The GB retail electricity market is to transition to a market-wide half-hourly settlement over the next four and a half years.
The decision from the energy regulator Ofgem is the next step in the evolution of the market with the rollout of smart meters, growth in distributed generation and the need for more flexibility in the system.
The transition to take place by October 2025 under Elexon, the balance and settlement code administrator as the programme manager, has been set to enable testing and the ironing out of any issues before the system goes fully live.
It also corresponds with the targetted completion for the national smart meter rollout.
Anna Rossington, Interim Director Retail at Ofgem, writes in a blog posting that market-wide half-hourly settlement is a vital enabler of flexibility.
“It will send accurate signals to suppliers about their customers’ electricity use and the cost of serving those customers throughout each day,” she writes.
“This will place incentives on suppliers to offer new tariffs and products that encourage more flexible use of energy and help consumers to lower their bills, for example time of use tariffs, automation, vehicle to grid solutions and battery storage.”
This in turn should lead to more optimal use of the infrastructure and the deferral or reduction in the need for investment in more generation.
Ofgem has estimated the initiative should save energy consumers from £1.6 billion to £4.5 billion ($2.2-6.3 billion) over the next 25 years.
The settlement will be based on the so-named ‘Target Operating Model’, the key features of which are three data services – Smart, Advanced and Unmetered Supplies – that collect data and supporting information, then output validated/estimated, disaggregated settlement period level data to the Balance and Settlement Code Central Settlement Services.
Two types of metering services also have been defined for smart and non-smart meters and for the advanced meters.
Residential customers will have a choice on the level of data that they share or will be able to opt-out from half-hourly meter data sharing. Suppliers will need to communicate with customers on these options and Ofgem anticipates formulating messaging for this purpose.