Implicit vs Explicit Flexibility

Every grid-connected asset can create value in two main ways. Starting July 2026, this difference will guide how asset managers, energy retailers, and fleet operators design their services. The first way is quiet: use the grid at the best times to lower operating costs. The second is loud: group assets together and sell their ability to respond to the grid as ancillary services. These are known as implicit and explicit flexibility. Most portfolios only use one, but the best results come from combining both.

The quiet route: better timing, lower costs

Implicit flexibility is about adjusting each asset based on price signals. Move charging and energy use to cheaper hours with dynamic tariffs. Reduce peak usage that increases capacity charges for your customers. Store extra solar energy in a battery instead of selling it at a low price and then buying expensive power later. You don’t need market approval for this, and the savings appear directly in your operating costs.

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This approach is becoming more valuable. With quarter-hourly dynamic pricing, wholesale price changes now affect end users directly. On days with lots of price swings, the difference between the cheapest and most expensive times can be large. Even shifting a small part of your portfolio’s energy use to cheaper hours can capture these savings every day, without market risk. For retailers or OEMs with many connected devices, small savings on each asset add up to a real advantage.

The loud route: ancillary services and market participation

Explicit flexibility means turning your ability to respond to the grid into something you can sell. Transmission operators buy reserves like FCR, aFRR, and mFRR to keep the grid stable. Distribution operators are also starting to buy local flexibility to manage congestion. Capacity mechanisms pay for being available when needed. Wholesale and intraday markets reward those who can shift energy use when prices change.

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Getting started with explicit flexibility is harder. There are rules about minimum bid sizes, how fast you must respond, how you measure performance, and penalties if you don’t deliver. One heat pump, charger, or battery on its own usually doesn’t qualify. But when you combine many assets into a virtual power plant, they can meet these requirements and join the market. This unlocks new revenue that implicit optimisation alone can’t reach: payments for the value your portfolio brings to the whole system, on top of the savings each asset already provides.

Why stacking beats choosing

These two approaches work well together because they are most valuable at different times. In many European markets, prices for ancillary services have dropped as more batteries compete, so relying on just one market is risky. A portfolio that focuses on cost savings by default, sells reserves when prices are good, and trades during volatile weather can get value from every situation and help assets pay for themselves faster.

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It’s easy to talk about stacking, but actually doing it is challenging. When you commit capacity to a reserve market, you can’t use it for tariff optimisation at the same time. Selling the same response twice breaks the rules. Every decision must also consider what each asset needs: vehicles must be ready to go, buildings must stay comfortable, and batteries must stay within their limits.

FLEXO solves this co-optimisation problem by connecting different assets, forecasting when they’ll be available, and choosing the best business case, so every asset delivers the best return.

Where to start

Begin with the quiet approach, then move to the loud one. Implicit optimisation doesn’t need market approval and usually pays for the investment in connectivity and control by itself. Once your assets are connected and you can forecast their use, adding ancillary services is a small next step. Companies that follow this order build up flexibility revenue in stages, with each layer supporting the next.​

FAQ

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What's the difference between implicit and explicit flexibility?

Implicit flexibility is when you adjust your energy use based on price signals, which leads to a lower bill—cheaper charging hours, smaller peaks, and better use of your own solar power. Explicit flexibility is when you sell your ability to respond to the grid, through products like FCR, aFRR, mFRR, congestion services, or capacity mechanisms.

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What is revenue stacking in flexibility?

Combining both approaches in one portfolio means using bill optimisation as your main strategy, selling reserves when prices are right, and trading during volatile weather. Stacking is better than relying on a single market because each approach is most valuable at different times. However, you need an optimiser that ensures you never sell the same capacity twice.

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Where should a portfolio start?

Start with the quiet approach. Implicit optimisation doesn’t need market approval and usually pays for the cost of connecting and controlling your assets. Once your assets are connected and you can forecast their use, joining explicit markets is a small next step.

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