Explained: Market-wide Half-Hourly Settlement (MHHS)

The UK energy sector is undergoing a major transformation with the introduction of the Market-wide Half-Hourly Settlement (MHHS).

Designed to modernise energy tracking and billing, MHHS aims to create a more flexible and data-driven energy network across the country. This initiative is expected to generate substantial cost savings, with Ofgem estimating consumer and business benefits ranging between £1.6 billion and £4.5 billion from 2021 to 2045.

In this article, we delve into the details of MHHS and its potential impact on UK businesses, from small enterprises to large energy consumers.

What is MHHS?

The MHHS programme is a new requirement that mandates the use of half-hourly data to measure electricity usage for all customers.  This change is part of a larger initiative to improve transparency and accuracy across the energy sector.

By moving all non-half-hourly electricity meters onto half-hourly settlement, this creates a more detailed and timely view of every consumer’s usage. This is a necessary step for the electricity industry to reform the way electricity is purchased, generated and stored, creating a much more flexible and cost-effective electricity system for the UK.

What is the MHHS Implementation Timeline?

The rollout of MHHS will occur in phases, with the testing phase scheduled for completion by October 2026. This staggered approach allows businesses and energy providers ample time to adjust to the new system.

To ensure a smooth transition, companies should stay informed about key milestones and work with their energy supplier(s) and/or broker to understand how the changes will specifically affect them.

Who Oversees MHHS?

Elexon, the organisation responsible for managing the Balancing and Settlement Code (BSC), is overseeing the implementation of MHHS. Its role is to ensure compliance with the new settlement framework and facilitate a seamless transition for market participants.

Additionally, the Retail Energy Code Company (RECCo) must update the retail energy code to accommodate these changes, while suppliers and delivery networks are required to modify their processes to align with the new standards.

Will there be an Impact on Small Businesses?

For small businesses, MHHS presents an opportunity for more accurate energy billing. With energy usage recorded in half-hourly intervals, SMEs will benefit from billing based on actual consumption rather than estimates. This enhanced visibility can help businesses identify peak usage times and implement energy-saving strategies, potentially reducing costs.

MHHS will also foster greater competition among energy suppliers, leading to more tailored and cost-effective tariffs for SMEs. In spite of this, some critics argue that half-hourly (HH) business energy contracts include additional non-commodity charges not present in non-half-hourly (NHH) contracts, potentially making HH agreements more expensive for smaller consumers.

These additional charges include:

• Data Collection (DC) and Aggregation (DA): Costs for collecting and processing energy usage data

• Meter Operation (MOP): Maintenance and management of metering infrastructure

• Capacity (kVA) Charges: Fees based on the agreed maximum demand

• Balancing Services Use of System (BSUoS): Costs associated with balancing the electricity grid

• Distribution Use of System (DUoS): Charges for local power distribution

• Transmission Network Use of System (TNUoS): Costs for national power transmission

Due to these factors, smaller businesses may find it harder to leverage the benefits of HH settlement compared to larger consumers who already operate under HH contracts.

Will there be an Impact on Large Energy Consumers?

For large businesses, such as manufacturers and factories, MHHS offers significant advantages. Access to granular energy consumption data enables these companies to optimise operations and negotiate more competitive energy tariffs with suppliers.

Additionally, the new system supports sustainability objectives by allowing businesses to implement more effective energy management strategies and track progress in reducing carbon emissions. Companies with Corporate Social Responsibility (CSR) goals can use MHHS to help support their commitment to sustainability.

Many large energy consumers already operate under HH contracts, but the introduction of new flexible energy products and load-shifting opportunities could further enhance cost-saving potential.

What Infrastructure Changes are required?

To comply with MHHS, businesses must have smart meters capable of recording half-hourly data. This may require upgrading existing meters or installing new infrastructure. Energy suppliers are working on strategies to facilitate the transition, and businesses not yet on HH supply will likely be contacted by their supplier in 2025.

What are the Next Steps?

Sit tight for now. Your supplier will be in touch with you to explain any changes and exactly how MHHS may affect your business.

Once the MHHS programme has rolled out, you will likely notice some differences. Anything Half-Hourly (HH) or Non Half-hourly (NHH) will disappear, with meters reclassified as either ‘Smart’, ‘Advanced’ or ‘Unmetered’. Similarly, Meter Operator will become Metering Services, Data Collector will become Data Services and Data Aggregation will become Market-wide Data Service.

Final Thoughts

MHHS marks one of the biggest changes to the Uk energy market since it was privatised in the 1990s. While businesses will need to make adjustments, the long-term benefits of increased transparency, better cost management, and improved sustainability are substantial. According to Ofgem, the full transition is expected to be completed by early 2027.

If you would like to understand how the MHHS programme will impact your business, call our experts on +44 (0)1423 225 333 or email hello@bigenergygroup.co.uk.

About Big Energy Group

Big Energy Group is a privately held, British-owned energy brokerage with an established track record of helping clients successfully navigate the energy market. The company has offices in Harrogate and the Tees Valley and serves more than 400 businesses across the UK. For more information, please visit bigenergygroup.co.uk.