How is MHHS going to affect the industry?
Head of Sales
Marketwide HH Settlement (MHHS) is one of the biggest changes to energy markets since retail competition was introduced.
Settlement reconciles differences between the electricity a supplier has bought and the demand of its customers. Generators and suppliers trade electricity in the wholesale market in half-hourly periods. Currently, most customers are settled on a ‘non-half-hourly’ basis using estimates of when they use electricity, based on a profile of the average consumer usage and their own – often monthly - meter reads.
Smart meters can record the amount of energy consumed or exported within every half hour of the day. With the latest smart meter enrolment statistics from BEIS showing that over 17 million electricity meters are now smart, this provides the industry with the opportunity to create a more accurate settlement process. Ofgem predicts that market-wide half-hourly settlement (MHHS) will bring net benefits for consumers in GB of between £1.6bn and £4.5bn over the period 2021-2045.
However, these are not the only benefits of the MHHS programme. By encouraging more flexible use of energy customers can begin to focus on reducing their energy usage at peak times to help take the load off the grid. With more of our world becoming electric it will become a vital behavioural change. Suppliers will be able to open up their offerings to include Time of Use (ToU) tariffs which will benefit the customer financially for consuming the majority of their energy off-peak (think running that washing machine overnight).
What about the Data?
The difficulty with the new MHHS scheme is that suppliers will now be receiving, and be expected to process, HH data from the majority of their electricity meters. For example, for a supplier with 100,000 meters, in only a month this will be over 144 million readings that need to be processed, settled to and billed correctly.
In all honesty, most suppliers’ current software is not up to the task of processing that level of data. Additionally, current software will not connect to the new Data Integration Platform (DIP) that is being built by the industry. Creating this software in-house would be incredibly time-consuming and expensive, not to mention taking resources away from valuable other requirements (it's been a rather busy time in the energy market lately).
The MHHS is a colossal programme, in a heavily regulated industry and as such there have been significant numbers of forums, consultations, papers and regulations and these are constantly updating. There is also an extensive testing programme currently being undertaken by the industry.
Procode have been providing software within the energy industry for decades, and are extremely proficient in managing and adapting to new requirements. Our latest adapter will enable suppliers to achieve the requirements of MHHS and manage the extensive amount of data that will come with this, without the requirement to create their own.
By partnering with Procode we can ensure you stay connected to the latest changes and updates, and that you are at the forefront of the MHHS change. In turn, this enables you to provide your customers with the latest ToU tariffs and innovation, keeping you ahead of the curve and ensuring you're not let down by out-of-date software.
This change to the industry is vital and cannot come soon enough, to ensure the UK remains focussed on NetZero and our electricity grid can handle the increased demands it will receive in the future. However, there is a significant amount of work to make this change and having reliable partners will be vital for suppliers to ensure they remain relevant.