Utility Week

28 | NOVEMBER 2021 | UTILITY WEEK Customers Analysis Innovation for the masses? Will the introduction of market-wide half-hourly settlement unlock energy service innovation for the mass market? And are suppliers ready to support the nimble settlement processes it requires? A s the final countdown to the UN's COP26 climate summit in Glasgow begins, the focus on net zero is ramp- ing up against a backdrop of growing con- cern about our collective attempts to make drastic cuts to greenhouse gas emissions. In June this year the UK became the first major economy in the world to pass laws to end its contribution to global warming by 2050, following recommendations by inde- pendent climate advisory body the Commit- tee on Climate Change (IPCC). The target requires the UK to bring all greenhouse gas emissions to net zero by 2050, compared with the previous target of at least 80% reduction from 1990 levels. However, the August publication of shock findings from the IPCC's landmark scien- tific report was described by UN secretary general António Guterres as a "code red for humanity" a•er it warned that under all the emissions scenarios considered by scien- tists, both targets will be broken this century unless huge cuts in carbon take place. To try and bridge the gap, it is increas- ingly acknowledged by policy, regulatory and industry leaders that we must go beyond legacy approaches to decarbonisation which have focused on driving down the emissions related to energy production. While this effort must continue, it must also be matched with innovation in energy services, which will enable all consumers to run more energy-efficient homes, reduce their consumption and engage in the opera- tion of a smart energy grid. Energy regulator Ofgem has set out its intention to enable this wave of service inno- vation through a variety of market reforms, among which the move to mandatory mar- ket-wide half-hourly settlement (MHHS) of all domestic customer bills by autumn 2025 is pivotal. The regulator has set out its belief that this market-wide settlement reform will cre- ate the right environment and incentives for 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," all of which will help the UK make inroads towards its 2050 car- bon reduction target. As an additional fillip, Ofgem has also calculated that the introduc- tion of MHHS could deliver as much as £4.5 billion in consumer benefits by 2045. Rowan Hazell, senior analyst at Cornwall Insight, agrees that the change could be a watershed for the industry. "While there have been offerings to date with several time-of-use tariffs in the market, the onus is not there yet to encourage all suppliers to offer innovative products with mass-market appeal," he tells Utility Week. With the arrival of MHHS, this could change, with a new influx of consumption data accelerating to market more accessible and flexible tariffs which support energy system optimisation. But will MHHS really help to unlock these innovations in energy services? And are suppliers ready to handle the enormous growth in customer data and rapid settlement processes MHHS will entail? These are the questions Utility Week – in association with Siemens – explores in a new report, Bringing Energy Service Innova- tion to the Masses. Drawing on the views of industry leaders

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