The UK energy sector is undergoing significant changes with the introduction of the Market-wide Half Hourly Settlement (MHHS).
Designed to modernise how energy usage is tracked and billed, the premise of the Market-wide Half hourly Settlement (MHHS) is to create a more flexible and data-rich energy network across the UK. It is estimated to provide billions of pounds of savings for consumers and businesses over coming decades which Ofgem predicts will be between £1.6bn and £4.5bn over the period of 2021 to 2045.
In this article, we explore what MHHS entails and how it will affect UK businesses, from SMEs to large energy consumers.
When MHHS Will Take Place
The implementation of MHHS is set to roll out in stages, with the “testing phase” of the project complete by October 2026. This phased approach allows businesses and energy providers sufficient time to adapt to the changes. It’s essential for companies to stay informed about the timeline to ensure a smooth transition. Work with your energy supplier or Third Party Intermediary (TPI) to understand what the changes mean on a specific basis.
Who Is Administering MHHS
MHHS is being overseen by Elexon, the organisation responsible for managing the Balancing and Settlement Code (BSC) in the UK energy market. Elexon’s role includes ensuring that market participants comply with the new settlement arrangements and that the transition is as seamless as possible.
Retail Energy Code Company (RECCo) is also required to update the retail energy code to consider the changes; and industry players such as suppliers and delivery networks must amend processes to meet the new standards.
What This Means for Small Businesses
For small businesses, MHHS offers opportunities to better manage energy bills. With energy usage recorded in half-hourly intervals, SMEs can access more accurate energy billing based on actual consumption rather than estimates. This increased visibility allows small businesses to identify peak usage times and adopt energy-saving measures, potentially reducing overall costs from business energy suppliers.
Additionally, MHHS could encourage greater competition among business energy suppliers, leading to more tailored and cost-effective tariffs for SMEs.
Critics of the move point out that half hourly (HH) business energy contracts include additional non-commodity charges that aren’t found in non-half hourly (NHH), making a half hourly contract more expensive. Smaller consuming business’ ability to leverage HH strengths is lower than larger consumers, leading critics to suggest smaller businesses are losing out from the move, whereas larger businesses are already settling half hourly.
These additional charges are itemised on HH bills and include:
- Data Collection (DC) and Aggregation (DA) for collection of data
- Meter Operation (MOP) for maintenance of the increased equipment capabilities
- Capacity (kVA) charges for the agreed maximum meter demand
- Balancing Services Use of System (BSUoS) to cover the cost of balancing the grid
- Distribution Use of System (DUoS) for local distribution of power
- Transmission Network Use of System (TNUoS) for national transmission of power
What This Means for Large Consumers
Large energy consumers, such as manufacturers or office complexes, stand to benefit significantly from MHHS. By leveraging granular data on energy consumption, these businesses can optimise their operations and negotiate bespoke tariffs with suppliers.
Moreover, the new system aligns with broader sustainability goals, enabling large businesses to implement more effective energy management strategies and track their progress in reducing carbon emissions. For companies with Corporate Social Responsibility (CSR) objectives, this can be a critical advantage.
Many larger consumers will already have HH contracts and employ these measures, however new flexible products and load shifting options should create further opportunities.
What Physical Changes Are Needed to Facilitate MHHS
To accommodate MHHS, businesses will need to have appropriate metering infrastructure. Smart meters capable of recording half-hourly data are essential for compliance. For many businesses, this might mean upgrading existing meters or installing new ones.
Energy suppliers are now employing strategies to migrate meter types. Businesses will likely be contacted by their supplier in 2025 if they are not on HH supply. It’s advisable for businesses to engage with their suppliers early to determine if any upgrades or installations are necessary and to plan accordingly.
In the consumer market, the much-maligned smart meter rollout will need to be completed.
Conclusion
MHHS represents a drastic change for the UK energy sector. While the changes will require adjustments, the long-term benefits of greater transparency, cost control, and sustainability are estimated to be vast by the government and Ofgem.
The latest Energy UK update estimates the transformation will be complete by early 2027.
If you would like to discuss how HH settlement will affect your business’ energy contract, feel free to reach out via the form below and one of Procure Smart’s experts will call you to discuss.
