This blog explains at a high level how the Market Wide Half Hourly Settlement proposals from Ofgem will affect your business.
Energy sector regulator Ofgem continues to reiterate its commitment to a substantial shift in how UK electricity bills are calculated.
Many businesses already have their bills calculated based on recorded usage every 30 minutes, or half hourly (HH). Whether your bill is calculated this way depends on whether your meter is HH or non half hourly (NHH).
Benefits of half hourly
For accuracy reasons, there has been a push in recent years to move more businesses onto HH meters and install smart meters to allow remote reading regularly. There are also further benefits to larger consuming businesses, who can increase granularity in their consumption reduction strategies and drastically increase their data collection capabilities.
Drawbacks of half hourly
All this extra data needs collecting and storing. Likewise, because users tend to be higher consuming, additional charges apply and standing charges are higher than NHH meters.
Generally speaking, because of these additional charges, HH meters are more expensive to have than NHHs and smaller consumers don’t benefit from the opportunities they provide quite as much.
Why is Market Wide Half Hourly Settlement (MHHS) happening?
In short, this will drastically increase the flexibility of the UK’s power distribution and increase accuracy of billing.
As energy technologies such as renewables, battery storage and EVs become more commonplace, there will be opportunities for microgenerators such as businesses and households with renewables to reduce their demand on the grid and potentially sell electricity back to support a more flexible power grid.
This supports the theory that bills could potentially reduce for some businesses as a result.
It could also stimulate a new level of innovation within the energy market, with suppliers able to offer flexible and real-time pricing products and incentives.
When is MHHS happening?
Ofgem has progressed past consultation and planning stage and is now testing. It has suggested rollout will be complete by the end of 2026.
It is worth noting that the rollout of the smart metering project nationwide is significantly behind schedule and changes of this magnitude in a fragmented marketplace may well be subject to delays as a result.
What do the critics say?
As outlined previously, HH measurement includes extra charges, which could be detrimental to smaller consumers who don’t have as much of an upside from the increased accuracy it provides.
Ofgem’s quoted benefits of the change say energy consumers in Great Britain will benefit by between £1.5 billion to £4.5 billion by 2045. If implementation is complete by the end of 2026 as planned and benefits begin in January 2027, that’s 18 years of benefit, or £250 million per year. Considering there are 31 million electricity meters in the UK, that’s a benefit of around £3 per year per electricity meter.
How does my business need to prepare?
Suppliers are advising businesses to get a smart meter, which they can obtain via their supplier. This will ensure that their billing is accurate and they can take advantage of the benefits MHHS will bring.
This is not such an attractive prospect for those on smaller NHH supplies, however, who will be nervous of the cost impacts of MHHS and may not want to engage so early.
How can Procure Smart help?
If you want to know about the differences between HH and NHH supplies, you can reach out to us using the form below. Our advice is free and no-obligation.
