Five years ago, the average UK household was spending £1,162 per year on energy (gas and electricity). With Ofgem’s latest announcement, that figure is set to rise to £1,849 from April 2024. This isn’t just inflation; it’s a 30% real-terms increase on what UK homes and businesses pay for energy.
By comparison, US energy prices have risen by just over 3% above inflation, while in France, it’s been less than 1%.
Why Are UK Energy Prices So High?
The usual culprit cited is wholesale gas prices, largely due to geopolitical instability. But while other countries have shielded their consumers, the UK has been uniquely exposed. Why? A decade of indecision on energy policy.
While government focus has been on slow-moving upgrades to generation, transmission, and distribution infrastructure, one key change is coming: Market-Wide Half-Hourly Settlement (MHHS). This £450 million market reform was meant to deliver benefits in 2024 but has now been pushed back to May 2027.
The idea behind MHHS is simple: By moving all electricity users to half-hourly billing, the system will reward those who shift their energy use to off-peak times. Estimated savings across the economy are £4 billion over 20 years. But what does this mean for you?
We have calculated that electricity consumers who don’t take action before May 2027 are likely to see a 5-15% rise in their energy bills just from higher charges related to inaction. Those who do not adjust their energy consumption patterns or invest in solutions like battery storage will bear the brunt of peak-time pricing, increasing their overall costs.
The Key Benefits of MHHS
For consumers, MHHS promises:
- More Accurate Billing – Pay for exactly what you use, no more estimates.
- Access to Time-of-Use Tariffs – Save money by shifting energy use to cheaper off-peak times.
- Better Energy Management – More data means smarter energy decisions.
- Support for Renewables – Use electricity when it’s greenest, reducing costs and carbon footprints.
- New Smart Energy Services – AI-driven energy optimization, smart EV charging, and virtual power plants.
For businesses, the opportunities (and risks) are bigger. Energy-intensive companies that can shift demand to low-cost periods will see significant savings, while others may struggle with cost volatility unless they invest in better energy management.
The Big Opportunity: Behind-the-Meter Battery Storage
While MHHS offers benefits, it also brings challenges. Time-of-use pricing means peak-hour energy will cost more.So, how do you take advantage of the shift?
The answer: Behind-the-Meter (BTM) battery storage.
How BTM Batteries Help Homes & Businesses
- Store Cheap Energy, Use It When Prices Spike
- Charge your battery when electricity is cheap (off-peak) and use it when it’s expensive.
- Example: A home with a smart tariff charges at night and powers the house in the evening, reducing bills.
- Maximise Solar Energy
- If you have solar panels, store excess power instead of selling it back at low rates. Use it when the sun isn’t shining.
- Example: A business with solar PV can run its operations after dark using stored energy.
- Cut Peak Demand Charges
- Businesses are charged more when they use a lot of power at once. Batteries smooth out spikes, reducing these costs.
- Sell Power Back to the Grid
- Participate in Demand Side Response (DSR) programs, earning money by supplying power when the grid needs it.
- Example: A home battery linked to a Virtual Power Plant (VPP) can discharge energy at peak times, creating revenue.
- Backup Power & Energy Security
- Protect your home or business from blackouts.
- Example: A shop can keep essential systems running during power cuts, avoiding disruption.
- Boost Sustainability & Carbon Reduction
- Use stored green energy instead of fossil fuel electricity during peak demand times.
- Businesses can improve ESG scores and reduce carbon footprints.
The AI Opportunity
Artificial Intelligence is transforming Behind-the-Meter storage. AI-powered systems can automatically optimize charging and discharging, ensuring you get the most from your battery while minimizing costs. With MHHS, AI-driven energy management will be essential in making the most of real-time pricing.
The Bottom Line
Market-wide half-hourly settlement is coming, and it will change the way we pay for electricity. The best way to benefit? Invest in behind-the-meter battery storage.
- For homes: It means lower bills, backup power, and better use of solar energy.
- For businesses: It means demand charge reductions, revenue from energy trading, and a more sustainable operation.
If any of this resonates with you, let’s talk. Drop me a note, and let’s explore how behind-the-meter batteries can help you get ahead of the coming changes.
#BatteryStorage #EnergySavings #MHHS #SmartEnergy #BusinessResilience