Market-Wide Half-Hourly Settlement (MHHS) delay hands energy suppliers another chance to get ahead of competitors

Ofgem’s Market-wide Half-Hourly Settlement (MHHS) implementation deadline has been extended by more than a year. So, how will this impact energy suppliers and other stakeholders in the industry? In this blog, SMS delves into the latest setback, discussing how the extended deadline presents ample opportunity to get ahead of the curve and capitalise on the numerous benefits this reform promises.

The UK’s energy regulator, Ofgem, recently announced a setback in the implementation timeline of its Market-Wide Half-Hourly Settlement (MHHS) programme. The programme – which mandates all UK suppliers to switch their meter portfolios to half-hourly consumption – has been extended by more than a year from October 2025 to December 2026.

When Ofgem first unveiled its roadmap to the MHHS, it demonstrated an impressive determination to revolutionise the energy market. The report outlined a reform that would bring about remarkable energy cost savings of up to £4.5bn for UK customers by 2045. This would be achieved by introducing more accurate and transparent billing based on half-hourly consumption. And let’s not forget the significant impact a smarter system will have in advancing the country’s net-zero carbon efforts.

Understanding the challenges facing Market-wide Half-hourly settlement

So, why the extension? Well, in order to enable MHHS, energy suppliers must install smart meters in at least 85% of their consumers’ homes and small businesses. However, this task is not as straightforward as it seems due to the significant technical challenge of deploying smart meters.

Smart meters play a pivotal role in achieving the UK’s target of net zero by 2050. Recognising their significance, governments and policymakers have made strategic investments to facilitate their expansion with smart meters now in over half (55%) of UK homes and small businesses. But there is still some way to go to accelerate the rollout of smart meters to meet the deadline, and this necessitates strong support, innovation and collaboration from the industry.

It is also important to take into consideration that many energy suppliers have struggled financially due to the prevailing energy crisis and the significant investment in cost and resources to support the Switching Programme, an Ofgem sponsored industry change to enable energy users to change energy suppliers more efficiently. This has understandably created challenges among suppliers when it comes to further investment into change.

The adoption of half-hourly settlements by all energy suppliers can actually result in significant cost savings. There is an opportunity to become an early adopter of the principles of MHHS with Elective Half Hourly Settlement (EHHS). Contrary to the common misconception, EHHS can often be implemented without the need to invest in systems and, in tandem with installing and maintaining an optimally performing portfolio of smart meters, these savings can start to be realised sooner than waiting for MHHS to become mandated.

Indeed, by our informed estimations, once the smart meter rollout is fully implemented, the transition to half-hourly settlements throughout the market could generate annual savings of £500 million for energy suppliers. This estimate is based on the successful implementation of EHHS and smart tariff design services that SMS has already provided to early adopters in the market. With substantial financial incentives at stake, it is crucial to highlight the significant opportunity that lies ahead for suppliers who embrace the transition to smart settlements.

The opportunity for energy suppliers

Since 2017, many suppliers, including some of SMS’s customers, have taken advantage of the early adopter benefits and chosen to provide an EHHS service to those customers with smart meters. According to Elexon’s data, there has been a significant rise in the number of suppliers transitioning to EHHS in the last quarter. Leading the market in this shift are Centrica, Octopus, and OVO Energy (see Fig. 1).

Fig. 1. Rise in energy suppliers in the Half-Hourly market. Source: Gross Supplier Market Share Data reports – Elexon BSC

Early adopters of our EHHS service have significantly enhanced the accuracy of settlement and billing processes, resulting in improved business efficiency and customer satisfaction. Not only this, but by introducing new dynamic tariffs and energy-as-a-service offerings, energy suppliers position themselves as industry leaders, enabling them to stay ahead of competitors and drive greater innovation.

Beyond its potential to deliver remarkable cost savings and empower consumers, half-hourly settlement also serves as a facilitator for the advancement of smart grid technology which is essential for a decarbonised system, enabled through Virtual Power Plant platforms such as FlexiGrid. And with millions of smart and advanced meters yet to be installed, the opportunity is only set to grow.

How can energy suppliers get ahead amid the delay to MHHS?

While the extension poses challenges, it is important to recognise that the extended timeline presents a valuable opportunity for energy suppliers to further collaborate, learn and refine strategies. By effectively utilising this additional time, suppliers can take proactive measures to transition to MHHS ahead of schedule, collaborating and leveraging industry experts, ensuring timely compliance with the revised deadline and fully capitalising on the programme’s benefits.

With two and a half years remaining until MHHS comes into force, businesses have the chance to turn setbacks into strategic advantages. During this time, suppliers should prioritise System Design, Test and Build (DBT), create migration strategies and readiness assessments, whilst continuing the focus upon rolling out smart meters to customers. Opting for an early EHHS transition – along with voluntary testing and optimisation – offers the best way to get ahead in the industry. Partnering with experienced service providers like SMS can also greatly facilitate the transition, whilst mitigating the risk of any further delays.

Whilst the official deadline for the reform is December 2026, all suppliers who wish to participate must have the necessary systems and services in place to accept Meter Point Administration Numbers (MPANs) under the new Target Operating Model (TOM) by June 2026. Failure to meet this requirement will prevent suppliers from onboarding new customers. With this deadline in mind, it’s crucial to start making the necessary preparations now for a seamless transition.

Work with an expert

As one of the only MHHS Programme Participants that achieved full marks in Readiness Assessment 1 (see Fig. 2.), SMS is fully prepared and equipped to assist energy suppliers in meeting the necessary deadline. As the UK’s leading Meter Asset & Data Services Provider, our experts have the capabilities to take care of the whole end-to-end process, from electric and gas meter installation to the collection and aggregation of data, including EHHS and tariff design and other dynamic energy efficiency services.

Fig. 2. Scores of Programme Participants in PPC Assessment, MHHS Programme, Readiness Assessment Two: Overall Report v1.0.

Half-hourly settlement is, and will increasingly become, a vital cornerstone in the energy industry’s journey towards a smarter future, fostering growth and paving the way for a greener ecosystem. It, therefore, begs the question, what are we – as a collective industry – waiting for? Don’t fall behind in the race to net zero. Seize this opportunity to gain a competitive edge and find out what you could save across your meter portfolio today.

FAQS

What is Market Wide Half Hourly Settlement (MHHS)?

Market Wide Half Hourly Settlement (MHHS) is a government mandate that requires all UK energy suppliers to settle energy trades and payments based on a half-hourly basis by December 2026. This means that instead of utilising traditional meters – which sends readings manually – energy suppliers must install smart meters in at least 85% of their consumers’ homes and small businesses.

How does Market Wide Half Hourly Settlement (MHHS) work in electricity markets?

Market Wide Half Hourly Settlement (MHHS) works by tracking and settling energy consumption and production in half-hourly intervals. The meter automatically sends a reading every half hour, this is then processed and turned into analysis to provide more transparent billing.

What are the benefits of Market Wide Half Hourly Settlement (MHHS) for market participants?

There are many benefits of switching to MHHS, from enhanced accuracy in billing, real-time tracking of energy usage, to significant cost savings for energy suppliers. This is especially the case for early adopters of MHHS, with our customers reporting improved business efficiency and customer satisfaction. In addition, the adoption of half hourly settlement allows energy providers to introduce new dynamic tariffs, providing a more competitive edge.

Find out more about the benefits of Half Hourly Settlement.

What role does Market Wide Half Hourly Settlement (MHHS) play in renewable energy integration?

Market Wide Half Hourly Settlement (MHHS) plays an important role in achieving the UK’s net zero goal by facilitating the integration of renewable energy sources to create smart, flexible local energy systems.

Half-hourly demand data enables grid operators to better predict and manage energy demand, crucial for accommodating the intermittent nature of renewables. MHHS also encourages demand response, empowering consumers to adjust usage patterns during peak demand periods and align them with renewable energy availability.

Find out more about our Demand Flexibility Service.

How does Market Wide Half Hourly Settlement (MHHS) impact electricity pricing and billing for consumers?                                 

Market Wide Half Hourly Settlement (MHHS) enables more precise billing by monitoring real-time supply and demand data (every half hour). This accuracy benefits consumers by promoting transparent and dynamic pricing, ensuring they are billed more accurately, and potentially offering cost-saving incentives for off-peak usage.