Market-wide Half Hourly Settlement
This page is a comprehensive overview of all the activity around Elexon’s Market-wide Half Hourly Settlement (MHHS) work. You can find all related news, updates and more.
On this page
What is Market-wide Half Hourly Settlement (MHHS)?
In 2017, energy regulator Ofgem announced a review on whether the whole electricity market (commercial as well as residential properties) should move to half-hourly Settlement.
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 record consumption every 30 minutes and send that information to Suppliers. The amount of electricity they are consuming compared with how much is being generated can then 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). Estimates of their usage are updated as meters are read, meaning that the current Settlement process takes over a year to complete.
However, now that smart meters are being fitted in homes and smaller businesses they will record actual consumption every half hour. This means the whole electricity market could be settled every half hour.
If you are new to electricity Settlement, the Balancing and Settlement Code for Dummies guidebook will help you understand the basics.
Benefits of MHHS
Moving to MHHS will:
- make the Settlement process more accurate and quicker reducing current timescales to around 4 months.
- act as an enabler for new products and services, for example supporting use of electric vehicles or making use of smart appliances through ‘time of use’ tariffs (where consumers save money if they shift their energy usage away from times of peak demand).
- help to encourage innovation to support a smarter and more flexible electricity system.
Ofgem’s draft MHHS Impact Assessment identifies total net benefits of MHHS for GB consumers of £1.6bn to £4.6bn.
Since 2017, Elexon has been leading industry work to deliver the MHHS Target Operating Model (TOM) to Ofgem. We’re supporting Ofgem’s review by:
- developing the overall TOM design, Settlement timetable and transition approach (with the Design Working Group), which we delivered in August 2019 and received preliminary approval from Ofgem in October 2019.
- developing further detail of the TOM design and overseeing the identification/drafting of the necessary Industry Code changes (with the Code Change and Development Group and other code bodies).
- developing the solution architecture to support the TOM (with the Architecture Working Group), which will set the framework for subsequent IT system design.
You can see further detail and reports by the DWG, including the DWG’s report on the preferred TOM and the final report on the TOM and transition approach to it, on the links above.
Development of the TOM forms only one part of Ofgem’s wider review. The DWG, CCDG and AWG make recommendations to Ofgem, which will make the final decision on how and when to proceed with MHHS.
Ofgem’s Draft Impact Assessment Consultation
In April 2020, Ofgem published its Draft Impact Assessment Consultation on introducing MHHS. This consultation closes on 14 September 2020 and includes the following:
- Target Operating Model and data aggregation arrangement
- Settlement timetable
- Export-related meter points
- Transition period
- Programme management
For more background information please visit:
Our response to the consultation
We have published our response to Ofgem’s Draft Impact Assessment Consultation, which includes:
- our agreement with Ofgem’s proposals to implement MHHS for both import and export at the same time
- our agreement with Ofgem’s proposal to require daily granularity of data for smart meter customers who opt out of sharing their half-hourly data for Settlement purposes
- explaining our belief that Elexon is best placed to take on the Programme Manager role for the implementation of MHHS (find out more about this in ‘Implementing MHHS’ below)
The next few stages of this project will carry on until winter 2021.
These milestone are:
- CCDG consultation on detailed areas of TOM design (Winter 2020)
- AWG consultation on architecture (Winter/Spring 2021)
- AWG final report to Ofgem for approval (Spring 2021)
- CCDG consultation on Industry Codes legal drafting (Summer 2021)
- CCDG final report to Ofgem for approval (Autumn 2021)
MHHS will be one of the biggest overhauls of electricity systems and processes since privatisation and the introduction of the competitive market in 1998.
Ofgem’s consultation on its draft Impact Assessment identifies the need for a delivery Programme Manager, accountable to Ofgem for ensuring the successful implementation of MHHS. In our consultation response, we have said that Elexon would undertake this role if Ofgem and the industry wish us to do so. We have published a pamphlet on how we would leverage Elexon’s capabilities to perform the role of Programme Manager.