The roll out of the Market-wide Half-Hourly Settlement (MHHS) Programme is one of the most significant changes to the electricity market since privatisation. Ofgem considers it key to the UK achieving Net Zero and estimates net consumer benefits of up to £4.5 billion by 2045, with a further £3 billion in net benefits to wider society.
MHHS Programme implementation will unlock large quantities of data that can be used to support service growth and improve value for consumers – and suppliers will want to take advantage of the opportunities on offer. Here we explore eight potential opportunities for suppliers.
1. Save customers money through personalised plans and services
With access to nearly 18,000 data points a year, suppliers can provide more personalised energy services to customers. This replaces an energy-as-commodity model in which consumers are slotted into profiles based on estimates.
The dynamic energy services matching customer behaviour and their requirements can include off-peak Time Of Use tariffs (TOUs) at a discounted unit price. Providers can create tariffs for customers who prefer to maximise green energy usage or are happy to run washing cycles at night. If customers use more energy at peak times than planned, they will receive higher bills, but can adjust behaviour with support from their supplier to reduce costs.
2. Lower energy costs and a more reliable grid
Both the supplier and the grid can benefit from shifting the load to off-peak times. A flatter demand curve enables power facilities to operate at closer to optimal capacity instead of relying on more costly back-ups to meet demand spikes. The grid becomes more efficient and the overall cost of energy falls.
With energy use reduced during peak demand, the grid is more stable and efficient. Some costs, such as those incurred by energy loss during transmission, maintenance and standby facilities, are reduced in tandem. Encouraging consumption when more renewable energy is available minimises the use of fossil fuels and reduces price volatility.
3. Nurture and retain customers through easier two-way dialogue
Energy suppliers have not often had to interact with customers beyond queries concerning billing or service disruption. Active communication will result in better quality customer data. This data can be used to inform marketing decisions and tailor services to customer requirements, supporting retention.
Two-way dialogue can encourage customers to save energy, embrace incentives and participate in demand response programmes, and complete surveys so suppliers can gain a greater understanding of their needs. Greater control over energy use has the potential to save consumers money and build loyalty towards suppliers that leverage MHHS data effectively.
4. Minimise downtime and operational costs
With more granular data at their fingertips, suppliers have a better understanding of consumption patterns and grid operations. This opens the way to using advanced analytics, AI and machine learning algorithms to predict maintenance requirements or equipment failure.
Integrating this data with Internet of Things (IoT) devices embedded in the energy network provides a real-time operational check of equipment that supports successful forecasting. Taken together, systems failures, downtime and associated costs can be avoided, and equipment lasts longer. As a result, the grid is more reliable.
5. Lower energy procurement costs
Predictive analytics has already made an impact on energy procurement costs. The impetus was the smart meter roll out. With the addition of MHHS data, energy companies gain a greater understanding of demand patterns so they can make more accurate predictions.
By identifying trends, peaks and fluctuations in historical data, and with a clearer view of future demand, suppliers can develop a smarter procurement strategy. They can adapt energy purchasing decisions in real or near real-time when prices are expected to be lower, driving price competition.
6. Streamline compliance with regulatory changes
Regulatory change is a feature of the energy market. Operators have tended to be more reactive, making last-minute changes to operations or tariffs if needed to ensure compliance. With MHHS, suppliers can anticipate and adapt to regulatory changes quickly, providing, for example, more detailed reporting on energy sources or on demand response initiatives.
Utilities companies are also better placed to report on regulatory updates to bidding procedures, imbalance charges or new market structures demanded by a more decentralised energy market.
7. Innovate through automating and managing decentralised energy
By leveraging MHHS data, energy companies can offer services to customers that go beyond TOUs. For example, they can create tariffs for smart-enabled air conditioners, electric cars and washing machines that only run during off-peak times. Utility providers save money and can pass the savings onto the customer.
Alternatively, companies can design programmes to encourage consumers and businesses to invest in flexible assets such as batteries or at-capacity electric cars to participate in grid balancing markets. These services may include rebates, reduced tariffs or guaranteed payments for flexibility services.
There are also opportunities to become a facilitator in the Peer-To-Peer (P2P) energy trading market and offer prosumers with home solar and battery systems the ability to buy or sell power with neighbours. Flexibility management and P2P energy trading platforms help them manage technical infrastructure, ensure secure transactions and provide billing and settlement services.
Additionally, suppliers can take anonymised MHHS data and use third parties to search for customers who match popular tariffs instead of marketing their offerings to less qualified leads.
8. Incentivise enterprise-wide data strategy review
The requirement for accurate, uncompromised MHHS data incentivises suppliers to audit their data strategy to ensure alignment with current data protection and management standards. By scrutinising data practices, suppliers can spot inefficiencies, improve operations and boost competitive positioning while optimising data to drive strategic decisions and increase customer value.
To process half-hourly data, system upgrades may be required. This will present an opportunity to reevaluate future technology needs, selection processes, partnerships and implementation strategies. Enhanced cybersecurity measures, such as robust encryption, strict access controls and network segmentation, will be a core part of any MHHS data strategy alongside compliance with data regulations, such as the General Data Protection Regulation (GDPR).
Our recent report, Market-wide settlement reform: a moment of opportunity? published in association with Utility Week, asks senior figures from across the energy industry how they think MHHS will shape the market. By reading the report, suppliers can gain a clearer understanding of the potential risks and opportunities, and how to prepare for MHHS effectively.
