ECONOMIC OPERATION OF

POWER SYSTEMS
OBJECTIVE: To supply power to power to our
customers at minimum fuel cost
PROBLEM STATEMENT: Given a power system
with m generating units and a total demand of PTD
, how much power should each unit generate so
that the total demand is supplied at minimum
fuel cost.

Mathematical Formulation
Minimize

CT =

i=1,2..,m

Ci(PGi)

Such that:

PGi = PTD +PLoss

(Power Balance)

i=1,2,,m

PGi max PGi PGi min

i=1,2,3,,m

Power flow constraints

Where:
(in $/HR)

Ci(PGi)

is the cost curve for the generator i

Question

How do we solve the optimization

problem?

Optimization

Without any constraints

With equality constraints

With inequality constraints

1) Economic Dispatch without transmission

losses and generator limits
Minimize

CT =

i=1,2..,m

Ci(PGi)

Such that:

PGi = PTD +PLoss

(Power Balance)

i=1,2,,m

PGi max PGi PGi min

i=1,2,3,,m

Power flow constraints

Where:

Ci(PGi)

is the cost curve for the generator i

Rule: Operate all generators at the

same incremental cost value.

= ICi

for i=1,2,3,.,m

2) Economic Dispatch without transmission

losses but including generator limits
Minimize

CT =

i=1,2..,m

Ci(PGi)

Such that:

PGi = PTD +PLoss

(Power Balance)

i=1,2,,m

PGi max PGi PGi min

i=1,2,3,,m

Power flow constraints

Where:

Ci(PGi)

is the cost curve for the generator i

Rule: Operate all generators that are

NOT at their limits at the same
incremental cost value.

= ICi

for those units that are NOT

at their limits

3) Economic Dispatch including transmission

losses and generator limits
Minimize

CT =

i=1,2..,m

Ci(PGi)

Such that:

PGi = PTD +PLoss

(Power Balance)

i=1,2,,m

PGi max PGi PGi min

i=1,2,3,,m

Power flow constraints

Where:

Ci(PGi)

is the cost curve for the generator i

Rule : Operate all generators that

are NOT at their limits at the same
system lambda.

= Li * ICi

for those units that are

NOT at their limits

Where: Li is the penalty factor for generator i