The UK electricity market, like many others, runs on 30-minute cycles. Every 30 minutes the amount of electricity put in and taken out by each player is calculated and a settlement process is run which invoices those who took out too much and pays those that put in more than they used.
The market mechanics are relatively simple. An hour before the 30-minute process each player tells the System Operator how much physical electricity they plan to put in and take out, this time is known as Gate Closure. Before the 30-minute period starts they also need to also say what contracts they have in place to cover their usage. A central company, Elexon, then does the sums and raises invoices and makes payments.
As part of a package of market reforms (REMA) the UK government (DESNZ) is considering increasing the frequency of the settlement periods from 30 minutes to 15 minutes, or possibly 5 minutes (as is done in Australia). This would bring finer and more real time control into the market and encourage users to more accurately match supply to demand.
But implementing this change is not simple.
It would mean changing almost every piece of software in use in the industry, including that in smart meters. DESNZ estimate this would cost £2bn and take 4 years, but they say this may be conservative.
Already underway is the MHHS programme which will enable new energy tariffs and services by ensuring that all electricity is settled in 30-minute periods, which is currently an opt-in process. This programme will have taken 5 years from start to finish. Implementation of shorter settlement periods will require redoing many of the changes this programme has made.
The future is a real time physical electricity system, with a market system that closely tracks it. If we are going to achieve this, we need to be able to design, sequencing and implement change in a shorter timeframe.
This requires a comprehensive view of processes and systems to ensure that we can confidently tinker with the wiring knowing that the system will still work. We don’t have this today.
