the model?

There are a few layers to this.

First, customers don’t pay upfront for equipment. The utility finances and owns the solar panels and batteries. That removes one of the biggest barriers to clean energy access, especially for renters and households without access to credit.

Second, we’re using grant funding to launch pilots in lower-income areas, including Ann Arbor’s Bryant neighborhood. Those customers will be in a special pilot rate class with much lower costs than standard service.

Third, we’re leaning toward a fixed monthly rate based on system size. That predictability matters. People can look at their budget and decide what level of service they can afford, without worrying about large swings in their energy bill.

What happens when a home with SEU equipment is sold?

The equipment stays with the home, and the new owner has the option to continue service or opt out. The utility is optional by charter, so no one is forced to participate.

Our hope is that having solar and battery storage already installed becomes a selling point for homes, but we’re building in flexibility for customers as ownership changes.

What has been the biggest structural challenge so far?

Financing the very first phase.

Once we’re fully operating, we can rely on revenue-backed municipal bonds, which offer relatively low-cost capital. But getting through the early stage — before we have revenue — is the hardest part. We’re actively exploring philanthropic support and other financing tools to help bridge that gap and get the first assets built.

Could this model work in other Michigan communities?

Absolutely — and we hope it does.

If this only ever works in Ann Arbor, that’s still a win for the city. But the real potential is in building a model that other communities can adapt to their own circumstances. It’s locally driven, responsive to community values, and not dependent on federal policy staying favorable. That makes it especially relevant right now.