Ann Arbor took three steps toward being greener Monday night with the City Council's unanimous approval to install solar panels on the roof of a city fire station, to purchase 500 new LED streetlights and to launch a new energy efficiency program for businesses.

Crews will install solar electric and solar thermal systems at Fire Station No. 6, located near Briarwood Mall, after the council approved $51,480 contract with Huron Valley Electric.

The company will install the 8-kilowatt solar photovoltaic system and a solar domestic hot water system in early June. The project is funded entirely by the city's Energy Efficiency and Conservation Block Grant from the U.S. Department of Energy.

LED street lights illuminate Main Street in downtown Ann Arbor.

Ryan J. Stanton | AnnArbor.com

The electric system is expected to produce $1,000 annually in electricity and the hot water system is expected to meet 55 percent of the station's hot water needs, for an annual savings of $430. Electricity would be used to offset the fire station's electric use on sunny days.

The city is purchasing the photovoltaic collectors for the project separately from the construction contract with Huron Valley Electric. Andrew Brix, the city's energy programs manager, said that's because the manufacturer, Uni-Solar, has agreed to sell solar collectors at a greatly reduced cost to the city based on its Solar America Cities Partnership.

Brix said the panels themselves should be under $27,000, though that hasn't been finalized. Those are being paid for with the same federal grant. Additionally, DTE Energy's SolarCurrents rebate will cover about $20,000 of the total system cost, Brix said.

Many more energy efficiency improvements throughout the city will be made possible under a new program that received initial support from the City Council Monday night.

The council voted to establish a $482,800 loan loss reserve fund to be used in conjunction with the city's new Property Assessed Clean Energy program that's under development.

Funds were previously budgeted from the city's Energy Efficiency and Conservation Block Grant from the U.S. Department of Energy for this purpose.

Ann Arbor officials fought for the passage of the state's new PACE law, which was signed by outgoing Gov. Jennifer Granholm in December.

The new law gives local governments authority to issue revenue bonds to pay for upgrades on private property, ranging from high-efficiency furnaces that can cost a few thousand dollars to solar-panel systems that can cost tens of thousands of dollars.

Property owners are responsible for repaying the loans from their local governments over a period of several years through special assessments added to their property tax bills.

Brix said the PACE program is being set up so the estimated energy savings must be greater than the cost of the special assessment — meaning it'll be an immediate cost savings for the property owner. The way the law is currently worded, it only applies to businesses for now.

Ann Arbor officials hope to see it extended to residents.

Brix said the loan loss reserve fund will allow the city to leverage 10 times as much private funding for PACE projects and reduce interest rates for participating property owners by covering a portion of delinquent or defaulted payments.

"I think that folks will see that Ann Arbor will be moving certainly faster than many other communities," said Mayor John Hieftje, championing the PACE program Monday night. "Again, we've had so much to do with getting this program up and running, and we've already put a great deal of work in, and I'll be very happy to see when it actually takes off."

The council also showed its support Monday night for a $315,968 purchase of 500 new LED "cobra head" streetlight fixtures from Farmington Hills-based Lumecon LLC.

The new lights will be installed on the arterial roads in the city, which city officials say is the third and final phase of the LED conversion process for city-owned streetlights.

However, many of the street lights in Ann Arbor are owned by DTE Energy and the city remains in talks with the company about converting those.

In order to achieve energy and maintenance savings, the city began converting all city-owned streetlights to LED fixtures in 2007. Crews began with the conversion of 1,000 downtown streetlights through a grant from the Ann Arbor Downtown Development Authority.

In June 2010, the City Council authorized moving on to Phase II of the LED-conversion process for the remaining 800 city-owned streetlights. The city was able to purchase 250 LED cobra head fixtures, which are in the process of being installed. Tonight's resolution would approve the installation of another 500 over the course of eight months.

The city expects to see a 50-70 percent savings in energy and maintenance.

Ryan J. Stanton covers government and politics for AnnArbor.com. Reach him at ryanstanton@annarbor.com or 734-623-2529.