Title
Resolution to Approve Amendment 1 to the Grant Agreement with State of Michigan Department of Labor and Economic Opportunity to Support the Sustainable Energy Utility with Launching a Solar Virtual Power Plant and Adding a Full Time Equivalent Position to the SEU
Memorandum
In late 2024, staff in the Office of Sustainability and Innovations (OSI) approached the State of Michigan Department of Labor and Economic Opportunity to change the scope of our $5,000,000.00 grant award from one that focuses on advancing the Wheeler Center Solar Park to one that focuses on supporting the launch of the Ann Arbor Sustainable Energy Utility (SEU). More specifically, as prices for the Wheeler Center Solar Park continued to rise, the project became financially untenable. At the same time, the public had just voted to authorize creation of the SEU. With the authorization to create the SEU, the City requested that the State of Michigan Department of Labor and Economic Opportunity entertain a change to the grant award that would support staffing for the SEU and support the SEU with standing up a pilot solar virtual power plant.
Staff made the decision to pivot to supporting a solar virtual power plant due to the need to understand the viability of this technology for potential future integration in SEU offerings. Moreover, the flexibility of the State’s funding allows for the exploration of more creative energy solutions. As such, the City made the following request to the State of Michigan Department of Labor and Economic Opportunity:
“The $5,000,000.00 from the State of Michigan award be applied to the purchasing of solar photovoltaic panels, batteries, software, and labor necessary to install and interconnect these systems into a virtual power plant.”
Simultaneously, the City requested a budget adjustment so that the award could be spent as follows:
• $3,000,000.00 for buying the solar and supporting materials for the solar virtual power plant
• $1,000,000.00 in consultant / outside contractor support
• $1,000,000.00 in general administrative costs necessary to implement the project, including SEU staffing costs
In November 2024, the State agreed to these changes and executed Amendment 1 to the grant agreement. The grant award currently runs through October 2026.
Now that the new Executive Director for the Sustainable Energy Utility has started, staff are seeking formal approval by Council to accept this modified grant agreement and to use a portion of the funding to cover the salary for the SEU Executive Director. This will necessitate an increase in the City’s FTE count by 1.
Budget/Fiscal Impact: There is no near-term fiscal impact for these changes.
Staff
Prepared by: Missy Stults, Sustainability and Innovations Director
Reviewed by: Valerie Jackson, Assistant City Attorney
Reviewed by: Marti Praschan, Chief Financial Officer
Reviewed by: Shoshannah Lenski, Executive Director of Sustainable Energy Utility
Approved by: Milton Dohoney, Jr., City Administrator
Body
Whereas, The Ann Arbor Office of Sustainability and Innovations secured a $5,000,000 grant from the State of Michigan Department of Labor and Economic Opportunity in 2024 to support the Wheeler Center Landfill Solar Project;
Whereas, City Council accepted and approved this grant agreement via Resolution R-24-045;
Whereas, In late 2024, the pricing for the Wheeler Center Landfill Solar Project rose to a point that made the project untenable at that time;
Whereas, In November 2024, Ann Arbor voters overwhelming authorized creation of the Ann Arbor Sustainable Energy Utility;
Whereas, Office of Sustainability and Innovations staff negotiated a change in scope to the grant agreement with the State of Michigan Department of Labor and Economic Opportunity to support the Sustainable Energy Utility and launch a pilot solar virtual power plant as part of the Sustainable Energy Utility’s potential future programming;
Whereas, The State of Michigan Department of Labor and Economic Opportunity approved this change and executed an amendment to the grant agreement;
Whereas, This amended grant agreement will enable the City to use the grant funds to support launching the Sustainable Energy Utility and creating the City’s first solar virtual power plant; and
Whereas, This proposal is funding neutral through at least October 2026 due to the grant agreement with the State of Michigan Department of Labor and Economic Opportunity;
RESOLVED, That City Council authorize and approve Amendment 1 to the grant agreement with the State of Michigan Department of Labor and Economic Opportunity;
RESOLVED, That City Council authorize the addition of 1 FTE to the Ann Arbor Sustainable Energy Utility Fiscal Year 2026 budget;
RESOLVED, That City Council authorize the increase of the City’s full-time equivalent positions by one, making the new total 864; and
RESOLVED, That the City Administrator is authorized to take all appropriate actions to implement this resolution.