ANN ARBOR, MI — Ann Arbor has set a goal to launch the city’s new sustainable energy utility in fall 2026 and about 1,500 potential customers already have expressed interest.

Those who sign up to receive solar energy through the new SEU as an alternative to DTE Energy also may see an alternative form of billing.

“We’re exploring the question of do we really need metering infrastructure,” Director Shoshannah Lenski said. “Maybe we don’t and maybe we’ll be able to bill at a flat rate.”

There’s more conversation to be had about that, but it could be a really different experience than the traditional model of measuring every kilowatt hour of energy, she said.

“Metering energy is pretty expensive,” she said. “You have to put in this whole metering infrastructure and then you have to read that metering infrastructure. And by the way, with solar, what’s getting metered is really just dependent upon the sun, so you can’t control it even if you are metering it.”

The new utility, approved by city voters in 2024, will allow residents, businesses and others to get solar panels and backup battery storage systems installed on their properties at no upfront cost to them, with the city financing installations and owning the equipment.

Those hosting equipment on their properties — tied into micro-grids with neighbors in some cases — will reap the benefits of the renewable energy and energy cost savings, while paying down the city’s debt for the installed systems over time through rates they’ll pay for the solar energy.

Geothermal heating and cooling networks for neighborhoods also could be created through the SEU and the city is planning one for the Bryant neighborhood. It’s part of Ann Arbor’s A2Zero plan to achieve communitywide carbon-neutrality.

The SEU will supplement DTE service, not totally replace it, though a group called Ann Arbor for Public Power is aiming to put the question of a DTE takeover to city voters.

Residents and others who become SEU customers starting in 2026 could get part of their energy through the SEU and part of it through DTE.

Lenski, who previously worked for DTE and the University of Michigan’s Center for Sustainable Systems, was hired this summer to help launch the SEU. She gave an overview of the latest talks at City Council’s annual planning session Monday, Dec. 8, calling it a bold idea.

She believes the city is on track to hit its target of a preliminary pilot launch in fall 2026, starting with grant-funded work in the Bryant neighborhood. While the city planned to wait to make investments through the SEU until there were 20 megawatts of subscribed commitments from energy customers, Lenski said a smaller initial rollout is expected now.

The SEU has received $250,000 in startup funds from the Municipal Investment Fund, plus $5 million from the Michigan Department of Labor and Economic Development for solar and battery storage in the Bryant neighborhood. The city also was awarded $10.8 million by the U.S. Department of Energy for the Bryant geothermal.

The city has a relatively short runway to secure additional SEU financing, Lenski said, and bond funding likely will be used to purchase and install more equipment. Beyond the short-term grants, it’s not expected to be a charitable or grant-funded operation, but the city welcomes additional philanthropic support, she said.

“This is obviously a super exciting thing,” Mayor Christopher Taylor said, crediting the city’s sustainability office for leading the way.

Many people struggle with a large portion of their monthly income going to energy bills, Lenski said, and the city is working to make the SEU affordable. With backup battery storage, it also can help withstand DTE power grid outages, she said.

“Utilities are never beloved institutions, but I really hope that the sustainable energy utility can be … and that folks will trust the SEU as their energy provider,” she said.

In addition to serving Ann Arbor’s existing population, the SEU can help attract growth and make it easy for new developments to access sustainable energy, she said.

Even in cases where a property owner might not want to invest in sustainable energy, the SEU could work with someone leasing a property to make it happen, she suggested.

The SEU also can help more than just the people who subscribe, Lenski said. The DTE grid is stressed, she said, and if there is a chance for the SEU to take load off stressed areas, that helps everybody on the grid.

She laid out a timeline for a phased rollout of services, starting in 2026 with direct solar and battery storage at homes and businesses, neighborhood geothermal starting in Bryant in 2028, then micro-grids with energy sharing and wires between homes and other buildings around 2028-2030.

The city is trying to do something never done before, so the SEU has to be creative, try new things and adapt, she said.

“We’re going to try and be scrappy here and be efficient and cost effective and move fast,” she said. “And we’re going to try to be nimble, so that we’re going to do something small-scale, we’re going to learn from it, see what works, what doesn’t.”

The city also is exploring how to standardize solar system designs for the SEU. Right now, when someone gets solar panels installed at their own cost, often a contractor will look at a custom solution for their roof to maximize panels, but that takes a lot of upfront time and cost, Lenski said.

SEU customers might get a catalog of small, medium and large options where they pick one and it’s not custom designed to squeeze in an extra panel, she said.

“You might not exactly maximize all your energy, but you can get it a lot faster and cheaper,” she said.

The city was originally thinking about a larger initial rollout for the SEU to make it more economically viable, but it would take a lot of money to do 20 megawatts of solar all at once, Lenski said. The SEU could scale faster after smaller pilots and tests, she said.

“One of the things we’re working on doing is growing customer demand,” she said, showing a city map plotting all the properties of potential subscribers who have signed an interest form.

She expressed hopes of going well beyond the initial 1,500, saying those are mostly residents, and the city is looking at some bigger anchor customers like schools. A marketing campaign for the SEU is expected to launch in early 2026.

Council Member Jon Mallek, D-2nd Ward, said he noticed a gap in interest in his ward on the map. He and 2nd Ward colleague Chris Watson “have our work cut out for us,” he said.

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