In 2010, gas and electricity regulator Ofgem created a new licence condition: providers now had to record half-hourly meter readings for larger to medium-sized enterprises (LMEs) using advanced meters. Once this was implemented, it improved the settlement process for LMEs between banks and energy suppliers, allowing for settlement at a half-hourly level.
Around the same time, in 2017, Ofgem commenced a code review to see how this solution could be brought to the rest of the market, publishing the full business case for 'market-wide half-hourly settlements' (MHHS) in 2021. At present, MHHS is set to go live in December 2026.
But what does this mean for you as an energy retailer, network operator, or metering agency? What will regulators be asking you to do, and how can you get ahead of the increase in available smart meter data to create long-term use cases?
What is the MHHS and why it matters
Market-Wide Half-Hourly Settlements (MHHS) is a system created to ensure that suppliers can accurately settle for energy used in half-hourly periods using smart meter data. MHHS will be an important reform: a key enabler of the flexibility needed to support the Net Zero transition and another building block to realise the full value of smart meter technology.
The MHHS programme will help build a more cost-effective electricity system, encourage more flexible uses of energy, and help consumers lower their bills. This will all be part of its larger impact: promoting a cultural change in the way we consume energy and driving innovation.
Preparing for half-hourly settlements
Ofgem predicts that MHHS will net consumers an additional £1.6 to £4.5 billion by 20451. This is an industry-led programme - of which Ofgem is the sponsor. However, while this is something the sector has been pushing for, it will require a lot of work to overcome the barriers to adoption.
Key challenges to adoption
Despite the enormous potential offered by MHHS, there are some key challenges that retailers, operators, and distributors will need to address. They are:
- Connecting with the Data Integration Platform (DIP)
- Creating a data collection, management, and governance strategy.
- Understanding the technology stack required to drive this change home.
- Learning and complying with regulatory requirements.
Connecting to the Data Integration Platform (DIP) will require an adaptor to manage the integration between existing business processes and new ones, allowing the transfer of data and information between different parts of the market – including metering agents, suppliers, and network operators.
To take full advantage of MHHS, businesses must also be aware of the best way to collect, manage, govern, and utilise this data to feed long-term use cases - and this involves understanding which frameworks and technology stacks can help drive this change home. Innovation in this field is already occurring, but to design wholesale use cases, participants need a greater understanding of how the system will work.
3 types of metering under the MHHS
There will be three types of metering affected by the MHHS:
- Smart metering
- Advanced meters
- Unmetered
In the UK, the most numerous of these by far is smart meters, with a target of 50 million total installations to be rolled out by Smart DCC. Behind that, we have 6 million unmetered streetlamps, CCTV, and other connections. This group accounts for about 1.5% of the total electricity used in the UK. Finally, there are 850,000 advanced meters in the UK.
Meeting regulatory requirements
One of the biggest challenges associated with MHHS is understanding and complying with regulatory requirements. Due to the requirements for Qualification before integrating with the solution, organisations will need to publish test results, show security standards, and ensure that, when the time comes, they are prepared from both a technical and compliance perspective.
Consumers will have the option to opt out of the programme, and suppliers must be aware of their obligations under the new regulations. This means understanding and assessing the impact of these changes - especially the way it affects compliance and business processes.
Building the necessary architecture
The main engine built for the MHHS programme is the Data Integration Platform (DIP). It has been built with an EDA (event-driven architecture) design and is based on Microsoft Azure technology. For those unfamiliar with this type of architecture, it may be worth consulting with an expert who can provide information on how to optimise the integration, data management, strategy, and governance involved.
How to build long-term use cases
This programme will drive the volume of smart meter data by making the collection of 48-hour readings mandatory for the supplier. The increase in the amount of available data presents an opportunity: especially in forecasting demand and anticipating risk.
Businesses should consider what longer-term use cases this could enable and how they can start to leverage this increased flow of data. For example, integrating more renewable power into the grid, allowing consumers to access discounted energy at certain times of the day, or providing more accurate ways to manage demand at peak times.
MHHS enables further innovations, such as Vehicle to Grid (V2G), which research indicates has the potential to save £3.5 billion per year in areas including grid infrastructure reinforcement, storage, and generation due to the support it offers during periods of increased energy demand2.
By 2030, the UK could have almost 11 million Electric Vehicles (EVs) on the road. If even 50% of these vehicles were V2G enabled, this could free up 22TWh of flexible EV discharging capacity per year, providing around 16GW of daily flexible capacity to the grid. This is the kind of long-term use case that businesses should be investigating, creating consumer-friendly energy solutions and working out how they could be adopted.
Choosing the right partner
If you're a supplier, network operator, or metering agency looking to fully benefit from using MHHS and stay compliant with regulations, you’ll need to select the right partner to help you understand your organisation's obligations and the new use cases coming down the line.
At NTT DATA UK&I, we have extensive experience working with energy companies on data management, strategy, and governance. We can assist you in anticipating the expected innovations from MHHS and devising a plan to implement them.
Our team will help you assess the impact of MHHS on compliance and, by reviewing your business processes, create bespoke business strategies that will allow you to leverage this new data to maximise your opportunities.
If you’d like to know more, take a moment to get in touch and arrange a 45-minute consultation.
Sources
[1] https://www.ofgem.gov.uk/energy-policy-and-regulation/policy-and-regulatory-programmes/electricity-settlement-reform
[2] https://www.ofgem.gov.uk/publications/case-study-uk-electric-vehicle-grid-v2g-charging