Britain is due to witness the most significant reform to its electricity retail market since the country’s regional boards were privatised back in the 1990s.

From December 2026, the largest market change since deregulation will come into effect with the introduction of an ambitious market-wide half-hourly settlement (MHHS) programme. MHHS will transform how electricity consumption is settled for all customers. 

Currently, only large-scale industrial and commercial organisations are required to settle their consumption on a half-hourly basis, while others have the option to do so. However, most still follow a standardised one-size-fits-all approach. 

The new system aims to create a more level playing field for competition amongst energy retailers by, in effect, holding them responsible for their customers’ actual electricity usage. 

The desired outcome of MHHS is to see a faster, greener and more accurate settlement process for all participants—commercial and private—using half-hourly meter readings. 

Whilst there have been some recent tweaks to the initial launch timeline, Ofgem, the UK’s energy regulator, mandated this significant change back in April 2021. 

The programme, now overseen by Elexon, a not-for-profit entity funded by electricity market participants, is being viewed as instrumental in optimising the utilisation of renewable energy sources and network capacity to help the country achieve its net-zero goals. 

Ofgem predicts that MHHS will bring net benefits of between £1.6 billion and £4.5 billion for UK consumers up to 2045, which is welcome news indeed for a country still struggling through a cost of living crisis.

Elexon programme director Justin Andrews says: “MHHS will be one of the biggest overhauls for Britain’s electricity system since privatisation, and there are significant benefits to customers, suppliers, generators and other energy companies. 

“MHHS is another big step towards a smarter system in Britain, and it helps progress to net zero.”

Faster, greener, smarter

Expanding on the implementation of smart meters, MHHS is looking to establish a crucial foundation for a shift in energy consumption habits, with the hope that eco-conscious consumers will have more scope to use electricity only as needed. 

By measuring electricity consumption every 30 minutes, the new system will take guesswork out of energy bills and usage. Suppliers will be required to process data showing exactly when people use their electricity, clocking consumers’ peak times during the day and quieter moments overnight. 

This will become more impactful—and useful in terms of reducing emissions—as more people turn to electric heat pumps and electric vehicles. Meanwhile, suppliers will see increased competition in offering the best tariffs and products. 

Using the tsunami of data that will come with measuring usage in these 30-minute chunks, energy companies will be incentivised to offer people new time-of-use tariffs, which should help households save money.

Forecasts show there will be 48 million reads per day by 2025, and almost 1.5 billion reads a month. That is 566 billion additional meter reads a year, which will amount to 4.2 terabytes of compressed measurement data. 

This staggering amount of data should well serve an energy industry racing to hit climate goals. In terms of renewables, a smarter, more flexible energy system will play to the strengths of battery storage, especially given the availability of so much data.  

Understanding this data will facilitate the introduction of new energy tariffs and incentives to encourage off-peak energy consumption, which battery systems will be well placed to benefit from. 

The beauty of batteries is that they can react in seconds to changing grid and market conditions, helping the electricity network deal with issues such as power surges and bad weather. 

Given the avowed benefits of MHHS, it seems strange that the launch of the programme has recently been extended by more than a year, from October 2025 to December 2026. 

But in its approval of the Change Request CR022, also known as the ‘Market Wide Half Hourly Settlement (MHHS) Programme Replan,’ Ofgem provided much-needed certainty for the industry. 

This ‘Replan’ empowers the market to make informed decisions during crucial planning and design phases. Clarity is essential as organisations look at internal design, qualification and testing approaches in preparation for 2026. 

The changes in timing give businesses extra time to get ready but there is still plenty of work to do. 

A seismic shift in the market

Elexon’s Justin Andrews says: “We are currently replacing the central systems that manage settlement with a new flexible cloud-based platform. Once this is complete, the platform will be scalable to accommodate 15-minute settlement at a later date if it was required. 

“We have also designed the MHHS target operating market to be flexible enough for different settlement periods in future if needed.”

That is likely to be the case as the UK increases the level of renewable energy on its grid. Solar and particularly wind output can change from second to second, making it important to have markets that can respond as quickly as possible. 

And technically there should not be any problem in moving to 30-minute or even shorter settlement intervals. 

In Australia, 30-minute settlements were a fixture of the grid for years, and in November 2017 the Australian Energy Market Commission made a final rule to bring the settlement period for the electricity spot price down to five minutes, starting in 2021.

Australia’s National Electricity Market completed the change in October 2021 and battery system operators emerged as immediate winners, to the detriment of fossil fuel plants. 

Five battery projects that were operational in 2020 and 2021 saw an average 26% uplift in revenue under five-minute settlements, according to Renew Economy, 80% of which came from new energy arbitrage opportunities. 

While five-minute settlements apparently remain a long time off in the UK, the move to half-hourly periods, when it comes, is a step in the right direction that is to be celebrated. As Jenny Boothe, head of MHHS at Ofgem, says: “We can’t underestimate the importance of this programme. 

“It’s a seismic shift in the market, driving us towards net zero and underpinning future innovation.” 

Publish date: 28 March, 2024