Another Route To Rooftop Solar: The Ann Arbor Solution
May 21, 20262 hours
Tina Casey
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Small-scale solar arrays have become a powerful addition to the US electricity grid, at an estimated 58 gigawatts and counting. The balcony solar movement will also accelerate the trend, and now comes the city of Ann Arbor, Michigan with a new solution aimed at helping city residents, businesses, and institutions install rooftop solar systems with energy storage.
The Rooftop Solar Blues
The Ann Arbor solution comes at a fraught time for the U.S. rooftop solar industry. Last year, US President Donald Trump and his Republican allies in Congress successfully eliminated a generous federal tax credit aimed at making rooftop solar more affordable for homeowners. The impact on solar firms has been substantial and widespread.
The leading US solar installer SunRun provides one example. “In the first quarter of 2026, Subscriber Additions were 17,665, a 25% decrease compared to the first quarter of 2025,” the company noted in its Q1 2026 report earlier this month.
The firm Enphase had a similar experience. “Enphase sells batteries and equipment called inverters for rooftop solar panels, a business that’s been hit hard by changes in the big tax legislation that Republicans in Congress passed last year,” Barron’s reported in February.
“Before the tax changes, homeowners installing a standard $20,000 solar panel system could save $6,000 on their federal taxes. That break is no longer available. Enphase’s U.S. sales fell 23% year over year,” Barron’s added.
The Ann Arbor Solution
The loss of the federal tax credit has slowed the pace of solar adoption, but the momentum continues. Though some installers have fallen by the wayside, others are scrambling to adjust their business models.
Solar leasing has emerged as a key strategy for survival in the post-tax credit environment. Instead of purchasing their own rooftop solar systems, property owners can have them installed on a lease or subscription-type basis. The arrangement avoids the up-front cost of solar equipment while enabling the property owner to take advantage of lower electricity rates for solar power, rendering the tax credit issue moot.
Legacy firms like SunRun have adopted the model, and lease-type solar startups are adding to the momentum as well.
In the latest development, Ann Arbor has just launched a new solar lease program that provides rooftop solar panels integrated with battery energy storage. The program is managed by A2SEU, the city’s new Sustainable Energy Utility authorized by voters in November of 2024.
Homeowners who enroll in the program pay a fixed rate of $600.00 per year, good through 2030. To help homeowners manage their monthly costs, the payments are adjusted seasonally. During the April-September months of high solar output, homeowners pay $75.00 per month. In the winter, from October to March, payments are $25.00 per month.
“The Sustainable Energy Utility (known as the A2SEU or just SEU) is an innovative new form of municipal energy utility. It’s optional (sign up only if you want), supplemental (you’ll stay connected to the current grid), community-owned and provides 100% local, renewable and clean energy solutions,” SEU says of itself.
Rooftop Solar Is Just The Beginning
If you caught that thing about “connected to the current grid,” that’s an important feature. By and large, rooftop solar is not an off-grid solution. Whether leased or purchased, rooftop solar panels do not necessarily provide 100% of household electricity needs all year ’round. SEU’s integrated storage element will help Ann Arbor residents squeeze more value out of daylight and summertime hours, but the connection to local utility DTE is needed to ensure 24/7 service regardless of the weather or time of day.
Another feature to be aware of is usage creep. With “free” electricity coming from the sun, homeowners may lose track of new appliances and lifestyle changes that push their electricity demand up year after year. A growing family, a new home EV charger, or switching from in-person to remote work, for example, can add substantially to household electricity use. Homeowners will continue to save money on the electricity from their solar and storage system, but they may see total costs climb if they pull more electricity from their grid supplier.
Still, the Ann Arbor model also provides for geothermal heating and cooling systems, which could help participants avoid drawing electricity from the grid. As part of its mandate, SEU also administers energy-sharing microgrids that that can also help participants take full advantage of available renewable energy resources.
The SEU mandate covers all residents, businesses and institutions (nonprofits, schools, houses of worship, etc.) within Ann Arbor, with residents including other property owners, landlords, and renters in addition to homeowners who occupy their own homes.
SEU also points out that its focus on point-of-use renewable energy generation reduces grid-related vulnerabilities.
“Focusing on generating energy at the source of use minimizes the need for distribution systems (e.g., poles and wires), which are currently the most vulnerable part of the existing energy system,” SEU notes.
“This means that SEU-generated energy will be more reliable (and resilient) than energy from a traditional utility,” the utility adds.
“The SEU is all about generating energy locally – in our community, on our roofs, in shared spaces and under our feet,” they emphasize for good measure.
Socialism!
If this is beginning to sound familiar, you may be thinking of the sprawling network of not-for-profit community utilities that fall under the federal Rural Electric Cooperative umbrella. The REC program took shape as an anti-poverty program on the heels of the Great Depression. For-profit utility companies were uninterested in providing service to cash-strapped rural areas, so local groups organized to start their own local utilities, community-owned by local ratepayers.
What distinguishes SEU is its emphasis on small scale, hyper-locally generated solar and geothermal energy. Though REC’s have been vigorous adopters of renewable energy resources, their focus is primarily on utility-scale projects.
Additionally, renewable energy uptake by some REC’s has been impeded by long term energy contracts and local employment-related concerns. Days before former President Joe Biden left office in 2025, the US Department of Agriculture set aside $6 billion to help REC’s overcome these obstacles and accelerate their transition to cleaner, more economical energy resources.
The funds were approved by Congress in the 2022 Inflation Reduction Act, but the Congress of today is not interested in protecting its Constitutional duty as controller of the nation’s purse strings. Where that money will go is anybody’s guess.
Trump’s war in Iran has already cost well over 10 times the amount earmarked for REC’s, alongside $1 billion for the new and White House ballroom among other vanity projects, billion-dollar bribes enabling energy firms to walk away from their federal offshore wind leases at a profit, and, of course, the new $1.8 billion slush fund. If you have any thoughts about that, drop a note in the discussion thread.
Image: A new, not-for-profit utility will help residents install rooftop solar systems with energy storage for a flat fee of $600.00 per year and no up-front costs (courtesy of A2SEU).
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