Market-wide Half Hourly Settlement
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What is Market-wide Half Hourly Settlement (MHHS)?
MHHS is the initiative that will enable all commercial and residential properties to provide Suppliers with electricity meter readings every half hour.
Electricity used by the largest consumers (typically industrial companies) has been measured in half-hour periods for many years. This is because meters installed at these premises are recording consumption every 30 minutes and sending that information to Suppliers. As a result, the amount of electricity they are consuming compared with how much is being generated can be settled every half hour.
Traditionally, electricity used by smaller businesses and households every half hour has been estimated (In the past it was too expensive to install meters to provide half hourly readings).
Fast forward 20 years and ‘smart’ electricity meters which provide Suppliers with readings every half hour are widely available. Around 40% (according one of our Smart Meter Technical Detail Reports) of all homes and small businesses now have smart meters.
To get the full benefit of smart meters for consumers and the electricity sector as a whole, we need to move to Market-wide Half Hourly Settlement. This means their consumption for each half hour of the day can also be fed into the Settlement process.
If you are new to electricity Settlement, check out our new Balancing and Settlement Code for Dummies guidebook for further background reading.
Industry benefits of MHHS
MHHS supports the move to a smarter, more flexible electricity system and net zero in several ways. The main benefit is faster, and more accurate Settlement, which is good for the industry (as the amount that electricity companies owe, or are owed through Settlement is resolved more quickly).
For example, the Final Reconciliation Run , where companies either receive the full amount through the Settlement, will be cut from 14 months after each Settlement Period to just 4 months.
Consumer benefits of MHHS
MHHS will encourage Suppliers to provide a wider range of ‘time-of-use’ tariffs, which reward customers for reducing their energy use during peak demand periods.
MHHS will also make it easier for consumers to provide Demand-side Response. This is where they reduce or increase their electricity consumption in exchange for payments, when they are asked to by network companies or Suppliers).
Overall MHHS can help create a more efficient electricity system which can respond to the net-zero challenge. In its draft impact assessment of moving to MHHS, Ofgem estimates that the total net benefits of MHHS for GB consumers of between £1.6bn to £4.5bn.
Elexon’s role in MHHS
In 2017, energy regulator Ofgem announced a review on whether the whole electricity market should move to MHHS.
Elexon has led Ofgem’s Design Working Group (DWG) to design the Target Operating Model (TOM) and transition approach for MHHS.
Following Ofgem’s preliminary approval of the TOM in October 2019, Elexon’s role is now to provide technical leadership to two new working groups that are developing aspects of the TOM further:
Timeline for CCDG & AWG work
To be added
Ofgem’s impact assessment on moving to MHHS
Ofgem has published its draft impact assessment on moving to MHHS and its consultation runs until 14 September 2020. If you have views, please visit Ofgem’s site where you can find out how to respond.
How to get involved
We will keep in touch with you about developments on MHHS and the CCDG/AWG work in various ways:
- Updates in Newscast – Elexon’s weekly e-bulletin. Sign up to Newscast
- Ofgem also publishes an MHHS stakeholder newsletter