Octopus: Customers suffer every time MHHS is delayed

Customers are the ones ultimately suffering from repeated delays to the deadline for market wide half hourly settlement (MHHS).

That is according to Octopus Energy’s global head of flexibility Alex Schoch.

Speaking to Utility Week, Schoch said that customers are being let down by repeated delays to the implementation of MHHS.

“We’ve consistently seen the repeated push out of the deadline for MHHS,” Schoch said. “Every time we push that back, we delay the ability to deliver newer, better propositions for all customers in the energy system.”

Schoch’s comments come after Ofgem pushed back the primary completion deadline for the programme by more than a year from October 2025 to December 2026.

The regulator has also approved an alternative deadline of May 2027, meaning the completion of the programme could actually be delayed by up 19 months.

The decision on the transitional timeline adopted in April 2021 had already been delayed three times and was originally due to take place in the first half of 2018.

As well as criticising Ofgem for pushing back the programme, Schoch also hit back at claims that the MHHS will squash demand diversity, possibly leading to overloading on the distribution grid.

These cautions were issued during interviews to inform Utility Week’s new report, Market-wide settlement reform: a moment of opportunity? in which anonymised leaders from across the energy industry shared their expectations about the extent to which the arrival of market-wide half-hourly settlement (MHHS) will unlock valuable industry change and contribute to the net zero transition.

While network leaders were broadly positive about the introduction of MHHS, seeing it as a vital source of more granular energy usage data which could support investment deferral targets and better asset utilitsation, they also expressed anxiety about some challenges that MHHS will pose to established methods for system planning and management.

These challenges included the scope for system overloads as swathes of customers respond more uniformly to price signals prompted by time-of-use tariffs, which are commonly expected to flourish after MHHS is introduced. There wer also some concerns about how to replace the long-established method for calculating maximum demand – After Diversity Maximum Demand (ADMD). One network leader emphaiszed that after MHHS, this will become “a thing of the past”.

Responding to these concerns, Schoch said that while he “understands the reluctance from some networks […] MHHS is an absolutely crucial part of getting a cheaper, greener, fully flexible net zero energy system”.

He added: “I understand that some people will be wary of change and will be willing to hang on to the status quo for as long as possible. Of course, it raises concerns because you know that it’s a very big systemic shift.

“They have used the ADMD [after diversity maximum demand] system for decade and MHHS fundamentally changes that.”

However, Schoch warns that the regulator needs to be tougher and “draw a final line in the sand [or] networks will still continue working in an old world to plan their network”.

“There will always be some elements resistant to change, but that is the case in any industry,” he added. “The important thing is that the majority see MHHS as an opportunity and we should now get on and deliver it.”

Schoch added that to truly see the benefits of flexibility, then a “rapid and extremely urgent review” of the Distribution Use of System (DUoS) charging mechanism also needs to be carried out.

He said that the way DUoS is currently structured is “far too static” with just three-time band periods too basic for system planning.

He added: “We have to get to a more dynamic system and there needs to be a new way of thinking, it really will help us dramatically a get back on pace with achieving net zero targets and will help us unlock GWs of demand flexibility across the energy system.

“The DuoS charging mechanism is incredibly important and it really needs to come hand in hand with MHHS.

“Unfortunately, this is something where we are seeing a complete lack of focus or attention.”

He added: “There are some token nods towards it from Ofgem, but from our perspective these things [MHHS and DUoS] are not currently being viewed in the same contextual bucket, when in reality they should go hand in hand.

“These things together really will drive down costs for the whole system and will also help how networks can then plan their growth.”