Unlocking the Benefits of the Smart Energy Market

Half Hourly Settlement: Unlocking the Benefits of

the Smart Energy Market

Joel Stark 25 February 2016

Shift to Half Hourly Settlement underpins

transformative change for the electricity industry.

This presentation attempts to:

Explain what the changes are

Describe what the benefits could be

Show how aM&T is the essential tool to help

Introduction

‘As we decarbonise, simply building more power

stations and cables to meet demand when the wind

isn’t blowing, or the sun isn’t shining, is neither

sustainable nor efficient. ‘

‘Whatever it looks like, we will need to produce and

consume energy more flexibly in order to make the

most of the opportunities provided. ‘

Ofgem aiming at a flexible energy system

Ofgem Position Paper, 30 September 2015

“Making the electricity system more flexible

and delivering the benefits for consumers”

‘We define flexibility as modifying generation and/or

consumption patterns in reaction to an external signal

(such as a change in price) to provide a service within

the energy system.’

Flexibility defined

Ofgem Position Paper, 30 September 2015

“Making the electricity system more flexible

and delivering the benefits for consumers”

New forms of flexibility all depend on

Half Hourly Settlement

Storage Embedded

Generation Time of Use

Half Hourly Settlement

“Following discussions with

Ministers, … Our first goal is

to deliver cost effective half

hourly settlement. We want

this in place early 2017.”

Ofgem to Elexon, 17 December 2015

Existing Legislation:

1994: Mandatory for largest ~125,000 supplies

April 2017: Mandatory for next largest ~175,000 supplies (P272)

Future Legislation:

Early 2017: Elective Settlement for all SME and Domestic supplies

Mid 2018: Systems in place for Mandatory Settlement for all SME and Domestic supplies

Half Hourly Settlement Timeline

Ofgem wants system flexibility, and to ensure regulatory environment which drives rapid innovation and competition

Shift to Half Hourly Settlement is fundamental – it enables parties to offer clear pricing signals

TOU tariffs are the mechanism that deliver price signals and drive change;

they incentivise demand side response

but also bring additional complexity

We are on the brink of transformative change

So, where does

aM&T figure?

Simple tariffs do not drive demand side

response

Night

Day

More transparency can empower consumers

Night

Day

DUoS Red

DUoS Amber

2 part tariff

With TOU, up to 30% of costs in red band

Night

Day

DUoS Red

DUoS Amber

2 part tariff

2 part tariff

with DUoS

Focus on red band unlocks other benefits,

including Triad

Hard to know which day of the week Triad will fall…

…but you can be confident the Triad will fall in the red band

0

5

10

15

20

25

30

Monday Tuesday Wednesday Thursday Friday

Number of

Triads

Day

0

10

20

30

40

50

60

70

12:00 14:00 16:00 18:00 20:00 22:00

Number of

Triads

Time

Manage the red band -

change behaviour or

suck it up.

Joel Stark, 2016

Ofgem is now driving change and prioritising the

transition to half hourly settlement

Energy profiling alone reveals only half the picture:

In order to surface the market’s price signals, we now

need to visualise half hourly costs including energy,

transmission and distribution

aM&T is the essential software tool for managing

energy and costs

Wrap up

Thank you

Joel Stark