The advancing Market-wide Half-Hourly Settlement (MHHS) programme is the biggest innovation the UK electricity industry will have seen since privatisation in 1991. This move toward an electricity system balanced and settled in a much more accurate way started with the UK domestic Smart Meter rollout in 2011. However, the way electricity is currently settled has not changed, and whilst electricity is traded in half-hourly periods, the way it is settled is based on estimated profiling across the whole meter class rather than on an ‘actual’ basis.
The MHHS programme aims to deliver a system that is settled on actual half-hourly data– shortening the overall settlement window from 14 months to four and enabling a far greater level of data and insight to consumers and utilities alike.
Suppliers need to act now to prepare for these upcoming challenges – not least because there are a surprising number of Non-Half Hourly meters still on the walls of business premises. Businesses, suppliers, and Meter Operators need to work together to ensure that everyone can reap the benefits of HH settlement by making sure that their meter assets are working correctly, exchanged for AMR or Smart where appropriate and sending data at the right levels and intervals.
Widespread Industry Impact
MHHS is bringing significant change – with most data flows impacted and the new Data Integration Platform (DIP), acting as the central gateway through which all data will flow. A totally new Target Operating Model (TOM) is being developed which changes every industry role, bar that of the Distribution Network Operator (DNO), so the way suppliers interact with their industry stakeholders and partners will change.
The most significant changes however are how Data Aggregation and EACS are applied – the load shaping service that applies to each individual MPAN. The impact here will change how estimation is managed and each supply point is billed. This element is where the most exciting future innovations could stem from – accurate settlement on a half-hourly basis unlocks true Time of Use (ToU) tariffs for future use.
This new TOM provides a new architecture with revised service providers and participants that will enable the timescales around data flows and settlement to be significantly compressed – it’s not just about making the data available more rapidly but how parties and suppliers can respond and resolve exceptions more quickly. The shift from a 14-month settlement window to 4 months means automation and digitalisation of the new process will be key.
Getting qualified early – working with the programme to get ahead of the game
The MHHS programme is operating via testing and qualification ‘tranches,’ of which there 4, and Suppliers have had to put themselves forward for a tranche to complete the process. However, the timing for each tranche is tight, and if suppliers wait until the final tranche to put themselves forward there is a concern that there will be a significant bottleneck and there won’t be enough time to complete the testing process and ultimately the time available to migrate to the new MHHS services.
Any delays to qualification and the technology implementations needed to achieve this could have an impact on retailers’ licence to operate – ELEXON and the Retail Energy Code (REC) will be keeping a close eye on suppliers’ performance through the process and their adoption and implementation of the back-end systems needed to be compliant.
But it’s not just these reputational or licence-to-operate risks that suppliers need to be cognisant of– there are also significant risks to settlement performance and each supplier’s ability to balance their books accurately. These risks all have to be assessed, and suppliers need to aim to get through the testing process as early as possible, allowing plenty of time to manage the necessary changes and handle any adaptions or changes to their migration programmes.
Data Cleansing – a key part of MHHS success
Ensuring that your meter data is accurate and that all meters are managing their half-hourly data loads correctly will be key to an accurate and timely migration to the new operating model. Now is the time for suppliers to work with the partners providing their Meter Operation and Data Collection services to ensure that any meters that are not sending reads or coming to the end of their life are replaced or corrected – to ensure the right data delivers the right result.
Early adoption – unlocking the data revolution
By moving to half-hourly settlement early – and ensuring that systems and processes are optimised to handle the increased volume of data, suppliers can unlock the benefits of increased volumes of data.
As we’ve mentioned above, a significant benefit will be driven in terms of the accuracy of settlement – which will in turn reduce the amount of credit cover needed with ELEXON.
But it’s not just the settlement process that will improve and create efficiencies.
The MHHS programme will unlock the real-time data levels needed to operate truly responsive tariffs – both at industrial demand side response and a more refined ‘time of use’ consumer level.
Whilst ToU tariffs have been offered to customers for some time – with more innovative suppliers offering options for consumers to charge the electric vehicles and times of high generation capacity or discharge their battery storage at times of high prices, the way energy is settled is not technically reflective of the real generation costs during the specific half-hour periods but are actually a ‘smearing’ of the cost of generation over the 48 half-hour periods that make up a billing day. So, whilst ToU tariffs have been playing a role in reducing load during periods of high generation – they are not as ‘innovative’ as they might first appear.
However, once we move to a fully settled half-hourly electricity system, we can start to introduce flexible and cost-reflective tariffs that can be tailored to the level of the individual user. Suppliers could potentially build innovative products that are specific to types of small businesses or prosumers.
The opportunities for new technology to manage this are incredible. By implementing truly reflective enforced settlement on the half hour of the true cost of the energy consumed, pricing can become truly dynamic and generate innovative products and services – all led by the energy data.
Here at IMServ, we sit at the centre of the UK Meter Data infrastructure. We’ve been delivering Meter Operator and Data Collector services for over 30 years – responsible for ensuring that the suppliers and businesses we serve are billed and settled accurately and in a timely manner. As we look to the new world of MHHS, we’re incredibly excited about the data opportunities enabled by more accurate and frequent settlement – and are working to identify new ways that the data we manage can be used to help suppliers create new products and services, reduce cost to serve, and businesses reduce and better manage their energy consumption.
We’re building an ecosystem of partners that are seeking greater access to data to create new ways of servicing their customers, as well as creating innovative new business models that solve some of the key challenges in the drive to a sustainable future.
IMServ recognises that data is such a critical tool that the transition won’t happen without it – we’re excited to be part of the energy data evolution – creating the power to make decisions.
