# Nodal pricing exercise

For the above system:
(a) Determine the economic dispatch assuming there are no transmission
constraints
(b) Determine the system marginal price
(c) Determine the constrained economic dispatch based on the given line
parameters and capacities
(e) Correct the overloads by re-dispatching generation in the most economic
fashion
(f) Compute the nodal prices for the constrained system
(g) Compute the congestion cost
(h) Finally, for case (c) write the equations for the objective function and the
constraints that you would need to solve using optimisation techniques to find
the dispatch and nodal prices
(i) Solve the problem in (h) using an optimisation routine (in MATLAB, EXCEL
etc) and compare your results with what you found in (c) and (f)
Nodal pricing exercise
Solution
(a) Determine the economic dispatch assuming there are no transmission constraints
Since the marginal costs are constant, the generators are dispatched starting with
the least marginal cost until the load is met.
Generator Node Cost
(\$/MWh)
Capacity
(MW)
Dispatch
(MW)
Demand
(MW)
GA 1 8 140 140 50
GB 1 10 285 270
GC 2 20 90 0 60
GD 3 15 85 0 300
Total 410MW 410MW
(b) Determine the system marginal price
The system marginal price is \$10/MWh (From the most expensive partially
(c) Determine the constrained economic dispatch based on the given line parameters
and capacities
The line flows are determined from Kirchhoff’s voltage (KVL) and nodal balance
(KCL) equations
Figure 1
KCL equations
Node 1: GA + GB – F1 – F3 – 50 = 0 (1)
Node 1: GC + F2 – F1 – 60 = 0 (2)
Node 1: GD + F3 + F2 – 300 = 0 (3)
One loop hence one KLV equation
KVL: 0.2*F1 + 0.1*F2 – 0.2*F3 = 0 (4)
Substituting for known variables, we have;
Nodal pricing exercise
Node 1: 360 – F1 – F3 = 0 (5)
Node 1: F2 – F1 – 60 = 0 (6)
Node 1: F3 + F2 – 300 = 0 (7)
From (5), F1 = 360 – F3 (8)
From (4) F1 = – (0.1*F2 – 0.2*F3)/0.2 = – 0.5F2 + F3 (9)
Equating (8) and (9); 360 – F3 = – 0.5F2 + F3 (10)
From (10), 2F3 – 0.5F2 = 360 (11)
Multiply (7) by –2
– 2*(F3 + F2) = –2*(300) – 2F3 – 2F2 = –600 (12)
Add (12) and (11) to give
– 2.5F2 = – 240; giving
F2=240/2.5 = 96MW
Therefore F3 and F1 can be computed from (7) and (5) respectively
F3=300-F2=300-96=204MW
F1=360-F3= 360-204=156MW
From line capacities line 1-2 is overloaded since it is rated at 120MW and the
flow is 156MW
(e) Correct the overloads by re-dispatching generation in the most economic fashion
The overload in line 1-2 can be corrected by re-dispatching either GD or GC.
Check each one in turn and compare the costs to choose the most economic
solution.
Case 1 – Use GD to reduce flow in line 1-2 by 36MW to 120MW the rated line
capacity.
Figure 2
For the above scenario we will have
Y = F3 + F2
Nodal pricing exercise
, )
, )
MW Y
Y F F
90 5 18
2 . 0
5 . 0
36
36
2 . 0 1 . 0 2 . 0
2 . 0
2 1
= - = - =
=
+ +
- = =
Cost of re-dispatch = 90*15= 135
Case 2 – Use GC to reduce flow in line 1-2 by 36MW to 120MW the rated line
capacity:
Figure 3
, )
, )
MW X
X F
60 5 12
3 . 0
5 . 0
36
36
2 . 0 1 . 0 2 . 0
1 . 0 2 . 0
1
= - = - =
=
+ +
+
- =
Table 1
Marginal
Cost
£/MWh
Unconstrained
Economic
dispatch
Case 1
constrained
dispatch
Case 2
constrained
dispatch
GA 8 140 140 140
GB 10 270 180 210
GC 20 0 0 60
GD 15 0 90 0
Total(MW) 410 410 410
Cost (\$) 3,820 4,270 4,420
Cost of
constraints
(\$) 0 450 600
The most economic way to eliminate the constraint online 1-2 would be to use
case 1. However GD capacity is limited to 85MW hence some use would have to
Hence with GD output equal to 85 the line 1-2 will still be overloaded by:
MW 2 34 36
5 . 0
2 . 0
85 36 = ÷ = - ÷
Hence we need to dispatch generator GC by:
Nodal pricing exercise
, )
, )
MW X
X F
33 . 3
3 . 0
5 . 0
2
2
2 . 0 1 . 0 2 . 0
1 . 0 2 . 0
1
= - =
=
+ +
+
- =
dispatch would be
Hence final dispatch will be as shown in Table 2 below
Table 2
Marginal
Cost
£/MWh
(A)
Unconstrained
Economic
dispatch
(B)
Case 1
constrained
dispatch
GA 8 140 140
GB 10 270 181.67
GC 20 0 3.33
GD 15 0 85
Total(MW) 410 410
Cost (\$) 3,820 4,278
Cost of
constraints
(\$) = (B)-
(A) 0 458
(f) Compute the nodal prices for the constrained system
Due to line 1-2 being congested, the nodal prices will be different at each node.
Node 1:
The nodal price at node 1 is equal to 10\$/MWh because generator GB is not fully
loaded and hence the next MW at this node will be supplied by GB
Node 2:
The generator GC at node 2 is also not fully loaded and hence the next MW
demand at this node will be supplied from this node. Therefore the nodal price at
this node is 20\$/MWh
Node 3:
Since the generator at node 3 is fully loaded, the next MW demand at this node
must be supplied from node 1 and node 2. Hence the nodal price is found as a
linear combination of the nodal prices at nodes 1 and 2.
Nodal pricing exercise
Figure 4
Figure 5
From Figure 4 and Figure 5, compute nodal prices as follows:
0 2 . 0 4 . 0
1
12 2 1
2 1
= A = A ÷ A
= A + A
F P P
MW P P
2
2
1
2 1
5 . 0
4 . 0
2 . 0
2 . 0 4 . 0
P
P
P
P P
A =
A
= A
A = A
MW P
MW P
P
P P P
3
1
3
2
5 . 1
1
1 ) 5 . 0 1 (
5 . 0 1 1
1
2
2
2 1 2
= A
= = A
= + A
A ÷ = A ÷ = A
Therefore; the nodal price for node 3 is:
MWh MC
MC P MC P MC
/ \$ 67 . 16
3
50
20
3
2
10
3
1
3
2 2 1 1 3
= = - + - =
A + A =
(g) Compute the congestion cost
Congestion is given from final dispatch table 2 as \$458
(h) Finally, for case (c) write the equations for the objective function and the
constraints that you would need to solve using optimisation techniques to find the
dispatch and nodal prices
Nodal pricing exercise
Figure 6
(a) Objective function
i
Ng
i
T
i
G C Min
¿
=1
= GD GC GB GA Min 15 20 10 8 : + + +
where Ng is the number of generators
Subject to the following constraints:
(b) KCL equations
0 300 3 2
0 60 2 1
0 50 3 1
= ÷ + +
= ÷ ÷ +
= ÷ ÷ ÷ +
F F GD
F F GC
F F GB GA
(c) KVL equation
0 3 2 . 0 2 1 . 0 1 2 . 0 = ÷ + F F F
(d) Generator limits
85 0
90 0
285 0
140 0
s s
s s
s s
s s
GD
GC
GB
GA
(e) Line flow limits
250 3 250
130 2 130
120 1 120
s s ÷
s s ÷
s s ÷
F
F
F
(i) Solve the problem in (h) using an optimisation routine (in MATLAB, EXCEL etc)
and compare your results with what you found in (c) and (f)
Nodal pricing exercise
Result from Excel
Microsoft Excel 11.0 Sensitivity Report
Worksheet: [Solver.xls]Sheet2
Report Created: 31/12/2011 02:09:20
Final Reduced
\$F\$3 GA solution 140 -2
\$F\$4 GB solution 181.6666667 0
\$F\$5 GC solution 3.333333333 0
\$F\$6 GD solution 85 -1.666666667
\$F\$9 F1 solution 120 -16.66666667
\$F\$10 F2 solution 63.33333333 0
\$F\$11 F3 solution 151.6666667 0
Constraints
Final Lagrange
Cell Name Value Multiplier
\$C\$14 KCL1 min -5.68434E-14 10
\$C\$15 KCL2 min 0 20  Nodal Prices
\$C\$16 KCL3 min 0 16.66666667
\$C\$17 KVL min 0 33.33333284

Nodal pricing exercise Solution (a) Determine the economic dispatch assuming there are no transmission constraints Since the marginal costs are constant. the generators are dispatched starting with the least marginal cost until the load is met.1*F2 – 0.2*F3 = 0 Substituting for known variables. (4) (1) (2) (3) . Generator GA GB GC GD Total Node 1 1 2 3 Cost Capacity (\$/MWh) (MW) 8 140 10 285 20 90 15 85 Dispatch (MW) 140 270 0 0 410MW Demand (MW) 50 60 300 410MW (b) Determine the system marginal price The system marginal price is \$10/MWh (From the most expensive partially loaded generator) (c) Determine the constrained economic dispatch based on the given line parameters and capacities The line flows are determined from Kirchhoff’s voltage (KVL) and nodal balance (KCL) equations Figure 1 KCL equations Node 1: GA + GB – F1 – F3 – 50 = 0 Node 1: GC + F2 – F1 – 60 = 0 Node 1: GD + F3 + F2 – 300 = 0 One loop hence one KLV equation KVL: 0.2*F1 + 0. we have.

Nodal pricing exercise Node 1: Node 1: Node 1: 360 – F1 – F3 = 0 F2 – F1 – 60 = 0 F3 + F2 – 300 = 0 (5) (6) (7) (8) (9) (10) (11) (12) From (5).5 = 96MW Therefore F3 and F1 can be computed from (7) and (5) respectively F3=300-F2=300-96=204MW F1=360-F3= 360-204=156MW (d) Identify overloaded lines From line capacities line 1-2 is overloaded since it is rated at 120MW and the flow is 156MW (e) Correct the overloads by re-dispatching generation in the most economic fashion The overload in line 1-2 can be corrected by re-dispatching either GD or GC. 360 – F3 = – 0. Figure 2 For the above scenario we will have Y = F3 + F2 . F1 = 360 – F3 From (4) F1 = – (0. giving F2=240/2. 2F3 – 0.5F2 + F3 Equating (8) and (9).2 = – 0.5F2 = 360 Multiply (7) by –2 – 2*(F3 + F2) = –2*(300)  – 2F3 – 2F2 = –600 Add (12) and (11) to give – 2. Case 1 – Use GD to reduce flow in line 1-2 by 36MW to 120MW the rated line capacity. Check each one in turn and compare the costs to choose the most economic solution.2*F3)/0.1*F2 – 0.5F2 + F3 From (10).5F2 = – 240.

2  36 0 .2 0.1  0.1  0. Hence with GD output equal to 85 the line 1-2 will still be overloaded by: 0 .420 0 450 600 The most economic way to eliminate the constraint online 1-2 would be to use case 1.270 4.5  12  5  60 MW 0.5 Hence we need to dispatch generator GC by: .Nodal pricing exercise F1  F 2  Y   Y  36  0.820 4.2  0.2  0.5  18  5  90 MW 0 .2 Cost of re-dispatch = 90*15= 135 Case 2 – Use GC to reduce flow in line 1-2 by 36MW to 120MW the rated line capacity: Figure 3 F1  X  0.2 0.1  36  X  36  Table 1 0.3 GA GB GC GD Total(MW) Cost (\$) Cost of constraints (\$) Marginal Unconstrained Case 1 Case 2 Cost Economic constrained constrained £/MWh dispatch dispatch dispatch 8 140 140 140 10 270 180 210 20 0 0 60 15 0 90 0 410 410 410 3.2 36  85   36  34  2 MW 0 . However GD capacity is limited to 85MW hence some use would have to be made of generator GC.2  0.

67 20 0 3.3 Hence final dispatch will be as shown in Table 2 below Table 2 (A) (B) Marginal Unconstrained Case 1 Cost Economic constrained £/MWh dispatch dispatch 8 140 140 10 270 181.2 0.Nodal pricing exercise F1  X  dispatch would be 0.1  0. the next MW demand at this node must be supplied from node 1 and node 2. . the nodal prices will be different at each node. Therefore the nodal price at this node is 20\$/MWh Node 3: Since the generator at node 3 is fully loaded.2  0.5  X  2  3.820 4.33MW 0.1 2 GA GB GC GD Total(MW) Cost (\$) Cost of constraints (\$) = (B)(A) 0 458 (f) Compute the nodal prices for the constrained system Due to line 1-2 being congested.278 0. Node 1: The nodal price at node 1 is equal to 10\$/MWh because generator GB is not fully loaded and hence the next MW at this node will be supplied by GB Node 2: The generator GC at node 2 is also not fully loaded and hence the next MW demand at this node will be supplied from this node.33 15 0 85 410 410 3.2  0. Hence the nodal price is found as a linear combination of the nodal prices at nodes 1 and 2.

5P2 0 .2P2  F12  0 0.4P1  0.Nodal pricing exercise Figure 4 Figure 5 From Figure 4 and Figure 5. the nodal price for node 3 is: MC3  P1 MC1  P2 MC2 MC3  1 2 50  10   20   16.2P2  0. for case (c) write the equations for the objective function and the constraints that you would need to solve using optimisation techniques to find the dispatch and nodal prices .2P2 P1  0.67\$ / MWh 3 3 3 (g) Compute the congestion cost Congestion is given from final dispatch table 2 as \$458 (h) Finally.5 3 1  P1  MW 3 P2  Therefore. compute nodal prices as follows: P1  P2  1MW 0.4P1  0.5)  1 1 2  MW 1 .4 P2  1  P1  1  0.5P2 P2 (1  0.

EXCEL etc) and compare your results with what you found in (c) and (f) .2 F 3  0 (d) Generator limits 0  GA  140 0  GB  285 0  GC  90 0  GD  85 (e) Line flow limits  120  F1  120  130  F 2  130  250  F 3  250 (i) Solve the problem in (h) using an optimisation routine (in MATLAB.2 F1  0.1F 2  0.Nodal pricing exercise Figure 6 (a) Objective function Min C i 1 Ng T i Gi = Min : 8GA  10GB  20GC  15GD where Ng is the number of generators Subject to the following constraints: (b) KCL equations GA  GB  F1  F 3  50  0 GC  F1  F 2  60  0 GD  F 2  F 3  300  0 (c) KVL equation 0.

333333333 85 120 63.0 Sensitivity Report Worksheet: [Solver.68434E-14 0 0 0 Lagrange Multiplier Name GA solution GB solution GC solution GD solution F1 solution F2 solution F3 solution Final Value 140 181.6666667 3.xls]Sheet2 Report Created: 31/12/2011 02:09:20 Adjustable Cells Cell \$F\$3 \$F\$4 \$F\$5 \$F\$6 \$F\$9 \$F\$10 \$F\$11 Constraints Cell \$C\$14 \$C\$15 \$C\$16 \$C\$17 Name KCL1 min KCL2 min KCL3 min KVL min Final Value -5.66666667 0 0 10 20 16.6666667 Reduced Gradient -2 0 0 -1.66666667 33.Nodal pricing exercise Result from Excel Microsoft Excel 11.33333333 151.33333284  Nodal Prices .666666667 -16.