Timothy Holman, Head of Operations at TEAM Energy, believes that Market-wide Half-Hourly Settlement (MHHS) could be a game-changer for organisations’ carbon reduction goals, as he explains.
How we generate, use and pay for electricity in the UK is going through a period of intense and accelerated change. New schemes are being introduced at pace, with a goal of promoting efficient energy management practices, saving money on energy costs and reducing carbon emissions.
The overall intent is admirable: improve energy security, increase affordability and prevent harm to the environment. But there is no magic bullet. As we have seen in the case of changes within phases of the Energy Savings Opportunity Scheme, nothing is set in stone. Each Government consultation, and last year’s change in Government, adds to the requirement for organisations to monitor, audit and report on their energy usage and plans to reach net zero.
Despite not knowing the precise route that industry will have to take to reach clean power objectives, we are aware of the overall direction of travel. There are initiatives that will have a major impact on when and how we use energy, how much it will cost and its impact on the climate and the environment. One of these is Market-wide Half-Hourly Settlement (MHHS) which will lead to a faster, more accurate settlement process for everyone participating in the electricity market.
The major market reform on the horizon
Market-wide Half-Hourly Settlement (MHHS) has been described by Elexon, the organisation that administers the UK’s energy balancing code, as one of the ‘biggest overhauls of electricity systems and processes since privatisation and the introduction of the competitive market in 1998’.
In essence, MHHS means that the energy supplier pays the energy generator for the energy consumed by its customers every 30 minutes based on actual rather than estimated consumption, as is currently the case. This will be heavily reliant on the installation of smart meters capable of returning accurate, real-time data of electricity usage. One thing is for sure, MHHS is going to both generate and rely on enormous volumes of data. Organisations that can access and analyse that data will be able to act on it more effectively.
As MHHS means that all suppliers will be charged for the actual consumption of their customers, it’s realistic to expect an increase in the variety of tariffs available. We should see the introduction of more ‘time of use’ tariffs for organisations that are ready to switch to them, with higher costs for peak-times or lower costs for times of increased, cheaper, renewable energy availability. This is good news for organisations without current low-carbon technologies to decarbonise their operations by using energy from renewable sources.
Weathering complex challenges
Clearly, the introduction of MHHS is highly complex. There is enormous scope for error – which can be costly. Even during periods of ‘business as usual’ analysis shows that up to 4% of utility bills contain errors, and during times of change, the risk of errors and mistakes is elevated. It’s early days yet for these systems, and there are many challenges to weather. It’s been said that while meters may have become smart, the system supporting them is still dumb. It’s quite a heavy burden for energy managers to tolerate.
To optimise the benefits of any incentivised tariffs, an organisation will need a comprehensive understanding of its energy estate data. Energy managers will need sophisticated tools to interpret and interact with the data, to make changes.
Multi-site energy estates may well turn to energy management bureaus or bill validation solutions to identify and benefit from tariffs specific to different sites and periods. Despite new charges and increased risk of errors, organisations who engage an energy bureau service can take the challenges of MHHS in their stride, by establishing energy efficiency best practices, and understanding the data and usage profiles supplied by smart metering. Energy bureau and bill validation services can help recover costs, mitigate risk, and help organisations work towards corporate net zero targets.
AI and the data deluge
While more flexible tariffs offer greater opportunities to save money and reduce an organisation’s carbon footprint, there’s no getting away from the fact that such schemes are not just complex, they are data-reliant and heavy on the need for processing power.
Here’s where it all gets a bit meta. Data-driven energy decision-making is driving the need for more data. While, in turn, collecting and processing data uses more energy. The amount of power consumed by data centres, and AI in particular, is already raising eyebrows. Multiplying data volumes to reduce energy consumption appears counter intuitive. Ironically, AI and big data are prime tools for tackling the challenges of energy security and net zero.
Across organisations, energy managers can use AI and data to get better insights into their energy estate, reduce their emissions, and mitigate the risks of energy security and climate change. While it’s the case that big data and AI have energy costs associated with them, they are often exaggerated.
Based on International Energy Agency (IEA) figures, data centres account for one or two per cent of energy use – a small figure compared to other industries and buildings. As the increase in AI helps counter building energy use, the small percentage energy increase incurred is made up for in savings.
And after the storm …
For the foreseeable future, the energy industry is going to continue to face the challenge of implementing changes. Some of which will work, some will need adaptation, and some will be short-term interim fixes. This may be unsettling for consumers. However, ‘early adopter’ organisations can make sure they are in the best position to take advantage of MHHS and other schemes as they develop and mature.
Support from energy management bureau services can help organisations weather the storm by unlocking important energy saving opportunities and ultimately guarantee the accuracy of their MHHS participation.
