Key points
- The Market-wide Half Hourly Settlement (MHHS) Programme is a vital enabler of the creation of a flexible, clean retail electricity market, ultimately supporting the UK in reaching Net Zero.
- The settlement process enables suppliers ultimately to match up trading, expected customer demand, and actual usage.
- The Programme aims for all electricity market trading in the UK, for both domestic and non-domestic customers, to be based on accurate half-hourly data by October 2026.
- MHHS will bring about cheaper bills for customers and more efficient ways of working for suppliers.
Who is delivering MHHS?
Many parties are involved in the Programme. Ofgem is the Programme Sponsor. Elexon is responsible for delivery (as Senior Responsible Owners and Implementation Managers). The industry (suppliers, agents, service providers, etc) participates in development and decision-making. The Retail Energy Code Company (RECCo) also needs to comply with MHHS; they must identify and deliver the required changes to the retail energy market through the Retail Energy Code (which sets out the industry’s central switching processes). This industry-led delivery model aims to ensure decisions are balanced appropriately.1
What changes will it bring about?
- The MHHS Programme will deliver many benefits to consumers, suppliers, and the energy sector as a whole.
- Ofgem has predicted that MHHS will bring net benefits for consumers in the UK of between £1.6bn and £4.5bn over the period 2021-2045.1
- This is because MHHS will allow accurate signals to be sent to suppliers about the cost of serving their customers every day. In turn, this allows suppliers to operate more efficiently by having streamlined settlement processes.
- MHHS will enable new offerings such as time-of-use tariffs, and products such as vehicle-to-grid solutions and battery storage. These all encourage smarter, more flexible energy usage, and overall, help lower the cost of customers’ energy bills.
- In addition to more innovative products and services, customers will have better visibility of their energy consumption. This allows customers to make more informed decisions about energy usage and reduce energy waste.
- MHHS will allow the industry to make better use of existing infrastructure, reducing the need for future generation and network investment. Ultimately, this aids the transition to Net Zero, benefiting all customers and our wider society.
What has to happen to get there?
For MHHS to happen, many other projects and elements need to be considered too.
- The smart meter rollout. Smart meters can record the amount of energy used or exported on a half-hourly basis, and these are needed to unlock the benefits of MHHS. This is possibly the biggest obstacle to MHHS taking effect, however, Ofgem is confident that the current status of the rollout enables the delivery of the business case.
- Industry Code changes will need to be finalised. Parties will need to ensure they are compliant with these for the successful implementation of MHHS. Code change work is on track.
- Changes to suppliers’ internal systems. Suppliers will need to ensure that their systems and customer meters are capable of recording and delivering half-hourly data, to enable accurate half-hourly billing for example.
- Innovative products and services to suit all customers. These will enable suppliers to change when and how customers use energy and will play a key role in customers receiving the benefits of MHHS and reaching net zero.
- Resourcing and budgeting. MHHS requires suppliers to spend a lot of time and money on making changes. There are industry concerns that the timetable for testing and migration remains challenging given the volume and complexity of the Programme. The plan that was finalised as part of Programme replan activity that occurred in 2023 remains unchanged, which includes a three-month contingency window to enable a degree of flexibility if required.
What stage are we currently at?
The current focus is on the delivery of the Testing phase. All Programme parties are working diligently with the Programme to achieve the timelines for testing to enable the delivery of MHHS and its benefits. The Programme plan is set to commence the migration phase, from September 2025 across an 18-month window. The migration phase is where suppliers can move their customers’ Meter Point Administration Number (MPANs) to the new settlement arrangements. MHHS is due to go live by May 2027.
[1] Ofgem (https://www.ofgem.gov.uk/energy-policy-and-regulation/policy-and-regulatory-programmes/electricity-settlement-reform)