Market-Wide Half-Hourly Settlement is coming
Published: 24/07/2024
5-minute read
In recent years, Great Britain has felt the impact of the unpredictable and at times, volatile energy market. As a response, the government has introduced various policies and strategies to enhance energy security while progressing towards achieving net zero by 2050. It's clear that to effectively decarbonise, significant transformation in the energy sector is needed to manage electricity more efficiently as Great Britain transitions to renewable energy sources and reduces its reliance on fossil fuels. Beyond just decarbonising, supply, consumption and how we engage with electricity needs to be revolutionised to make it more targeted, responsive, and adaptable. Fundamental changes are needed and are coming with the Market-Wide Half-Hourly Settlement Programme (MHHS): set to potentially accelerate the pathway to net zero and transform the electricity landscape into a smart and flexible energy system.
Take a listen to our latest podcast with the team at Future Net Zero! Kunal Sofat, Head of Programme Delivery talks through all things MHHS, what impact this will have on future products, the delivery timeline and why we don't want energy peaks to become even peakier!
Revolutionising electricity...
What does MHHS mean for you and your business and what do you need to do to prepare ahead of its implementation? Harry Wright, Change Manager here at TotalEnergies, explores MHHS, why it's been introduced and how these changes are set to impact consumers and what role there is to play in achieving net zero.
"In the ever-evolving landscape of the energy industry, the Market-Wide Half-Hourly Settlement (MHHS) programme, is the most significant change to how the wholesale electricity market is settled since the introduction of the non-half hourly market in 1998. MHHS intends to revolutionise the way electricity consumed is settled across the industry and brings with it substantial change and benefits to consumers, to the tune of up to £4.5 billion pounds according to Ofgem.
Let's start with the why...
The programme officially announced by Ofgem in April 2021, led by Elexon, is set to be implemented in December 2026, and has clear, established drivers; To support the transition to Net Zero. To introduce a faster and more accurate electricity system, and to encourage a more flexible approach to how customers use energy. MHHS also aims to reduce power production through fossil fuels and, by extension, reduce our carbon emission footprint. The shift to half-hourly settlements also supports the integration of renewable energy sources. By accurately measuring energy consumption and production, the programme can better accommodate the variable nature of renewable energy sources like wind and solar power, crucial for achieving the UK's net zero targets.
What is Market-Wide Half-Hourly Settlement?
In a nutshell, MHHS will see customers being settled on their half-hourly electricity consumption, so every 30 minutes, your electricity consumption will be recorded and used to calculate your bill. At present, half-hourly settlement is only required for industrial and commercial customers and if we analyse the model which exists today, most customers electricity usage is estimated based on pre-determined profile classes, so a one size fits all approach. With this, there is an often-reported common pitfall; inaccuracies in what is billed, in comparison to what is actually consumed.
The new target operating model (TOM) through MHHS will enable the flow of half-hourly data (meter reads), using advanced meters to record and convey real time usage data every 30 minutes. With this in place, businesses with half-hourly enabled meters will be provided with more detailed and accurate, real-time information about their energy consumption and usage, allowing them to make smarter choices with their usage and change their consumption behaviours.
This shift in behaviour would be beneficial for both customers and suppliers as energy production becomes more intermittent, linking demand with generation as renewable sources start to play a bigger role. Behavioural changes can also be used to manage peak energy periods to reduce the strain on electricity networks ensuing less investment is needed that would be otherwise.
What changes will this bring...
A key change, once MHHS is live, will be the greater accuracy of consumption data. The transition from estimated to actual data will eradicate the existing profile classes and significantly reduce the use of estimated reads to bill consumers.
Customers will be armed with a richer arsenal of data (as a result of the Non-domestic Smart Metering project, set out by DESNZ*). As supply and demand conditions are a factor in electricity prices, so if customers can identify off-peak periods, they can take full advantage of cheaper price periods.
*The Non-domestic Smart Metering project is an initiative by the DESNZ (Department for Energy Security and Net Zero) to ensure that suppliers provide applicable customers or appointed third parties with up to 12 months of historical half-hourly (power) and hourly (gas) data. DESNZ stipulate that data should be given to customers or appointed third parties without them having to request it and it must be free and accessible. The go-live date for this project is October 2024.
The availability of this new data will make it possible for new products, such as time-of-use-tariffs to be launched to the market. Whist TotalEnergies do not currently have a finalised view on what future products will be available as part of their product lined up, we are aware and engaged with the ongoing ' Smart and Secure Energy System' (SSES) programme that will ensure that we include any mandatory products in our offering.
What does this mean for you...
From December 2026 onwards, when the new industry settlement timetable goes live, one of the key changes some customers will notice is the improved level of transparency and accuracy regarding their consumption. Consistent daily, half-hourly readings will provide some customers with a new way of thinking when considering electricity usage, giving them greater control over their consumption. By providing real-time data on energy consumption, consumers can better understand their usage patterns and make informed decisions to reduce their energy consumption. This not only helps in saving money but also contributes to reducing the overall demand on the energy grid.
If a customer on a dynamic tariff can consume electricity in an off-peak lower costing period, or identify areas of waste at peak periods, they have far greater control of their costs. An approach that would not have been possible in the traditional landscape.
Customers without an existing smart meter will need to ensure that they have one installed to be able to operate in an MHHS world and take advantage of its benefits. To upgrade your meter to a smart meter, please visit our Business Smart & AMR Meters page.
What we're doing to prepare...
TotalEnergies started our analysis of the programme in 2022, with work completed alongside third parties to understand the MHHS picture against our current landscape. Then in 2023, we deployed a programme team to deliver MHHS. Additionally, we've also partnered with Energy Service Group (ESG) to prime us for MHHS success.
Between now and December 2026, we need to ensure that the meters in our portfolio are configured to read half-hourly data. For any incompatible meters, we will need to complete a Change of Measurement Class (CoMC). We'll be in touch with all our customers who we've identified as having a meter that will require a change, with options on how to proceed and what the next steps are.
As mentioned earlier, we're also required to provide free access for our customers and appointed third parties who are eligible to view it. We will be notifying customers how to access the new portal in due course.
Lastly, changes will be required to our pricing and billing systems to ensure they support half-hourly calculations.
Final thoughts...
In conclusion, Market-Wide Half-Hourly Settlement will revolutionise the way electricity is viewed, managed, and consumed for all parties involved in the supply chain. From suppliers and generators through to customers, the benefits are clear, and every party has their individual part to play. The programme is a key driver to support the transition to a Net-Zero nation and aims to reduce demand generation during peak periods where fossil fuels are being utilised. Additionally, the programme aims to change customer behaviour introducing new data insights. It is important to make clear, whilst suppliers such as TotalEnergies need to invest in and support the change to Half-Hourly settlement, the key component will be customers embracing the change, so all parties can reap the benefits.
TotalEnergies understand and appreciate the gravitas of the programme and its objective to help support not only the industries Net Zero ambitions, but the nations."
For more information on MHHS, we've a dedicated webpage: Market-Wide Half-Hourly Settlement.