Ofgem has given the go-ahead to rolling out Market-wide Half Hourly Settlement (MHHS) across the retail electricity market in Britain, with suppliers starting to migrate their customers from April 2025. This transformational step creates both significant challenges and opportunities for electricity suppliers, distribution companies and metering agents.
This is an obligatory programme so, right now, market participants should be giving urgent and serious thought to their strategic approach and taking action in the very near future. Investing time in planning an effective roadmap to implementation is the best route to accessing the benefits of this new market structure, as well as ensuring compliance with the new regime.
An evolutionary market development
Up until now, only the largest industrial and commercial customers were required to have meters that record their consumption down to a granular half-hourly level. Other customers have used meters that are infrequently read (often monthly or even less frequently), meaning their electricity suppliers’ settlement was based on one of a small set of standard profiles that only loosely reflected their actual usage patterns.
Although the market recognised this was far from ideal, change was initially hampered by a lack of remotely read smart meters capable of recording data at a half-hourly level. Then, even once a roll-out of these meters was well advanced, central market system constraints meant that only a small proportion of these meters could be settled using half-hourly data.
This is now changing. The introduction of the new MHHS operating model and settlement systems will enable the vast majority of customer meters to deliver half-hourly granular data for settlement.
MHHS brings increased efficiency and fresh opportunities
Using half-hourly meter data in settlement will ensure electricity retailers are settled accurately against the actual consumption patterns of their customers. This will be transformative, because it will better reflect costs, in line with prices that fluctuate throughout the day, and that also vary by the day of the week or season. Until now, the majority of customers’ demand was assumed to follow the same daily and seasonal pattern which disincentivised suppliers from offering time of use products.
For suppliers who are able to forecast or control their customers’ consumption accurately, a prime advantage will be more efficient wholesale electricity purchasing, potentially reducing costs and enabling savings (or even payments) for customers. MHHS is the key to optimising electricity purchasing (or selling back) on the volatile short-term markets. Suppliers will be able to share the benefits with their customers, and those who are able (and willing) to adjust their consumption in response to short term price signals will benefit the most. These concepts have already been trialled by innovative players in the market, however opportunities to participate have been limited by the legacy market settlement processes needed to support them.
MHHS opens up fresh possibilities for better electricity use management across the country. More accurate and up-to-date usage information will enable more of these innovative schemes to get customers involved in shifting demand to better support the low carbon transition.
The MHHS journey is a significant undertaking
However, being MHHS-ready and unlocking these benefits is not a straightforward, flick-the-switch exercise. Effective preparation involves a thorough assessment of the supplier’s IT systems to work out how they’ll be affected, whether they’re fit for purpose and, if not, what upgrades are needed.
It’s important not to underestimate the complexity of what’s involved and the pace of evolution that will be essential to meet the aggressive MHHS migration timescales. It’s likely that MHHS implementation will affect a wide range of systems, and the sheer number involved may come as a surprise. From customer acquisition to pricing, registration, forecasting and billing, electricity suppliers need to make sure their entire value chain is prepared.
Suppliers also need to be ready to deal with a massive influx of data from smart-enabled customers, and this will require massively enlarged data management, exception management and analytics capabilities. MHHS will also demand new capabilities in terms of forecasting models; risk management strategies; quotation, tariff modelling and cost-to-serve processes; metering agent contracts or in-house functions; as well as settlement performance measures and settlement reconciliation.
MHHS planning priorities for electricity suppliers
A clear strategy and an accelerated implementation programme will be essential if suppliers are to have all appropriate systems in place to start migration from April 2025. ‘In place’ means that the relevant systems must have gone through qualification, post-qualification user testing and full preparation for migration by that deadline.
A supplier’s initial priorities are to:
- thoroughly assess how prepared their business is to meet MHHS requirements
- quantify the impact of MHHS across their organisation
- generate a strategy that moves their organisation swiftly towards MHHS readiness and positions them to take full advantage of the opportunities MHHS will open up
- break this down into a detailed roadmap of actions with accountability for timely delivery.
How we can help you get MHHS-ready
We’re at the heart of the MHHS transition; we’re part of the Helix programme upgrading the Central Settlement Systems for MHHS and, as creator and operator of the DCC Central Systems that underpin the MHHS move, we’re making adaptations for MHHS compliance. As an active participant in the MHHS Programme, we have a deep understanding of the new market arrangements and already work with market participants to help them understand their obligations in the MHHS Programme and the impacts of it on their business capabilities, processes and applications. We’ve also invested early in designing a solution for the new Smart Data Service (SDS) and Advanced Data Service (ADS) market roles. Plus, our scalable, cloud-native solution has been benchmarked as comfortably exceeding the performance requirements for MHHS necessary to support over half the entire market.
Our experts have taken this valuable knowledge and experience and created our MHHS business readiness assessment and roadmap services. If you’d like to focus on assessing your business readiness for MHHS we’ll conduct a series of workshops and a playback session, to help you establish where you are and to prioritise key steps. If you’d like extended support, we’ll carry out a more in-depth assessment, strategy and roadmap engagement to ensure your business thrives as a result of this significant industry change.
To keep your finger on the pulse of MHHS implementation, watch out for our next blog post, exploring how MHHS will affect market and customer behaviours.