Preparing retail energy for Market-wide Half-Hourly Settlement

Reforms are underway

Market-wide Half Hourly Settlement (MHHS) is the largest shake-up of the GB electricity market since privatisation.

Alongside the smart meter rollout, MHHS will accelerate critical market processes from daily and monthly schedules to a half-hourly cadence and dramatically alter the consumer landscape.

Reforms will establish dynamic pricing as the norm, incentivise demand response, help ensure the market operates efficiently to deliver customer value, and support decarbonisation initiatives in alignment with UK climate goals. 

These opportunities excite us. From data platforms that handle vast new datasets to a market that incentivises green energy use, future energy markets will be underpinned by sophisticated forecasting systems running on advanced data platforms.

Market-wide settlement reforms are front-of-mind for industry leaders we have spoken to, and retail energy suppliers are gearing up for a once-in-a-lifetime recalibration of their sector.

At Softwire, we are working with Elexon to adapt central systems for half-hourly settlement, and our early view of data volumes and new platforms has informed our strategic and technical opinions.

Key changes are well underway, with the switchover scheduled for December 2026. Dramatic increases in data volumes and timeliness, coupled with new data-driven business opportunities, will require a step-up in data maturity at retail energy suppliers to get the most out of the switch.

Smart Tariffs

Half-Hourly Settlement will deliver incentives and savings to customers via time-of-use (or “smart”) tariffs. We expect smart tariffs to be a fiercely competitive market as finely tuned products launch, widespread data availability provides customers with personalised recommendations, and suppliers continue to offer switching bonuses.

Delivering dynamic tariff pricing will require a step up in retail energy supplier data maturity. Accurate demand response and profitability models for time-of-use tariffs and organisational confidence in those models will help suppliers move quickly with wholesale energy markets and the latest forecast data.

Smart tariffs are a foundation for product ecosystems and integrations. Rather than relying solely on human decisions, suppliers must build platforms that enable smart devices to schedule automatic demand response, helping meet UK net zero goals and lowering customer bills.

Industry leaders are already opening up their data: Octopus Energy has used its position as a supplier to build APIs and partnerships that enable an enviable automation and integration ecosystem, including heat pumps, electric vehicles (EVs), solar panels and smart home equipment. This ecosystem retains customers and anticipates market-wide reforms; other suppliers must take note and catch up or risk being left behind.

These ecosystems will grow dramatically over the coming years. In addition to basic time-of-use tariffs, suppliers must offer dynamic and export tariffs that meet the needs of EV owners, support solar and battery storage systems, and pioneer vehicle-to-home (V2H) and vehicle-to-grid (V2G) solutions. V2G solutions will be a critical national and global growth area: a modern EV battery can power a typical British home for days, even weeks. 

Today, UK EVs represent an estimated 52MWh of disconnected battery capacity – sufficient to power the entire Great Britain network for over an hour. As an industry, we must find better ways to deploy this capacity as a buffer for volatile wind and solar generation and reduce our reliance on gas. Suppliers must lead the building of business and technical platforms for V2G at scale.

Market Intelligence

Data-driven business processes place a spotlight on data quality and data sources. Suppliers need to learn – now – how to leverage live data feeds and establish new processes to make effective real-time decisions; systems built on slow daily batch jobs or unreliable sources will hold organisations back. 

Data flows from Elexon Insights, DCC, N2EX and others can form the backbone of market analytics datasets. We see little value in third-party data vendors and encourage everyone to integrate directly with first-party sources for the lowest latency and highest data quality guarantees.

While much effort has been spent on modelling the wholesale market, we have yet to see much focus on crafting customer-centric smart tariffs based on user research and real-world demand response data. An attractive offering to customers must account for behaviours and preferences, incentivise reasonable demand flexibility, and avoid recommending the impossible. To give an example, many people can shift their washing timers; however, few parents want to be told it’s cheaper to cook dinner for kids at 9 p.m. (regardless of market forces).

Real-time data-driven decisions are game-changing for internal processes. Suppliers should also pass the benefits on to customers by using push notifications, message brokers and websockets to broadcast real-time pricing & energy data to your users’ devices and connected products via an energy data platform.

Exceptional data outcomes flow from great sources, delivered in real time. Energy suppliers need User Research, Data Engineering, and Data Science expertise to confidently collect and leverage customer and market-wide data, design effective products, and gain the deepest possible insights.

Data Platforms

Half-hourly smart meters generate 1,400x more data than monthly readings. These volumetrics, combined with new business processes, will push many existing operational and analytical systems beyond their limits.

Operational systems designed for gigabytes now need to handle terabytes and require immense scalability to handle bulk customer migrations.

Increased analytics and data science demands will also require entirely new data platforms to handle the load without delaying real-time operations. Cloud-native serverless architectures can address these technical challenges but require much more than simple lift-and-shift operations.

Cloud solutions must be designed to make full use of managed platforms, hyperscale databases, horizontally-scalable servers and cloud-native event-driven integration patterns. Connections with AI-enabled cloud Data Science platforms stand out as a recent priority for many businesses in and beyond the energy sector.

Industry is already adapting, scaling and modernising technology to keep up with market changes and new business processes.

Energy tech platforms such as Kraken and Kaluza offer a one-stop shop for supplier technology needs, and we expect this commodification to grow over time as energy tech matures. Integrating new platforms into a data estate will remain an ongoing challenge and requires careful planning. 

Other suppliers and wholesalers may choose a custom approach, building or expanding data platforms and operational systems fully aligned with their own processes. This approach could involve managed all-in-one cloud data platforms (e.g., Databricks, Snowflake) or building bespoke solutions on a hyper-scale cloud provider (e.g., AWS, GCP, and Azure).

Conclusion

Market-wide Half-Hourly Settlement is a rare and significant shake-up to the GB electricity market. New settlement schedules, paired with the smart meter rollout, affect every participant in the market, including suppliers, wholesalers, operators, traders, and consumers.

We expect smart tariffs to move from a niche product category to a mainstream offering, and retail energy suppliers should look ahead to new frontiers, including open data, integrated product ecosystems and V2G platforms.

At Softwire, we know data maturity will be a key enabler of everything we’ve discussed here. Suppliers and other participants in the wholesale market need to start investing now in skills, processes, and technology; otherwise, they’ll be caught flat-footed and lag behind.