Economic Dispatch of

Generation
By
Prof. E. Matlotse
 Economic Dispatch of Generation
• In reality, power plants are not located at the
same place as the load centres and their fuel
costs are different
• Usually, under normal operating conditions,
the generation capacity is more than total
demand and losses
• In this sense, there are many options for
scheduling generation
 Economic Dispatch of Generation

• In an interconnected power system, the main

issue is to find the real and reactive power
scheduling for each power plant in such a way
as to minimise the operating cost

• This is referred to as optimal power flow (OPF)

problem
Operating Cost of a Thermal Plant
• Factors influencing power generation at
minimum cost are operating efficiencies of
generation, fuel cost and transmission losses.
• Most efficient generator in the system does not
guarantee minimum cost as it may be located in
an area where fuel cost is high.
• Additionally, if the plant is located far from load
centres, transmission losses may be significantly
higher and, therefore, the plants may be overly
uneconomical.
Operating Cost of a Thermal Plant
• In this light, the problem is to determine the
different generation of different sets such that
the total operating cost is minimum.
• The input to the thermal plant is generally
measured in Btu/h and the output is
measured in MW.
• A simplified input-output curve of a thermal
unit known as heat-rate curve is shown in the
figure on the next slide
Operating Cost of a Thermal Plant

Figure 1: Heat-Rate Curve

Operating Cost of a Thermal Plant
• Converting the ordinates of heat-rate curve
from Btu/h to $/h results in the fuel-cost curve
as shown in the figure below

Figure 2: Fuel-Cost Curve

Operating Cost of a Thermal Plant
• In all practical cases, the fuel cost of
generation i can be represented as a quadratic
function of real power generation
Ci   i  i Pi   i Pi 2 (1)
• An important observation is achieved by
plotting the derivative of the fuel-cost curve
versus the real power.
Operating Cost of a Thermal Plant
• This relationship is known as incremental fuel-
cost curve shown below

Figure 3: Typical Incremental Fuel-Cost Curve

Operating Cost of a Thermal Plant
dCi
 2 i Pi  i (2)
dPi
• Incremental fuel-cost is a measure of how
costly it will be to produce the next increment
of power

• Total operating cost includes the fuel cost,

labour cost, cost of supply and that of
maintenance.
Operating Cost of a Thermal Plant

• Latter cost are assumed to

be a fixed percentage of
fuel cost and, usually, are
included in the incremental
fuel-cost curve.
Economic Dispatch Neglecting Losses
and No Generator Limits
• Simplest economic dispatch problem is
the case when transmission losses are
neglected.

• In essence, model assumes that the

system is only one bus with all
generation and loads connected to it as
shown in the figure on the next slide.
Economic Dispatch Neglecting Losses
and No Generator Limits

Figure 4:Plants Connected to a Common Bus

Economic Dispatch Neglecting Losses
and No Generator Limits
• Since transmission losses are neglected, total
demand PD is the sum of all generation .
• Cost function Ci is assumed to be known for
each plant
• The problem is to find real power generation
for each plant such that the objective function
(i.e. total production cost) is as defined by the
following equation
Economic Dispatch Neglecting Losses
and No Generator Limits
Ng
Ct   i
i 1
Ng
(3)
   i   i Pi   i Pi 2
i 1

Eqn (3) is minimised, subject to the constraint

Ng
P  Pi D (4)
i 1
where Ct is total production cost, Ci is cost of
the ith plant, Pi is the generation of the ith
plant, PD is the total load demand and Ng is
the total no. of dispatchable generation plants
Economic Dispatch Neglecting Losses
and No Generator Limits
• A typical approach is to augument the
constraints into objective function by using
Lagrange multipliers
 Ng 
L  Ct    PD   Pi 
 (5)
 i 1 
where: L is the Lagrange multiplier and  is a
vector of undetermined quantities
Economic Dispatch Neglecting Losses
and No Generator Limits
• Minimum of this unconstrained function is
determined at the point of where the partials
of the function to its variables are zeros.
L
0 (6)
Pi
L

0 (7)
1st condition, provided by (6), yields
Ct
  (0  1)  0
Pi
Economic Dispatch Neglecting Losses
and No Generator Limits
Since
Ct  C1  C2  ......  CNg
then Ct dCi
 
Pi dPi

and, therefore, the condition for optimum

dispatch is
dCi
  i  1,......, Ng (7)
dPi

or
Economic Dispatch Neglecting Losses
and No Generator Limits
i  2 i Pi   (8)
2nd condition provided by (7), yields
Ng
 Pi  PD (9)
i 1
Solving (8) for Pi , yields
  i
Pi  (10)
2 i
Substituting for Pi from (10) into (9)
Ng
  i (11)
 2  PD
i 1 i
Economic Dispatch Neglecting Losses
and No Generator Limits
or
i
PD  i 1
Ng

2 i
 (12)
1
i1 2
Ng

Using gradient method

f ( )  PD (13)
Economic Dispatch Neglecting Losses
and No Generator Limits
Expanding the left-hand side of (13) in Taylor’s
series about an operating point (k ) and
neglecting the higher-order terms yields

(k )
 df ( )  (14)
f ( ) ( k )      PD
(k )

 d 
or
P ( k )
 (k )

 df ( ) 
(k )
 
 d  

P ( k )
 (k )
(15)
 dPi 
 
 d 
Economic Dispatch Neglecting Losses
and No Generator Limits
or
 (k )

P ( k ) (16)
1
 2
i

and, therefore
( k 1)  ( k )  ( k ) (17)
Ng
where: P (k )
 PD   Pi ( k ) (18)
i 1

Process is carried-out until P (k ) is less than a

specified accuracy
 Example
The fuel-cost functions for three thermal
plants in $/h are given by
C1  500  5.3P1  0.004P12
C2  400  5.5P2  0.006P22
C3  200  5.8P3  0.009P32
where P1, P2 and P3 are in MW. The total load, PD
is 800 MW. Neglecting line losses and
generator limits, find the optimal dispatch and
the total cost in $/h.
 Solution
i
PD  i 1
ng

2 i

1
i1 2
ng

5.3 5.5 5.8

800   
2(0.004) 2(0.006) 2(0.009)

1 1 1
 
2(0.004) 2(0.006) 2(0.009)

 8.5 $ / MWh
 Solution
  1 8.5  5.3
P1    400 MW
2 1 2(0.004)

   2 8.5  5.5
P2    250 MW
2 2 2(0.006)
   3 8.5  5.8
P3    150 MW
2 3 2(0.009)

Ct  500  5.3(400)  0.004(400) 2  400  5.5(250)  0.006(250) 2

 200  5.8(150)  0.009(150) 2  6682.50 $ / h
Economic Dispatch Neglecting Losses
and Including Generator Limits
• Power output of any generator should not exceed
its rating nor should it be below that required for
stable boiler operation.
• Therefore, generators are supposed to be
operated within given minimum and maximum
limits.
• The issue is to find the real power generation for
each plant such that the objective function (total
production cost) is minimum subject to the given
equality and inequality constraints.
Economic Dispatch Neglecting Losses
and Including Generator Limits
Pi (min)  Pi  Pi (max) (1)
where Pi (min) and Pi (max) are minimum and
maximum generating limits respectively for
plant i.
• The Kuhn-Tucker conditions complement the
Lagrangian conditions to include the
inequality constraints as additional terms.
• The conditions for the optimal dispatch with
losses neglected becomes
Economic Dispatch Neglecting Losses
and Including Generator Limits
dCi
 for Pi (min)  Pi  Pi (max) (2)
dPi
dCi
 for Pi  Pi (max) (3)
dPi
dCi
 for Pi  Pi (min) (4)
dPi
• Iteration is continued until  Pi  PD.
• As soon as any plant reaches a max or min, the
plant becomes pegged at that limit.
• That is, plant output becomes a constant and
only the unviolated plants must operate at equal
incremental cost.