Alexa Bush was seven months pregnant in 2021 when the power went out for four days in her Ann Arbor neighborhood.
"I just have this really vivid memory of getting my toddler and walking up this hill over a downed tree — super pregnant in a pandemic — and being like, 'I never want to feel this vulnerable again in my life.'"
Bush and her partner, Andrew Billi, had thought about installing solar energy. But those four days without power prompted them to take action.
The couple are among the roughly 8% of American homeowners who have installed solar panels, Pew Research reported last fall. Another 39% are interested in going solar.
Solar energy can offer homeowners like Bush freedom from an aging and increasingly unreliable electric grid, and making solar energy more accessible to Michigan homeowners is an important public policy goal: Renewable energy production is a crucial part of mitigating the impacts of climate change, and of Michigan's plan to become carbon neutral by mid-century.
But even for middle-class Michigan homeowners, access to solar panels and battery storage often remains stubbornly out of reach.
That’s not due to lack of solar potential. Despite having a reputation for cloudiness, Michigan has sufficient sunlight to generate solar power. Yet the state lags neighboring states Minnesota, Illinois and Indiana that among the national leaders in solar installations.
For most prospective solar buyers, the biggest obstacle to going solar is the upfront cost. A solar installation costs tens of thousands of dollars, and can take a decade or more to break even over the 25-year average life of a solar array.
Bush acknowledges that she and Billi are lucky — they own a single-family home sturdy enough to have a stable roof, the income and credit history to qualify for a publicly backed loan, and to take advantage of the federal Inflation Reduction Act's solar power tax credit, and they live in Ann Arbor, where the city helps homeowners obtain bulk discounts on solar installations.
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Advocates and industry leaders say advancing residential solar in Michigan comes down to policy at the state and local levels, like the public programs that helped Bush and her partner. State and city governments should expand those offerings, advocates say, standardize permitting and other bureaucratic hurdles to installing solar, and revise state policies that limit the number of homeowners who can sell energy back to the grid under the current rate.
Without more forward-looking solar policies, they say, Michiganders will miss out on the new federal incentives, and the opportunity to expand the use of renewable energy in the state.
What it costs
Michigan’s solar potential isn't far behind Florida’s, said John Richter, senior energy analyst at the Great Lakes Renewable Energy Association.
An ideally positioned 6 kW residential solar array in Tallahassee — in Florida, the sunshine state — produces an average of 8506 kWh per year, Richter said. A similar array in Lansing generates an average 7,764 kWh annually — enough to power about 73% of the electrical needs of the average home.
“That’s only 9% less in Michigan than in Florida,” he said. “Location is not nearly as important as people think it is."
Bush and Billi paid about $33,000 for the system installed on the roof of their home — 7 kW solar panels plus a 16 kW battery. The setup includes a multi-year warranty for both labor and parts; professional maintenance, including cleanings, may cost $140 to $180 annually. The panels are enough to power the entire home when the sun shines, and the battery stores enough extra energy to get through cloudy days.
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The couple financed with the help of Michigan Saves, a quasi-public nonprofit green bank that backs local loans for energy efficiency, renewables and other healthy home improvements, securing a 10-year loan with a 4.25% interest rate.Michigan Saves' backing reduces the risk for local banks, enabling them to offer competitive interest rates, favorable loan terms, and expanded underwriting criteria. They connected to an installer through a bulk buying program facilitated by the City of Ann Arbor, obtaining a 5% discount on the installation.
The Inflation Reduction Act increased the federal tax credit for solar from 26% to 30%, meaning taxpayers can claim that percentage of the cost of their solar installation as a deduction on their federal income taxes. Bush and Billi qualified for the credit.
Bush estimates the system’s break-even period — the time it will take for their energy savings to outpace the initial investment — at around 11 years, based on DTE’s 2022 electric rates. The average life of a solar installation is 25 years.
That timeline might accelerate, considering DTE’s new Time of Use rates, which charge more for electricity during the peak hours of 3 p.m. and 7 p.m., and the potential for future rate increases, or if the bill credit amount that solar panel owners like Bush can receive for sending excess energy back to DTE’s grid (called a "distributed generation tariff") changes.
For Bush, it was about more than money: “There's some peace of mind, knowing that it's a small part of a bigger transition. And it gives me security with the next great blackout. At least I have some control. I can keep my fridge and freezer running off the battery.”
Growing solar
Solar is on the rise, said Todd Parker, program director at the green bank Michigan Saves.
"We had our best year in 2022 for solar projects," Parker said. "And I think that's only going to improve with the new federal tax credits which are now in play in 2023."
Michigan Saves has backed financing for solar installations through its state and federally funded loan-loss reserve fund since 2009. Since its inception, the program has helped finance more than 5,700 residential projects across the state. Each public dollar spent, Parker says, leverages $30 in private spending.
As the cost of solar installations decrease, Parker says Michigan Saves is seeing larger projects, that increasingly include battery storage. He believes that's a response to power outages in the past few years.
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Michigan Solar Solutions owner Mark Hagerty said some of his customers borrow against their retirement funds to pay for a solar installation.
But even this set of options for independently financing solar are limited to those with 401ks, or enough income to qualify for a loan or to take advantage of the federal tax credit.
Not to mention those who don’t have access to a rooftop.
That’s where community solar — which allows residents and businesses to subscribe to a portion of energy production from off-site solar facilities, with the production credited towards their utility bills — comes in, says the Great Lakes Renewable Energy Association’s Richter.
Those who cannot afford to buy panels, who live in multifamily homes with shared roofs, or who otherwise may not have access to solar resources — like a resident whose roof is at a suboptimal angle for capturing solar energy — could still invest in and benefit from solar energy by subscribing to a community solar installation, Richter said.
“There are all these other categories that people fall into,” he said. “Community solar provides that solution, and those are predominantly middle-class people. So that's who community solar is for.”
But under current law, such an arrangement is not legal in Michigan, and advocates say that’s one reason Michigan’s solar power market has not reached its potential.
State policy could allow community solar
Michigan lawmakers recently introduced bipartisan legislation to authorize community solar in the state.
“We need policymakers to unleash [solar’s] potential by passing legislation allowing more local, cost-effective community solar projects to get off the ground,” Laura Sherman, president of the pro-advanced energy advocacy group Michigan Energy Innovation Business Council, said in a statement. “This will create jobs, support local businesses, and will help to strengthen our electric grid.”
But DTE Energy Co. and Consumers Energy have been staunch opponents of community solar, claiming that it would unfairly benefit "unregulated" and "out-of-state developers," leading to instability in Michigan's power grid.
The two utilities joined forces in 2021 to create and promote their own utility-based alternatives to community solar, which allow customers to support utility investment in solar by voluntarily paying a premium on their bills. DTE introduced MIGreenPower, and Consumers launched Solar Gardens.
Brian Wheeler, a media relations manager at Consumers, said the proposed community solar legislation is “redundant and would result in higher prices for customers.”
Raising the solar cap
Solar advocates also say Michigan's solar cap should be raised, or removed altogether.
Under existing state law, utilities must compensate residential solar owners for the power they send back to the grid — but up to just 1% of the utility company's average peak yearly load. Beyond that, the utilities are not obligated to compensate solar owners for power sent back to the grid — income that can help reduce a homeowner’s break-even time.
DTE Energy anticipates hitting its solar cap for residential customers as early June.
Even after the cap is reached, state law requires utilities to continue connecting new panels to the grid, and DTE Spokesperson Peter Ternes said the company has decided to honor the current distributed generation tariff rate for new connections through the end of this year. Ternes said the company is negotiating with regulators to establish a new tariff for future customers who connect solar panels to the grid after it reaches the cap.
In January 2023, Consumers Energy agreed in a rate case settlement to expand the participation limit for its distributed generation program from 2% to 4%.
Sen. Jeff Irwin (D-Ann Arbor), one of the legislators who sponsored the community solar bill last month, expects legislators to introduce bills addressing Michigan's distributed generation cap this session.
“I don't think that we need a cap — the cap was arbitrary in the first place,” Irwin said. “And if there are investments that we need to be making in our grid to facilitate people investing in generating and participating, then we should make those investments that would improve resiliency and harden it for storm damage.”
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But expect a fight from the utility companies, who have long argued that rooftop solar owners receive a subsidy from other customers.
The cap, Michigan law and related Michigan Public Service Commission orders require DTE to purchase excess energy from private solar customers at an above-market rate, DTE's Ternes said. “This overpayment is essentially a subsidy paid for by non-solar customers.”
Consumers echoed this sentiment.
“While we support distributed generation, we are concerned that the current rate structure for customers with distributed generation, like rooftop solar, results in these customers paying approximately 38% less than a typical customer to support investments in the grid than other customers,” Katie Carey, a Consumers spokesperson, said in a statement.
Richter and other advocates disagree with the utilities’ assertion that non-solar customers are subsidizing solar owners' excess energy compensation, noting that utilities stand to profit from building massive utility-owned solar arrays because the state’s regulatory framework allows them to recoup these costs from ratepayers.
“The energy that outflows from a customers’ solar system hops across a couple of short wires to their neighbor's house, where the utility sells it to their neighbor at full retail price,” Richter said. “In any competitive business, buying at half price and selling at full price would be considered quite a deal. But monopoly utilities oppose customer-owned solar because utility profits are regulated based primarily on the amount of capital they invest in equipment.”
What cities can do
Solar installers who deal with Michigan’s many local governments — all with unique requirements and processes for approving solar projects — say local governments also have a crucial role to play.
In Michigan, Grand Rapids, Lansing, East Lansing, Ypsilanti, and Ann Arbor are among 484 SolSmart-certified municipalities nationwide. They’ve implemented solar-friendly practices like expediting permits, adopting solar-friendly planning and zoning, and installing solar facilities on publicly owned land.
Dave Friedrichs, founder and principal of Ann Arbor-based solar installer Homeland Solar, said he'd like to see local city planners and councils streamline permitting across local jurisdictions by adopting a standard process. The city of Ann arbor, he said, has combined its electrical and building permits into a single expedited solar permit.
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Such measures help "grease the skids," Friedrichs said, for the "contractors who have to get things done."
According to Michigan Saves data, Ann Arbor has the highest number of solar installations financed by the program at 153, followed by Grand Rapids with 42, Ypsilanti with 27, Detroit with 20 and Kalamazoo with 19.
Ann Arbor’s Solarize program — the one Bush and Billi used to get a 5% discount through bulk buying — has caused a “huge exponential up-curve” of installations, said to Julie Roth, an energy analyst who heads up the program for the city’s Office of Sustainability and Innovations.
The program has driven 520 installations since launching in 2020, with bulk discounts saving an estimated $1.6 million on upfront costs. Before the program, Roth said, Ann Arbor saw around 20 to 25 new solar installations per year.
It's a grassroots-style program where individuals interested in solar reach out to friends and neighbors to organize a group buy. Participants must use a Michigan Saves-vetted contractor. Roth helps host informational sessions in their homes or community spaces.Bulk buys can net as much as a 15% discount.
Now, Ann Arbor is working with Detroit-based Ecoworks to create an “energy concierge” program, whereby staff will work with homeowners on long-term plans for home decarbonization, including efficiency and electrification.
The program, advocates say, could be adopted by other municipalities.
Ann Arbor's goal, Roth said, is to make it easier for homeowners to go solar by providing a customized map to home decarbonization.
"So you know exactly how you can get your home there over the next ten years."
Nina Ignaczak is the founder and editor ofPlanet Detroit, a local news outlet covering health and the environment. Contact the Free Press opinion page: letters@freepress.com.
