Market-wide half-hourly settlement – the data revolution unlocking net zero in UK

The UK electricity industry is undergoing the biggest change since privatisation in 1991 with the rollout of the national Market-wide Half-Hourly Settlement (MHHS) programme, writes Lacey Montague, chief strategy officer at IMServ.

Since the national smart meter rollout started in 2011 the UK has inexorably been moving towards a more granular level of electricity data, informing consumers of their usage at half-hourly intervals.

However, the way electricity is settled has not changed, and whilst electricity is traded in half-hourly periods, the way it is settled is on estimated profiling across the whole meter class, rather than an ‘actual’ basis.

The MHHS programme aims to change that with actual half-hourly data being used for settlement for the first time, 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.

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The rollout of MHHS should not be underestimated, however, and the potential impact, but also opportunity, is there for consumers and businesses alike.

There are a surprising number of non-half-hourly meters still on the walls in business premises, and now is the time that businesses, suppliers and meter operators need to work together to ensure that businesses can reap the benefits of the half-hourly 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.

The data revolution – unlocking net zero

We spoke earlier about the granularity of the data that MHHS creates – but does more data mean better data? And just what does this data enable?

Whilst electricity use has been trending down over the past few years due to a focus on energy efficiency and increasing energy costs, electrification of transport and heat pose a bigger challenge for the UK’s generation and grid capacity.

Over the coming years, electricity use is forecast to dramatically increase as more and more electric transport options become available and we move away from gas to electricity for heating.

National Grid estimates that electricity consumption in the UK and US will increase by around 50% by 2036 and more than double by 2050.

This poses a significant challenge for those managing our generation capacity. Traditional baseload sources of coal and nuclear have been coming offline for several years as coal reaches the end of its emissions limits and nuclear stations reach end of life.

A significant amount of renewable capacity has come online to replace it but that poses challenges with intermittency and excess flexibility.

There is also an additional challenge – the UK grid itself would struggle to cope with the predicted volumes of future electricity demand and there is simply not enough copper in the ground to transmit the voltage necessary.

So, what is the answer?

MHHS unlocks the real-time actual data levels needed to operate truly responsive tariffs – both at industrial demand side response and a more refined ‘time of use’ consumer level.

As an industry, we’ve been offering time-of-use tariffs (ToU) for some time but in reality, these have been a clumsy tool based on profile class data and are not truly reflective of the settlement costs that occur.

Currently, costs are not reflective of the actual generation costs for the same period but rather a ‘smearing of costs’ over the 48 half-hour periods that make up a day. This means that whilst ToU or demand side response tariffs can reduce load, which in turn reduces impact of the grid, they are not cost-reflective. 

By using the actual data from meters on the half-hour, tariffs can be tailored at the meter level – i.e. down to a household – as opposed to the profile class, enabling truly reflective pricing which can shift or manage load at the scale needed.

Pricing signals can be used to enable changes in consumption behaviour and enable the integration of the energy system into the system. It also means that people or businesses using energy at peak or expensive periods can be billed appropriately.

This all means that the drive for products and services that can help businesses and individuals better manage and control their usage is critical to enabling both an efficient energy system of the future, with reduced need for margin and therefore extra cost, and for achieving a low carbon future.

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 can generate innovative products and services – all led by the energy data.

Here at IMServ, 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 and reduce cost to serve and enable businesses to 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.

About the author
Lacey Montague has over 18 years of experience in the utilities industry, holding leadership positions at companies including nPower, Evolve Analytics, Gentrack and Social Energy. As Chief Strategy Officer at IMServ, her focus is on creating data-driven insights and sustainable energy solutions to help energy suppliers, consumers and businesses achieve their sustainability and net zero goals.