The UK energy industry is undergoing significant transformation, driven by the push toward decarbonisation, increased electrification, and the need for a more flexible grid. Alongside these structural changes, the way costs are allocated across the system is evolving.
Three key developments are reshaping how the industry operates and how costs are ultimately passed on to consumers: rising Transmission Network Use of System (TNUoS) charges, the introduction of the Nuclear Regulated Asset Base (RAB) levy, and Market-Wide Half Hourly Settlement (MHHS). You can read about TNUoS and the Nuclear RAB Levy here.
Market-Wide Half Hourly Settlement (MHHS)
What?
In practical terms, this requires upgrading electricity metering so that meters are capable of full two-way communication between the supplier and the site, while also recording consumption data every 30 minutes.
Why?
Market-Wide Half Hourly Settlement (MHHS) represents a major reform to electricity retail markets. Under MHHS, electricity usage data will be settled in half-hourly intervals for all consumers, rather than relying on estimated consumption profiles for many businesses. You can read more about what MHHS is here and the challenges it presents for UK businesses here. In time this will also allow greater grid balancing.
Impact?
From a supplier perspective, this change is intended to significantly improve the accuracy of settlement. By providing more granular data, MHHS should also enable suppliers to develop more innovative, time-of-use tariffs. These tariffs can incentivise consumers to shift demand to off-peak periods, ultimately helping to reduce strain on the electricity system.
From a consumer perspective, it provides greater visibility of actual energy usage, helping businesses better understand their consumption patterns. This increased transparency is expected to encourage more efficient energy use and support the adoption of smart technologies such as electric vehicles and heat pumps.
Issues?
While MHHS is a critical step in modernising the energy system, it also introduces additional complexity. The reform requires multiple industry parties and systems to work together effectively, increasing both operational and administrative challenges.
There are also expected to be cost implications. Metering costs are likely to rise, although it is not yet fully clear how Meter Operator (MOP) and Data Collector (DC) charges will evolve or be integrated into future charging arrangements.
The energy landscape is changing. If you want to understand what that means for your business, we’re here to help. Get in touch with the team today.
theteam@herestheplan.co.uk
01738 474 630
