Ann Arbor, Michigan has a population of about 124,000 and is home to the University of Michigan. Like many college towns, it tends to skew toward the liberal side of the political spectrum. The city has adopted a policy to get all of its electricity from renewable sources no later than 2030. But it is served by DTE Energy, which is moving much too slowly toward reducing its greenhouse gas emissions. At the present time, DTE gets most of its electricity from thermal generation — 54 percent coal and 14 percent methane gas.
To reach its renewable energy goal, Ann Arbor is trying something that has never been done before — constructing a series of community owned microgrids while still maintaining a relationship with DTE Energy. The city owned assets would be bundled into what is being called a Sustainable Energy Unit or SEU. The city explains that, “The Ann Arbor SEU is a community-owned energy utility that provides electricity from local solar and battery storage systems installed on homes and businesses throughout the city. The SEU provides 100% clean, reliable, locally built, and affordable electricity; built by the community, for the community.”
This first of its kind project in the US aims to not only give citizens access to locally produced clean energy but also to overcome the grid reliability issues that plague DTE’s distribution network without having to invest a considerable amount of money in upgrades.
If Ann Arbor is successful, it could demonstrate that municipalities need not be beholden to the power companies that serve them. The audacious idea of skirting the utility’s control of the city’s energy provision has symbolic significance beyond Ann Arbor. According to Latitude Media, It shows that cities intent on decarbonizing their electrical supply may have options beyond the traditional utility model.
Missy Stults, Ann Arbor’s sustainability and innovations director, said the city is open to “all tools, resources, and pathways” to meet its 2030 goals. “Meeting these goals necessitates using every tool in our toolbox — and creating some new ones. While DTE has been making progress in their clean energy transition, even those ambitious plans are simply far too short of the goals that have been established in the city.”
The idea of creating a sustainable energy unit did not emerge overnight. Ann Arbor lawmakers hatched the SEU plan after considering various options for citywide clean energy provision, including the purchase of the Detroit-based DTE’s local assets, a route that has proved challenging when pursued elsewhere. Perhaps the most notable example is an attempt by the city of Boulder, Colorado to create a municipal utility by buying infrastructure from the local utility company, Xcel Energy. The move led to a legal battle that cost millions of dollars and was ultimately abandoned in 2020.
Last fall, voters in the state of Maine voted down a plan to take over the three investor owned utilities that serve the state after it became clear that the final cost of that project was unknown and the process would likely involve years of expensive litigation.
For Ann Arbor, buying DTE’s assets would mean the city would end up owning the same coal and gas assets it was trying to get away from. It is unclear how much Ann Arbor would have to pay for the privilege. Stults told Latitude Media most of the city’s existing electrical system would need to be upgraded.
Ann Arbor is known for its tree lined streets and when they interact with electrical wires overhead, tree damage becomes a major consideration for the electrical system. Stults said, “Burying the lines comes with significant expense financially but also in terms of tree canopy coverage. Moreover, we have significant lines that run through backyards and lots, which means it’s not even as simple as discussing right of way burial of lines — we’ll have to go through backyards and disrupt a significant amount of infrastructure.”
Ann Arbor SEU Explained
Mindful that climate change could further degrade distribution infrastructure, Ann Arbor sees a need to invest in decentralized generation “to ensure we are increasing the resilience of our people, our places, our institutions, and our communities,” said Stults. The proposed SEU is viewed as a way of encouraging DTE to introduce more clean energy while “investing in our own local community by supporting large scale adoption of behind the meter solar and energy storage systems. The idea behind the SEU concept has been tried and tested in today’s energy markets, she added, although the way services are being combined to improve resilience, reliability, and clean energy distribution is considered novel.
. The city says the sustainable energy unit would be a community owned utility that delivers:
- Improved energy reliability via the installation of solar and energy storage systems on homes and businesses.
- Robust energy waste reduction (efficiency) programs that save residents money while improving comfort, safety, and health.
- On-bill financing to lower the upfront costs and increase the flexibility of paying for comfort improvements.
- Support with beneficial electrification and associated work force training to transition to cleaner and safer homes and businesses.
- Microgrids between neighboring households, where solar and storage are shared.
- Community solar programs that provide residents the benefit of solar installed in shared areas of the City.
- Energy justice initiatives to ensure that everyone in the community has the benefit of the clean energy economy.
An Unusual Operating Model
Although the chosen architecture for the SEU will be a series of community microgrids, the way they will operate will be different from the norm, according to Johanna Mathieu, an associate professor of electrical engineering and computer science at the University of Michigan. Instead of having a single point of interconnection with the main grid, the SEU will connect to DTE’s infrastructure at every home, said Mathieu, who is providing grant application support for the project. Homeowners, if they decide to opt in to the SEU network, will have separate meters for the municipal utility and for DTE, Mathieu said.
The two systems will not exchange electricity but the microgrids will rely on the DTE network for frequency and voltage control. This proposed arrangement has given rise to a series of interesting technical questions, which Ann Arbor is addressing with equipment provider Schneider Electric.
For one, what happens when the amount of energy from distributed renewables on the SEU exceeds the demand from customers? To address this issue, SEU microgrids will initially be sized to only cover essential loads, meaning customers may still rely on DTE for some of their electricity provision. In addition, the microgrids will be equipped with batteries for energy storage. There are plans to pilot demand side initiatives such as automated control of heating and air conditioning systems so the need for solar power curtailment is minimized.
Another question is how to maintain SEU frequency control if the DTE network experiences a blackout. Planners are pondering whether battery inverters or biofuel-based generators could provide grid stability instead. “It’s not clear how to run this thing,” said Mathieu, “so there’s a lot of really interesting research on power electronics and inverter design that needs to happen. But it looks like something we can achieve in the next few years.”
Benefits Beyond Ann Arbor
If Ann Arbor can get the SEU to work, the consequences could be wide ranging, said Kevin Kircher, an assistant professor at the Purdue University School of Mechanical Engineering, who is not connected with the project. “The upside potential is really a radical re-envisioning of the model that we have between consumers and their energy provider. We have this whole field that involves these slow-to-adapt incumbent utilities, and we can change that so that we have public, clean, affordable, reliable power being deployed quickly, and in the neighborhoods where people want it. That could be huge, potentially.”
Given the implications, Kircher would be surprised if the SEU does not see pushback from DTE and the wider utility industry. As it stands, Ann Arbor is treading carefully to ensure the SEU’s design cannot be legally challenged by DTE or its stakeholders. “We certainly are having a lot of discussions with them about how we can meet our mutual goals,” Stults said.
Ann Arbor has only recently completed an economic modeling exercise to demonstrate the viability of the SEU and is now looking to test the findings with a third party rate firm. It is also creating a governance and staffing plan for the utility. The work will likely be watched with interest in the US and abroad as a growing number of cities worldwide look to bypass traditional energy providers with utilities of their own.
“We’re seeing a return to publicly owned utilities, particularly focused on generation,” said Daniel Pérez Rodríguez, managing director of L’Energètica, a clean energy provider owned by the regional government of Catalonia in Spain. “However, the idea of a microgrid operating in parallel with the main grid is not something I’ve seen before. It’s a big deal.”
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