The electricity settlement process places incentives on suppliers to buy energy to meet their customers’ demand in each half hour of the day. Accurate and timely half-hourly consumption data from smart metering could significantly improve the quality of settlement, which in turn could encourage innovation and efficient use of energy.
We consider it is in consumers’ interests to be settled using half-hourly consumption data from smart meters. Suppliers can already choose to settle consumers half-hourly through our elective half-hourly settlement work. We expect, however, that we will have to require that all suppliers do this in order to maximise consumer benefits.
In July 2017, we launched our Significant Code Review, which sets out our revised timetable following our November 2016 consultation on the timetable for reform for market-wide half-hourly settlement (previously mandatory half-hourly settlement). The decision on whether to require that all suppliers across the market settle half-hourly will be made in the second half of 2019 and is subject to cost-benefit analysis.
HHS has a fundamental role in delivering the Smart Systems and Flexibility plan which could save consumers up to £40bn off their energy bills in the coming decades.
Approach to design of the Target Operating Model
One of the key outputs of this Significant Code Review is the development of a Target Operating Model to deliver Market-wide Half-hourly Settlement. To achieve this we have set up the following design bodies:
- an ELEXON-led Design Working Group to undertake the design work to develop potential TOMs
- a Design Advisory Board, chaired by Ofgem, to provide a strategic assessment of potenital TOMs and advise the Ofgem Senior Responsible Owner
The ELEXON forward work plan for the Target Operating Model design work, last updated in May 2018, can be found here.