Electricity Retail Market-wide Half-hourly Settlement: Decision and Full Business Case

Decision

Publication date

Industry sector

Supply and Retail Market

In August 2018 we set out our expectation that we would need to introduce half-hourly settlement (HHS) on a market-wide basis in order to realise the full benefits of settlement reform. Our Outline Business Case document suggested that - due to the magnitude of the potential net benefits – our decision should centre on determining when and how, rather than whether, market-wide settlement reform should be introduced.

After carrying out a Request for Information (RFI), on 30 April 2020 we published (initially for information) a consultation on issues relating to the introduction of market-wide half-hourly settlement (MHHS) across the electricity retail market. On 17 June 2020 we opened the consultation period. Accompanying the consultation document was a draft impact assessment (IA) on the introduction of MHHS and a paper on the potential consumer impact of MHHS. The consultation closed on 14 September 2020. After the consultation closed we considered the responses carefully and continued to engage with a wide range of stakeholders as we refined our proposals.

We are now publishing our decision to proceed with MHHS based on the Design Working Group’s Target Operating Model (the DWG’s TOM), for import-and export-related Meter Point Administration Numbers (MPANs), with a transition period of 4 years and 6 months completing in October 2025. MHHS will place the right incentives on retailers to develop and offer new tariffs and innovations that encourage and enable more flexible use of energy, such as time of use tariffs, automation, vehicle to grid solutions and battery storage. We estimate that our chosen option for MHHS will deliver net benefits to GB energy consumers in the range of £1,559m-£4,509m over the period 2021-2045. We have published the following:

  • our Decision Document, which sets out all the decisions that we have taken and the reasons for them,
  • our Full Business Case (FBC), which includes an assessment of the economic case for implementing MHHS and provides updates on how MHHS will be implemented,
  • our Final Impact Assessment (IA), which sets out our analysis of the costs and benefits of MHHS, and
  • a short addendum to our Data Protection Impact Assessment, to reflect the new data access policy decisions set out in the Decision Document.

We would like to thank all stakeholders for your input so far. We look forward to your continued engagement during the implementation phase of settlement reform.