Warning: Undefined array key "HTTP_REFERER" in /var/www/vhosts/tomorrowuk.net/httpdocs/wp-content/plugins/cornwall-insight/inc/cookie.php on line 52

Warning: Undefined variable $field in /var/www/vhosts/tomorrowuk.net/httpdocs/wp-content/plugins/cornwall-insight/inc/training.php on line 442

Warning: Undefined variable $field in /var/www/vhosts/tomorrowuk.net/httpdocs/wp-content/plugins/cornwall-insight/inc/teams.php on line 113

Notice: Function WP_Scripts::localize was called incorrectly. The $l10n parameter must be an array. To pass arbitrary data to scripts, use the wp_add_inline_script() function instead. Please see Debugging in WordPress for more information. (This message was added in version 5.7.0.) in /var/www/vhosts/tomorrowuk.net/httpdocs/wp-includes/functions.php on line 5835
Market Wide Half-Hourly Settlement: Half-way home or just the first steps on the journey to a smart, flexible, energy system? - tmrw. test

Market Wide Half-Hourly Settlement: Half-way home or just the first steps on the journey to a smart, flexible, energy system?

Ofgem’s electricity settlement reform programme—the Market-wide Half Hourly Settlement (MHHS) Significant Code Review (SCR)—is around the half-way point towards introducing arrangements that ensure the benefits of smart meters can be delivered to enable “a smart, flexible, energy system”.

The ambition is for smart meter data to be used within the electricity settlements system to allow innovation to support smart charging of electric vehicles (EVs), vehicle-to-grid EV services, local energy markets, time of use (ToU) tariffs, and ‘prosumer’ offerings that encapsulate demand side response (DSR) and behind-the-meter generation and storage at household and smaller business sites. More accurate and timely data should also deliver wider efficiencies to BSC parties through shorter settlement timeframes and reduced credit cover.

At market opening, smaller consuming sites (households and smaller business sites) were settled on profile classes representing the half-hourly demand of eight consumer cohorts where it was not cost-effective to install meters that could be read every half-hour. During this decade suppliers have installed Automated Meter Reading (AMR) equipment at business properties, which has increased the number of meters settled half-hourly (HH) from around 130,000 (the original HH community where demand is greater than 100kW) to around 350,000.

Government statistics show that as of Q1 2019 around 9mn electricity smart meters had been in installed. This is just under a third of the target. Despite the number of meters installed we believe that only a very small number (a couple of thousand at most) are HH settled.

The settlement system is now at a point where just over 1% of meters are HH settled, but for the first time ever around half (and falling) of all settled supplier volumes is on an NHH basis (see chart).

The end game for the MHHS SCR is for all volumes and the remaining 99% of meters to be HH settled. This represents a huge endeavour for the sector, as although the primary use for settlement data is to assign supplier’s imbalance volumes and charges, the data is also used for:

  • distribution and transmission network charging
  • supplier BSC performance assurance purposes
  • calculating supplier Capacity Market and Contract for Difference charges
  • validating supplier volumes for their Renewables Obligation and Feed-in Tariff liabilities

So, although it is conceptually relatively straightforward to understand how the use of timely and actual consumption (and distributed generation) data can be used to develop offerings to unlock DSR and other opportunities, the central and supplier systems impact and associated rule changes will be a huge challenge. Crudely put, to HH settle the remaining electricity volumes represents around a hundred-fold increase in data collection, aggregation and validation compared to the existing half of HH settled volume.

Ofgem is hoping to reach a decision by the end of this year on how to implement MHHS, and although it has not given a firm go-live date for the change we cannot see this being any earlier than 2022. Over this period the review of electricity network charges should have concluded, new BSC performance assurance measures will be in place, faster more reliable switching infrastructure should be operational, and the smart meter roll-out should be complete.

The coming months and years will be particularly challenging for suppliers as they gear up for the introduction of market-wide HH settlement itself, but also how settlement data will be used to derive charges and what this means for tariff prices and the risk and opportunities in offering ‘smarter’ products. Even so, suppliers will also have to maintain existing processes and systems to serve the NHH market for a few more years yet.

To learn more about current and future settlement arrangement, we are holding our Electricity Settlements: From the Meter to the Bank training course in London on 20 June. For more information, click here, or contact training@cornwall-insight.com

Related thinking

Regulation and policy

How will consumers take to Market-wide Half Hourly Settlement?

Ofgem published its decision to implement the move to Market-wide Half Hourly Settlement (MHHS) on 20 April. This confirms plans to move to new settlement arrangements over a four and a half year time period, with the Elexon-led Design Working Group’s Target Operating Model to be used as the blueprint. Meters...

Regulation and policy

Ofgem raises modifications ahead of RCC and new switching arrangements

The latest edition of our Faster Switching Service Report due to be issued this week includes the latest developments in Ofgem’s Switching Programme and the associated Retail Energy Code (REC). Launched in November 2019, the Retail Code Consolidation (RCC) Significant Code Review (SCR) set out Ofgem’s intention to amalgamate the...

Regulation and policy

Calm before the storm? 2021 energy supplier compliance developments

The latest update to our Energy Supplier Compliance Portal went live on 4 May and includes changes to the compliance landscape during February to April 2021. While the previous quarter’s update reflected new principles resulting from Ofgem’s Supplier Licensing Review (SLR) and protections for prepayment meter customers facing self-disconnection, Q121...

Regulation and policy

Electricity transmission charging reform – overtaken by changing priorities?

Charging for the transmission network is never out of the development process for long. From major reviews, such as that initiated under Project Transmit in 2010, to significant reforms such as removing the triad benefit from distributed generation in 2018, and a host of smaller developments, change seems the only...

Commercial and market outlook

April showers bring DUoS for every half hour

Almost two years ago, Ofgem approved DCP268 DUoS Charging Using HH Settlement Data, which will move existing non-Half Hourly (NHH) settled demand customers onto time-based Half Hourly (HH) Distribution Use of System (DUoS) unit rate charges. With the modification to be implemented in the DCUSA on 1 April, we revisit...

Low carbon generation

New transmission charge forecast will help generators managing cost uncertainty and volatility

Transmission network use of system (TNUoS) charges represent a significant proportion of operating costs for many renewables generators, often exceeding 50% of annual running costs. For some, as recently highlighted by SSE in a recent report and to Members of the Scottish Parliament, they could present a barrier to investment in generation...

Business supply and services

Energy suppliers must be ready to demonstrate compliance with new principles

From 22 January, energy suppliers were required to follow new principles resulting from Ofgem’s Supplier Licensing Review (SLR), which initially kicked off nearly three years ago. Such was the breadth of the SLR, changes were introduced in two rounds, with the first round of changes bringing the introduction of tougher...

Regulation and policy

Ofgem “hands-on” in RIIO-2 as net zero route unfolds

During the next round of the RIIO price controls, Ofgem can be expected to take a more hands-on approach to outputs the networks are required to provide and the allowed revenues they can charge their users or consumers. This will have impacts for network development including the enabling of electric...

This site is registered on wpml.org as a development site.