ECONOMIC DISPATCH

A power system has several power plants. Each power plant has several generating units. At any point
of time, the total load in the power system is met by the generating units in different power plants.
Economic dispatch is the method of determining the most efficient, low-cost and reliable operation
of a power system by dispatching the available electricity generation resources to supply the load on
the system. The primary objective of economic dispatch is to minimize the total cost of generation
while honouring the operational constraints of the available generation resources.

INPUT – OUTPUT CURVES OF A GENERATING UNIT

Power plants consisting of several generating units are constructed investing huge amount of money.
Fuel cost, staff salary, interest and depreciation charges and maintenance cost are some of the
components of operating cost. Fuel cost is the major portion of operating cost and it can be controlled.
Therefore, the fuel cost is considered alone for further consideration.

Fuel cost is the major portion of operating cost and it can be controlled. The most efficient generator
in the system does not guarantee minimum cost as it may be located in an area where fuel cost is high.
Also, if the plant is located far from the load centre, transmission losses may be considerably higher
and hence the plant may be uneconomical. Hence, the problem is to determine the generation of
different plants such that the total operating cost is minimum. The operating cost plays an important
role in the economic scheduling of plants.

The fuel input can be measured in Tonnes / hour or Btu / hour, and the output is measured in MW.
A simplified input-output curve of a thermal unit known as heat-rate curve is shown in Fig 1(a).

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 Figure 1: (a) Heat-rate curve (b) Fuel-cost curve

Converting the heat-rate curve from Btu to $/h results in the fuel-cost curve shown in Fig 1(b). In
all practical cases, the fuel cost of generator i can be represented as a quadratic function of real power
generation.

𝐶𝑖 = 𝛼𝑖 + 𝛽𝑖 𝑃𝑖 + 𝛾𝑖 𝑃𝑖 2
(1.1)

Here, 𝛼𝑖 , 𝛽𝑖 , 𝛾𝑖 are constants.

INCREMENTAL COST CURVE

𝑑𝐶
An important characteristic is obtained by plotting the derivative of the fuel-cost curve 𝑑𝑃𝑖 verses the
𝑖

real power 𝑃𝑖 . This is known as the incremental fuel-cost curve shown in Fig. 2.

𝑑𝐶𝑖
= 2𝛾𝑖 𝑃𝑖 + 𝛽𝑖
𝑑𝑃𝑖
(1.2)

The incremental fuel-cost curve is a measure of how costly it will be to produce the next increment
of power. The total operating cost includes the fuel cost, and the cost of labour, supplies and
maintenance. These costs are assumed to be a fixed percentage of the fuel cost and are generally
𝑑𝐶𝑖
included in the incremental fuel-cost curve. The dimension of is $ / MWh (can be Rs / MWh or
𝑑𝑃𝑖

KShs / MWh).

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Fig. 2: Typical incremental fuel-cost curve

ECONOMIC DISPATCH NEGLECTING LOSSES AND NO GENERATOR LIMITS

Since transmission losses are neglected, the total demand 𝑃𝐷 is the sum of all generation. The total
production cost is defined by equation (1.3).

𝑛𝑔

𝐶𝑡 = ∑ 𝐶𝑖
𝑖=1

𝐶𝑡 = ∑ 𝛼𝑖 + 𝛽𝑖 𝑃𝑖 + 𝛾𝑖 𝑃𝑖 2
𝑖=1

(1.3)

𝑛𝑔

∑ 𝑃𝑖 = 𝑃𝐷
𝑖=1

(1.4)
where 𝐶𝑡 is the total production cost, 𝐶𝑖 is the production cost of ith plant, 𝑃𝑖 is the generation of ith
plant, 𝑃𝐷 is the total load demand, and 𝑛𝑔 is the total number of dispatchable generating plant.

From equation (1.2), the condition for optimum dispatch is

𝑑𝐶𝑖
=𝜆 𝑖 = 1, 2, … . . , 𝑛𝑔
𝑑𝑃𝑖
(1.5)

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Equation (1.5) simply says that at the minimum cost operating point, the incremental cost for all the
generating units must be equal. This condition is commonly referred to as equal incremental cost
rule. From equation (1.5)

𝜆 = 2𝛾𝑖 𝑃𝑖 + 𝛽𝑖
(1.6)

𝜆 − 𝛽𝑖
𝑃𝑖 =
2𝛾𝑖
(1.7)

The relations given by (1.7) are known as the coordination equations. They are functions of 𝜆. An
analytical solution can be obtained for 𝜆 by substituting for 𝑃𝑖 in equation (1.4).

𝑛𝑔
𝜆 − 𝛽𝑖
∑ = 𝑃𝐷
2𝛾𝑖
𝑖=1

(1.8)

Or

𝑛𝑔 𝛽𝑖
𝑃𝐷 + ∑𝑖=1 2𝛾 𝑖
𝜆= 𝑛𝑔 1
∑𝑖=1
2𝛾𝑖
(1.9)

Methods of Solving Economic Dispatch

(i) analytical method

(ii) graphical method
(iii) iterative technique using the gradient method
(i) Analytical Method

The analytical method involves finding the optimal solution to the economic dispatch problem
through mathematical analysis, as in equation (1.9). It often employs optimization techniques and may
incorporate Lagrange multipliers for handling constraints.

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Advantages

• Provides a direct mathematical solution to the economic dispatch problem.

• Suitable for systems with relatively simple constraints and cost functions.

Limitations

• May become computationally challenging or impossible for complex systems.

• The analytical solution may not exist for every scenario.
(ii) Graphical Method

The graphical method involves plotting cost curves on a graph to visually identify the intersection
point that represents the optimal solution to the economic dispatch problem.

Advantages

• Provides an intuitive visual representation of the economic dispatch problem.

• Easy to understand and apply for systems with a small number of generating units.

Limitations

• May not be practical for systems with a large number of generators or complex constraints.
• Accuracy may be limited, and precision depends on the scale of the graph.
(iii) Iterative Technique Using the Gradient Method

Iterative techniques involve adjusting the generation levels iteratively to minimize the total generation
cost. The gradient method is one such iterative technique that uses the gradient (derivative) of the cost
function to guide the adjustments.

Advantages

• Flexibility in handling various constraints and cost functions.

• Can be applied to systems with a larger number of generators.

Limitations

• Convergence may be slow, and the method might get stuck in local minima.

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ECONOMIC DISPATCH NEGLECTING LOSSES AND GENERATOR LIMITS

Example 1

A power plant has three units with the following cost characteristics in Rs/h

𝐶1 = 5000 + 215𝑃1 + 0.5𝑃1 2

𝐶2 = 5000 + 270𝑃2 + 1.0𝑃2 2

𝐶3 = 9000 + 160𝑃3 + 0.7𝑃3 2

where 𝑃𝑖 𝑠 are the generating powers in MW. Find the economic scheduling for a total load of 320
MW by analytical method.

Solution

Knowing the cost characteristics, incremental cost characteristics are obtained as in equation (1.2)

𝑑𝐶1
= 215 + 1.0𝑃1
𝑑𝑃1

𝑑𝐶2
= 270 + 2.0𝑃2
𝑑𝑃2

𝑑𝐶3
= 160 + 1.4𝑃3
𝑑𝑃3

Using the equal incremental cost rule, equation (1.5)

215 + 1.0𝑃1 = 𝜆

270 + 2.0𝑃2 = 𝜆

160 + 1.4𝑃3 = 𝜆

From equation (1.4)

𝑃1 + 𝑃2 + 𝑃3 = 320

Referring to equation (1.4) and (1.7)

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𝜆 − 215 𝜆 − 270 𝜆 − 160
+ + = 320
1.0 2.0 1.4

𝜆 = 354.193 𝑅𝑠/𝑀𝑊ℎ

Substituting for λ in the coordination equation, given by equation (1.7), the optimal dispatch is

354.193 − 215
𝑃1 = = 139.193 𝑀𝑊
1.0

354.193 − 270
𝑃2 = = 42.0965 𝑀𝑊
2.0

354.193 − 160
𝑃3 = = 138.7093 𝑀𝑊
1.4

Example 2

The fuel cost functions for three thermal plants in $/h are given by

𝐶1 = 500 + 5.3𝑃1 + 0.004𝑃1 2

𝐶2 = 400 + 5.5𝑃2 + 0.006𝑃2 2

𝐶3 = 200 + 5.8𝑃3 + 0.009𝑃3 2

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 of generation in $/h by

a) Analytical method
b) Iterative technique using gradient method

Solution

a) From equation (1.9), 𝜆 is found to be

5.3 5.5 5.8

800 + + +
2(0.004) 2(0.006) 2(0.009)
𝜆=
1 1 1
+ +
2(0.004) 2(0.006) 2(0.009)

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 800 + 1443.0555
𝜆=
263.8889

𝜆 = 8.5 $/𝑀𝑊ℎ

Substituting for 𝜆 in the coordination equation, given by equation (1.7), the optimal dispatch is

8.5 − 5.3
𝑃1 = = 400
2(0.004)

8.5 − 5.5
𝑃2 = = 250
2(0.006)

8.5 − 5.8
𝑃3 = = 150
2(0.009)

The total fuel cost is

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

𝐶𝑇 = 6682.5 $/ℎ

Iterative Technique; Gradient Method

b) For numerical solution using the gradient method, assume the initial value of 𝜆(1) = 6.0. 𝜆(1) is
chosen such that the coordination equation (1.7) is positive From the coordination equations,
given by equation (1.7).

𝜆−𝛽𝑖
𝑃𝑖 = (1.7)
2𝛾𝑖

6.0 − 5.3
𝑃1 (1) = = 87.5000
2(0.004)

6.0 − 5.5
𝑃2 (1) = = 41.6667
2(0.006)

6.0 − 5.8
𝑃3 (1) = = 11.1111
2(0.009)

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∆𝑃(1) = 800 − (87.5 + 41.6667 + 11.1111) = 659.7222

(𝑘) ∆𝑃(𝑘)
∆𝜆 =
1
∑
2𝛾𝑖

659.7222 659.7222
∆𝜆(1) = = = 2.5
1 1 1 263.8888
+ +
2(0.004) 2(0.006) 2(0.009)

Therefore, the new value of λ is

𝜆(2) = 6.0 + 2.5 = 8.5

Continuing the process, for the second iteration

8.5 − 5.3
𝑃1 (2) = = 400.0000
2(0.004)

8.5 − 5.5
𝑃2 (2) = = 250.0000
2(0.006)

8.5 − 5.8
𝑃3 (2) = = 150.0000
2(0.009)

∆𝑃(2) = 800 − (400 + 250 + 150) = 0.0

Since ∆𝑃(2) = 0, the equality constraint is met in two iterations. Therefore the optimal dispatch is

𝑃1 = 400 𝑀𝑊

𝑃2 = 250 𝑀𝑊

𝑃3 = 150 𝑀𝑊

𝜆 = 8.5 $/𝑀𝑊ℎ

The total fuel cost is

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

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𝐶𝑇 = 6682.5 $/ℎ

ECONOMIC DISPATCH INCLUDING GENERATOR LIMITS

The power output of any generator should not exceed its rating nor should it be below that necessary
for stable operation. Thus, the generations are restricted to lie within given minimum and maximum
limits.

𝑃𝑖(𝑚𝑖𝑛) ≤ 𝑃𝑖 ≤ 𝑃𝑖(𝑚𝑎𝑥)

Where 𝑃𝑖(𝑚𝑖𝑛) and 𝑃𝑖(𝑚𝑎𝑥) are the minimum and maximum generating limits respectively.

Example 3

A power plant has three units with the following cost characteristics

𝐶1 = 5000 + 215𝑃1 + 0.5𝑃1 2

𝐶2 = 5000 + 270𝑃2 + 1.0𝑃2 2

𝐶3 = 9000 + 160𝑃3 + 0.7𝑃3 2

where 𝑃𝑖 𝑠 are the generating powers in MW. The maximum and minimum loads allowable on each
unit are 150 MW and 39 MW respectively. Find the economic scheduling for a total load of 200 MW.

Solution

Knowing the cost characteristics, incremental cost characteristics are obtained as in equation (1.2)

𝑑𝐶1
= 215 + 1.0𝑃1
𝑑𝑃1

𝑑𝐶2
= 270 + 2.0𝑃2
𝑑𝑃2

𝑑𝐶3
= 160 + 1.4𝑃3
𝑑𝑃3

Using the equal incremental cost rule, equation (1.5)

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215 + 1.0𝑃1 = 𝜆

270 + 2.0𝑃2 = 𝜆

160 + 1.4𝑃3 = 𝜆

From equation (1.4)

𝑃1 + 𝑃2 + 𝑃3 = 200

Referring to equation (1.4) and (1.7)

𝜆 − 215 𝜆 − 270 𝜆 − 160

+ + = 200
1.0 2.0 1.4

𝜆 = 300 𝑅𝑠/𝑀𝑊ℎ

Substituting for λ in the coordination equation, given by equation (1.7), the optimal dispatch is

300 − 215
𝑃1 = = 85 𝑀𝑊
1.0

300 − 270
𝑃2 = = 15 𝑀𝑊
2.0

300 − 160
𝑃3 = = 100 𝑀𝑊
1.4

It is noted that 𝑃2 < 𝑃𝑚𝑖𝑛 , therefore P2 is set at the minimum value of 39 MW.

Then

𝑃1 + 𝑃3 = 200 − 39 = 161 𝑀𝑊

This power has to be scheduled between units 1 and 3. Therefore

𝜆 − 215 𝜆 − 160
+ = 161
1.0 1.4

𝜆 = 286 𝑅𝑠/𝑀𝑊ℎ

Substituting for λ in the coordination equation, given by equation (1.7), the optimal dispatch is

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 286 − 215
𝑃1 = = 71 𝑀𝑊
1.0

286−160
𝑃3 = = 90 𝑀𝑊
1.4

P1 and P3 are now within the limits. Therefore, economic scheduling is

𝑃1 = 71 MW, 𝑃2 = 39 MW, 𝑃3 = 90 MW

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