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Delivering outcomes to support a more cost-effective electricity industry

Climate change presents the world with a challenge to urgently protect our planet, our economy and our populations.

The UK has set a world-leading net zero target, the first major economy to do so. Having set the target, the focus turns to delivering against that target. In the Energy White Paper ‘Powering our Net Zero Future‘ the government has set out an ambitious programme to build a fairer greener energy system.

Market-wide Half-Hourly Settlement (MHHS) is a key enabler of the flexibility to support the transition to Net Zero. The MHHS Programme will contribute to a more cost-effective electricity system, encouraging more flexible use of energy and helping consumers lower their bills.

 

Introduction from the MHHS Programme SRO

Market-wide Half-Hourly Settlement (MHHS) reform will see the electricity industry working together in a significant move forward in how electricity is used and accounted for. The MHHS Programme is an industry first, in that Ofgem has placed responsibility on the industry to deliver the Programme and made Elexon the Senior Responsible Owner (SRO) of the Programme.

The outcome of MHHS will be a faster, more accurate settlement process for all market participants, introducing site specific reconciliation using half-hourly meter readings. Elexon is a key organisation at the centre of the wholesale electricity market and is an expert in balancing and settlement processes. Elexon is proud to lead the MHHS Programme, which will be a key enabler to a smarter, more flexible energy system and will be vital in supporting flexible solutions to enable the nation’s transition to Net Zero.

Recognising industry concerns about potential conflict of interest, a Separation Solution has been established to clearly detach the role of Elexon as a programme participant, delivering the central systems, from its programme management role. The Separation Solution seeks to minimise and manage the potential for conflicts of interest between these two roles. The Elexon Board, Ofgem and an Independent Programme Assurance (IPA) function will monitor the separation requirements.

The whole approach for the MHHS Programme paves the way for new ways of working for the electricity industry. Ofgem consider the MHHS Programme as a first in defining the ‘blueprint’ for future large change programmes within the energy industry.

We look forward to working in a collaborative and transparent way with the energy industry to develop and deliver the MHHS Programme.

Helen Adey, MHHS Programme SRO

 

Introduction from Ofgem MHHS Programme Sponsor

Ofgem’s 2021/22 Forward Work Programme set out five strategic priorities, including to deliver full chain flexibility in how we generate, use and store energy. One of the key activities within that strategic priority is to implement MHHS. This will be a vital enabler of the flexibility to support this country’s transition to net zero.

On 20 April 2021, we published our decision to implement Market-wide Half-Hourly Settlement (MHHS), and stated that Elexon will be the Senior Responsible Owner (SRO) for MHHS implementation. We estimated, in our Final Impact Assessment, that MHHS will deliver net benefits to GB energy consumers of between £1.5bn-£4.5bn by 2045. After a further period of consultation, we then introduced the governance arrangements to support the industry-led delivery of MHHS.

Ofgem, as Programme Sponsor for MHHS, retains overall accountability for achieving the outcomes set out in our MHHS Decision. To that end, under the MHHS Governance Framework, Ofgem will continue to make decisions where a proposal would cross the agreed Level 1 milestones, relating for example, to cost, timescales, design scope, competition, and conflicts of interest. 

Important progress has been made. This includes baselining the overall technical design of the new arrangements, appointing Avanade to build the Data Integration Platform, and commencing system build to enable System Integration Testing. 

At the same time, MHHS Programme has been consulting on the Timetable Replan. We expect this exercise to deliver a challenging but robust new implementation timetable that the whole industry will support.

Delivering MHHS remains an essential step on our path to net zero. We will continue to support the Programme as necessary so the industry can start delivering the benefits of MHHS from the earliest practicable date.

Melissa Giordano, Ofgem, Programme Sponsor