Understanding Market-Wide Half-Hourly Settlement (MHHS) and Its Impact

The Market-Wide Half-Hourly Settlement (MHHS) is set to revolutionise the electricity market, bringing greater efficiency, and transparency to energy usage and billing. MHHS aims to leverage half-hourly data from smart meters to improve settlement processes and enhance grid flexibility. With the shift expected to be completed by July 2027, what does this mean for businesses?

Electricity generators and suppliers trade energy in half-hourly periods in the wholesale market and currently the settlement process is based on the difference between how much electricity the supplier purchases and how much is actually used by the consumers.

Non-Half Hourly meters are commonly used by smaller businesses and domestic cases, but as these will use estimates for consumption they will not be as accurate as Half-Hourly meters. It also means that those businesses will be unable to see the peaks and troughs of their energy consumption to work on energy efficiencies and accurately forecast their energy costs.

The majority of larger businesses are already being measured in half-hourly periods and have their electricity use measured in half-hour periods with smart meters installed at their premises. This allows them to have the most up-to-date consumption records sent to suppliers every 30 minutes.

Smart meters are more common in businesses and as these can record actual consumption every half an hour, it allows for smaller businesses to have the correct information sent to suppliers. This allows the amount of electricity that has been consumed to be compared with the amount generated and settled every half an hour. For those smaller businesses it is important that non-half hourly meters are swapped over to smart meters as soon as possible to ensure a smooth transition.

With the widespread roll-out of smart meters, MHHS will extend this approach to everyone, ensuring that actual energy usage, rather than estimated profiles, informs settlement. This move aligns with efforts to create a more flexible and efficient energy system, enabling better demand forecasting and providing cost savings for consumers.

The transition to MHHS will involve several fundamental changes to the energy market:

For all businesses, MHHS means adapting to new contractual arrangements. Organisations with Half-Hourly meters currently engage Meter Operators, Data Collectors and Data Aggregators. Under MHHS, they will transition to new services such as Metering Services, Smart (MSS) or Advanced (MSA) and Smart Data Services (SDS) or Advanced Data Service (ADS). While this may seem complex, it presents an opportunity for businesses to optimise their energy management strategies.

Businesses that have non-half hourly meters will need to get their meters updated and transition to a half-hourly meter sooner rather than later as if they do not have a HH meter by the time the transition starts, those businesses will be subject to penalties.

This is a mammoth task for the energy industry and as such, it will take time to migrate everyone over and ensure all consumers’ MPANs are on a new system. As such, Ofgem pushed back the timeline for all central systems being ready to complete System Integration Testing and get ready for the migration. With this extension, suppliers will be able to start transitioning their meters from October 2025, with the cutoff date for the new settlement process to be in place pushed back to July 2027.

The MHHS transition marks a significant milestone in the UK’s energy market, promising more accurate billing, better grid management, and enhanced customer choice. While the changes may require adjustments in metering and data management, businesses and consumers stand to benefit from a more transparent and efficient energy system.

To better understand what this means for you, and to review your current metering arrangements in-depth, contact our experts for more information.