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Economic Operation

Economic Load Dispatch

There are many factors involved in the successful operation of a power system.
Next to security, economy is the most important.

Economic load dispatch concerns with the optimum load scheduling of the
different generating plants in the system and it involves 2 different problems.
1. Economic Dispatch an on-line problem to optimally distribute the load
1

among the generating units to minimise the total cost of supply while the total
demand and the losses at any instant is met by the total generation.
2. Unit Commitment a predispatch problem to select optimally out of the
available generating units to meet the expected load and provide a specified
margin of operating reserve over a specified period of time.

Economic Load Dispatch only deals with the problem of minimum cost of power
production. Other economic operation aspects such as minimum-loss delivery
of the generated power to the loads are beyond the scope of this topic.

Economic Dispatch

The sole focus of economic dispatch is the minimisation of the thermal fuel costs,
even though there are other factors such as labour, supplies and maintenance in
dealing with the total costs of producing electrical energy.
There are 2 important cases of optimal economic dispatch to be analysed.
1. Economic Dispatch Neglecting Losses
2

(a) Generators in a given station there is no transmission losses within the

power station.
(b) Urban systems small power systems with short transmission lines where
the line losses are negligible.
2. Economic Dispatch Including Transmission Losses large electric power
systems have many widely separated generating units which are interconnected
by long transmission line, it is necessary to consider the associated losses in
determining system optimal economic dispatch.

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2.1 Generator Operating Cost

The operating cost of a thermal plant is mainly the cost of the fuel. The fuel is often
coal, oil, gas or nuclear. Other costs such as costs of maintenance, labour and
supplies contribute only to a small extent and are assumed to vary as a fixed
percentage of the fuel cost.
3

The fuel cost is meaningful in case of thermal stations, but for hydro stations where
the energy storage is apparently free, the operating fuel cost as such is not
meaningful. This is the reason why only thermal plants are considered in the
following sections.

2.2 Fuel-Cost Characteristics and Incremental Fuel Cost

The cost-output curves of generating units of a thermal plant are important to
describe the efficiency of the plant. A typical cost-output curve is shown below.

In practice, the operating cost

Ci is constructed of

piecewise non-linear functions valid for ranges of output

Pi based on empirical data. By fitting a suitable degree

polynomial, an analytical expression for operating cost
can be written as

Ci (Pi ). It generally suffices to fit a

$/h

Unit operating cost, Ci

Piecewise
Non-linear
Characteristics
dCi
dPi

second degree polynomial, i.e.

B1 and B2 are constants depending upon

a particular plant and Pi,min Pi Pi,max .

i
The slope of the cost curve, i.e. dC
dPi , is called the
incremental fuel cost (ICi ). If the cost is approximated

as a quadratic as in the above, then ICi is linear.

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ICi = 2B2 Pi + B1 $/MWh

Pi,max

MW

Unit output, Pi

+ B1 Pi + B0 $/h

where B0 ,

Pi,min

Cost-Output Curve
$/MWh

Incremental cost, dCi/dPi

Ci =

B2 Pi2

Polynomial
Approximation

Linear
Approximation

Unit output, Pi

MW

Incremental Cost Curve

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2.3 Optimum Loading of Two Units Within a Plant

Consider 2 generators either in the same plant or close enough electrically

so that the line losses may be neglected. Let

C1 =
C2 =
C =
PD =

Then

fuel cost of generator 1 for a power output of P1

fuel cost of generator 2 for a power output of P2

C1 + C2
total load demand = P1 + P2 = constant
total fuel cost

C
P1

=
=

and

PD
P1

C1
P1
C1
P1

= 1+

For minimum cost,

+
+
P2
P1
C
P1

C2
P1
C2
P2

P2
P1

=0
=0

P2
P1
C1
P1

= 1
=

C2
P2

= (say)

i.e. the basic criterion for economical division of load between units is that
both the units must operate at the same incremental fuel cost .

This is known as the equal criterion.

2.4 Example 1
The total amount output of a 2-generator station is P MW and the cost curves of

the generators are:

C1 = B2 P12 + B1 P1 + B0 $/h where P = P1 + P2

C2 = B2 P22 + B1 P2 + B0 $/h

Determine how this load should be shared to give the most economical distribution.
The incremental costs of the generators are:
6

IC1 = 2B2 P1 + B1
IC2 = 2B2 P2 + B1

For optimum division of load, the two incremental costs should be equal, i.e.

2B2 P1 + B1 = 2B2 P2 + B1

(E1.1)

Eliminate P2 and rearrange (E1.1):

B2
B1 B1
P1 =
P+
B2 + B2
2(B2 + B2 )

Eliminate P1 and rearrange (E1.1):

B1 B1
B2
P+
P2 =
B2 + B2
2(B2 + B2 )

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Economic Operation

2.5 Example 2
Determine the most economical load distribution and the total minimum cost
of operation at this load as described in Example 1. Given that:

P = 450 MW

B1 = 4.0 $/MWh
B2 = 0.02 $/MW 2 h

B1 = 3.4 $/MWh
B2 = 0.01 $/MW 2 h

From the results obtained in Example 1, the optimium load of generator 1 and 2 are:
7

B1 B1
B2
P
+
B2 + B2
2(B2 + B2 )
3.4 4.0
0.01
450 +
= 140 MW
=
0.02 + 0.01
2(0.02 + 0.01)
P2 = P P1 = 450 140
= 310 MW

P1 =

The total minimum cost of operation:

C = C1 + C2 = B2 P12 + B1 P1 + B0 + B2 P22 + B1 P2 + B0
= 0.02(140)2 + 4(140) + B0 + 0.01(310)2 + 3.4(310) + B0
= 2967 + B0 + B0 $/h

2.6 Optimum Loading of N Units Within a Plant

Consider n generating units within a plant. Let C1 , C2 . . . Cn be the fuel costs of

individual units for the corresponding power outputs P1 , P2 . . . Pn respectively. If

C is the total fuel cost of the entire system and PD is the total load demand.
Pn
C = C1 + C2 + . . . + Cn = i=1 Ci
Pn
PD = P1 + P2 + . . . + Pn = i=1 Pi = constant

For a minimum C , the total differential dC

= 0, i.e.

C
C
C
dP1 +
dP2 + . . . +
dPn = 0
P1
P2
Pn
For the total load demand PD to remain constant, dPD = 0, i.e.
dC =

dPD = dP1 + dP2 + . . . + dPn = 0

(1)

(2)

Multiplying (2) by and then subtracting from (1) gives






C
C
C
dP1 +
dP2 + . . . +
dPn = 0 (3)
P1
P2
Pn

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Economic Operation

Equation (3) is satisfied if each term is equal to zero, i.e.

C
C
C
=
= ... =
=
P1
P2
Pn
dC
dC
dC
=
= ... =
=
dP1
dP2
dPn

Or

as Ci is a function of Pi only, i.e.

9

coordination equations

Ci
dCi
=
Pi
dPi

This shows that the criterion for most economical division of load between units
within a plant is that all the units must operate at the same incremental fuel cost .
This is known as the principle of equal criterion for economic operation.
The method used above is called the method of Lagrangian multipliers.

Pn
C

(
i
i=1 Pi PD )
i=1
dCi
L
=0
=
Minimization is achieved by the condition:
Pi
dPi
The Lagrangian is defined as:

L=

Pn

2.7 Example 3

The power needs of a large plant are served by three generating unit, which have
the following incremental cost functions:

IC1 = 2B2 P1 + B1 = 0.010P1 + 8.8 $/MWh

IC2 = 2B2 P2 + B1 = 0.015P2 + 10.2 $/MWh
IC3 = 2B2 P3 + B1 = 0.020P3 + 12.1 $/MWh
10

Determine the optimal economic dispatch for a total power demand of

PD = 800 MW and the cost in cents per kWh at this operating condition.
The required optimal condition is when = IC1 = IC2 = IC3 hence

P1 =
P2 =
P3 =

8.8
0.01
10.2
0.015
12.1
0.02

= 100( 8.8)
= 66.67( 10.2)
= 50( 12.1)

Next, substitute the above equations into

P3

i=1

Pi = PD yields

100( 8.8) + 66.67( 10.2) + 50( 12.1) = 800

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Hence,

2.8

Economic Operation

= 13.6844 $/MWh = 1.36844 cents/kWh

P1 = 488.44 MW
P2 = 232.31 MW
P3 = 79.22 MW

Computer Solution for Optimum Loading of Generators

It is not uncommon for the solution in the lossless case to be determined easily.
However, analytical solutions are often difficult to obtain when losses in the
11

transmission network must be considered and efforts are better served by resorting
to an iteration solution using computer as follows:
(a) Express each generator power in terms of the Lagrangian multiplier
(b) Pick a suitable initial value of
(c) Find the corresponding real powers P1 , P2 . . . Pn

P
Pi PD = 0, the optimal solution is reached
P
If
Pi PD < 0, increase and goto (c)
P
If
Pi PD > 0, decrease and goto (c)

(d) If

dC1
dP1

dC2
dP2

dC3
dP3

P1

P2

12

Solving each generator output

using successive adjustments

Compared to Pd

dC1
dP1

dC2
dP2

P3

dC3
dP3

dCi
dPi

G1

Range 2

G2
P1

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P2

outside limits of Gnerator 1 & 3

Range 3

Range 1

P3
P

Graphical Representation

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Economic Operation

2.9 Example 4
The following are the fuel-cost curves for the 3 generating units of a power plant.

C1 = 0.0015P12 + 8.0P1 + 300 $/h 50 P1 400 MW

C2 = 0.0005P22 + 8.0P1 + 450 $/h 50 P2 800 MW
C3 = 0.0010P32 + 7.5P1 + 700 $/h 50 P3 1000 MW
Plot the graph of incremental cost versus total load (150 MW PD
13

2200 MW)

when the generators are sharing the load optimally, and hence find the incremental
cost for the load PD

= 1800 MW.

Incremental Cost

($/MWh)

Generator

Total Power, PD (MW)

IC1 = 0.003P1 + 8.0

IC2 = 0.001P2 + 8.0
IC3 = 0.002P3 + 7.5

7.6

50+50+50 = 150

50+150+325 = 525

9.2

G3
G2 , G3
G1 , G2 , G3
G1 , G3
G3

9.5

400+800+1000 = 2200

8.05
8.15
8.8

50+50+275 = 375

266.67+800+650 = 1716.67
400+800+850 = 2050

14

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3 Economic Dispatch Including Transmission Losses

When transmission losses are included in the economic dispatch problem, the total
load demand equation becomes:
n
X

Pi PL = PD

i=1

where PL is the total transmission loss. In general, PL is not constant but depends
15

on the unit outputs Pi . A new Lagrangian function L is generated such that

L=C

"

n
X

Pi PL PD

i=1

L
Minimum of C is attained when P

"

= 0 for all values of i, i.e.

#

n
X

Pi PL PD
Pi
Pi

or

16

i=1

=0

PL
dCi
1
=0
dPi
Pi

"

or

dCi
dPi

or

dCi
Li = for all values of i
dPi

where Li

PL
Pi

(4)

1
is known as the penalty factor for plant i.
L
1 P
Pi

Thus the optimum fuel economy is achieved when the product of the incremental
L
is known as the
fuel times the penalty factor is the same for all plants. P
P
i

incremental transmission loss at plant i and is known as the incremental cost of

received power in $/MWh.

dC1
dC2
dCn
L1 =
L2 = . . . =
Ln =
dP1
dP2
dPn
The above equations are known as the exact coordination equations because both
incremental fuel cost and incremental transmission loss are coordinated for best

economy.

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Economic Operation

3.1 Loss Penalty Factors

Focusing on the generator i and assuming that it undergoess an increase in
generating power of amount Pi , which in turn manifests itself as an increased
share of total load demand as well as associated line losses. That is:

Pi = PD + PL
The loss penalty factor for this generator can be rewritten as:
17

Li =

Pi
Pi
1
1
=
1
=

PL
L
P

P
P
1

1 P
i
L
D
Pi
Pi

dCi
dCi Pi
dCi
incremental cost of
Li =
=
= received power for unit i
dPi
dPi PD
dPD

or

Li 1 : generator is close to the loads and most of the increased generator

power goes to supply the load demand.

Li > 1 : generator is far away from loads and is required to supply an

increased load demand in the presence of high line losses.

3.2 Loss Formula Concept B Coefficients

The two generator units of this system are assumed to deliver power to a remotely
located load with power factor pf1 and pf2 . Three transmission line segments are
involved with resistances of R1 , R2 and R3 .
Let the currents supplied by G1 and G2

18

G1
V1
pf1

G2
R1

R2

I1

I2

to the load are I1 and I2 and are co-

R3

phasal, the line losses PL is:

Load

V2
pf2

PL = |I1 |2 R1 + |I2 |2 R2 + (|I1 | + |I2 |)2 R3







R1 + R3
R2 + R3
2R3
2
=
P1 P2 +
P1 +
P22
2
2
2
2
V1 (pf1 )
V1 V2 (pf1 )(pf2 )
V2 (pf2 )
= B11 P12 + 2B12 P1 P2 + B22 P22
The B coefficients can be assumed constant if bus voltages and power factors
remain constant. In practice, they are calculated for some average operating
condition and can be used reliably for a faily wide range around those conditions.

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Economic Operation

3.3 Loss Penalty Factors Via Loss Coefficients

Based on the experience with the simple case in last section, a general expression
for the total system losses can be written, with several approximations, as:

PL =

n X
n
X

Pi Bij Pj

and

i=1 j=1

X
PL
=
2Bij Pj
Pj
i=1

where Bij is the loss coefficients which are constants unders certain assumed
operating conditions and Bij
19

= Bji . Assuming quadratic plant cost curves as:

Ci = B2i Pi2 + B1i Pi + B0i

i
The incremental cost is: dC
dP

= 2B2i Pi + B1i

dCi
L
Substituting P
Pj and dPi from the above coordination equation (4) an collecting all
P
Bi
terms of Pi :
1 1
2Bij Pj
j6=i

Pi =

2B2i

+ 2Bii

For any particular value of , Pi can be solved iteratively by assuming initial values

of P i. A convenient choice is Pi

= 0.

3.4 Example 5
Generator 1 is remotely located and generator 2 is at the load centre.
When 100 MW is dispatched from generator 1, the transmission loss is 10%.
When the system is optimally dispatched at a certain time the system
is found to be $25 per MWh.
Determine the power output of each generator and the power taken by the load.

20

The following cost data is supplied.

Generator 1:
Generator 2:
Solution:

0.015P 2 + 17P + 14
0.030P 2 + 19P + 16
PL
P12

Incremental cost :

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$/h

PL = B11 P12
B11 =

$/h

10010%
1002

= 103 MW1

IC1 = 0.03P1 + 17
IC2 = 0.06P2 + 19

10

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Economic Operation

Exact coordination equation :

L1 = ?
L2 = 1
= 25

where

Hence,

IC1 L1 = IC2 L2 =

(no loss)
(given)

0.06P2 + 19 = 25
P2 = 100 MW

21
Penalty factor :

L1 =

1
1
=
PL
1 2B11 P1
1 P1

(0.03P1 + 17)( 12B111 P1 ) = 25

8
8
=
0.03 + 50B11
0.08
= 100 MW

P1 =

Load, PD

Pi PL = 100 + 100 10 = 190 MW

3.5 Example 6

Consider the operation of 3 thermal generators G1, G2 and G3 in a small system.

The rating of the units are G1 = 150MW and G2 = G3 = 350MW. The operating
costs are:

22

2
+ 60PG1 + 15
C1 = 0.25PG1
2
+ 70PG2 + 13
C2 = 0.25PG2
2
+ 75PG3 + 12
C3 = 0.25PG3

$/h
$/h
$/h

The transmission losses are given by a loss formula whose only non-zero coefficient
is B33 = 0.0005 MW1 .
Assuming that G1s power output is fixed at 140MW, calculate to an accuracy of

2MW per generator the optimal dispatch of a system demand of 550MW and
obtain the corresponding average system electricity production cost in cents/kWh.
Determine also the marginal cost of supplying an additional kWh of electricity to the

system under these operating conditions.

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Solution:

IC1 = 0.5P1 + 60
IC2 = 0.5P2 + 70
IC3 = 0.5P3 + 75

Economic Operation

PD = 550 MW =
PL = B33 P32
PL
= 2B33 P3
P3

Pi
Li =

1
1

PL
Pi

P1 = 140 MW , L1 = L2 = 1 & L3 = ?
1st iteration :

L3 = 1 PL = 0 (lossless)
P2 + P3 = PD P1 + PL = 410 MW
IC2 L2 = IC3 L3 0.5P2 + 70 = 0.5P3 + 75

23

2nd iteration :

set

P2 = 210 MW
P3 = 200 MW
L3 =

1
12(0.0005)(200)
2

= 1.25

PL = (0.0005)(200 ) = 20

P2 + P3 = 550 140 + 20 = 430 MW

0.5P2 + 70 = 1.25(0.5P3 + 75)

3rd iteration :

P2 = 260 MW
P3 = 170 MW
L3 =

1
12(0.0005)(170)
2

= 1.2048

PL = (0.0005)(170 ) = 14.45
P2 + P3 = 424.45 MW
0.5P2 + 70 = 1.2048(0.5P3 + 75)

24

4th iteration :

P2 = 250.4 MW
P3 = 174 MW
L3 = 1.2107
P2
PL = 15.14 MW P3

= 251.82 MW
= 173.63 MW

Hourly generating cost

= (C1 + C2 + C3 )/550
= 122.5 $/MWh = 12.25 cents/kWh

Marginal cost per kWh

= IC2 L2 = IC2 = 70 + 0.5(251.82)

= 195.9 $/MWh = 19.59 cents/kWh

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Economic Operation

Interconnection for Interchange of Power

Power plants are connected together through tie-line (transmission line) to form a
large interconnected system due to the following advantages.
1. Increased Reliability - extra spining reserve and redundant power paths

The loss of generator or transmission line can be made up from spinning

reserve among generators throughout the interconnection or alternative
transmission paths.

25

2. Cost Reduction - power interchange

Power is bought from the lower cost generator and hence the cost of
generation is reduced.

Regional spinning reserve is reduced by relying on system reserve, thus

saving operation cost.
3. Improved Regulation

Changes of load can be catered by all generating units within the whole

system and not the generators in the region only.

4.1 Interchange Evaluation

Consider two power systems operating with different incremental costs (IC).

Utility A is generating at a lower IC than utility B.

If utility B buys power from utility A for its load at a price less than the cost of
generation by itself, utility B would save money.

Utility A would benefit economically from selling power to utility B as long as

26

utility B is willing to pay a price greater than utility As cost of generation.

Steps for interchange evaluation:
1. Assume no power interchange, calculate the economis dispatch (ED) for each
system alone.
2. Determine which system has the lower IC. The system with lower IC runs a
series of ED, each having a greater demand. The system with higher IC runs a
series of ED, each having a lower demand.
3. Find out at which level of interchange energy will bring the two systems towards

the most economic operation.

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Economic Operation

4.2 Example 7
Consider the following interconnected areas:
4
1

27

Area 2
Load 1100MW

Area 1
Load 700MW

Ci = fi (ai + bi Pi + ci Pi2 )
Unit
1
2
3
4
5
6

Pimin Pi Pimax

fi

ai

bi

ci

Pimin (MW)

Pimax (MW)

2.0
2.0
2.0
1.9
1.9
1.9

561
310
78
500
295
295

7.92
7.85
7.97
7.06
7.46
7.46

0.001562
0.00194
0.00482
0.00139
0.00184
0.00184

150
100
50
140
110
110

600
400
200
590
440
440

Step 1: Perform separate economic dispatch for each area

28

Area 1

Area 2

P1 = 322.7MW, P2 = 277.9MW
P3 = 99.4MW, PArea1 = 700MW
1 = 17.856 $/MWhr
C1 = 13,677.21 $/hr

P4 = 524.7MW, P5 = 287.7MW
P6 = 287.7MW, PArea2 = 1100MW
2 = 16.185 $/MWhr
C2 = 18,569.23 $/hr

Total generation cost C

= C1 + C2 = 32,246.4 $/hr

Step 2: Perform economic dispatch with two areas interconnected

Area 1

Area 2

P1 = 184MW, P2 = 166.2MW

= 404.6MW
P3 = 54.4MW, PArea1

P4 = 590MW, P5 = 402.7MW

= 1395.4MW
P6 = 402.7MW, PArea2

= 16.99 $/MWhr
C1 = 8,530.93 $/hr

= 16.99 $/MWhr
C2 = 23,453.89 $/hr

Total generation cost, C

KWCn v3.1

= C1 + C2 = 31,984.82 $/hr

14

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Economic Operation

Step 3: Calculate interchange power price

Interchange power from Area 1 to Area 2:

PI = PArea2
PArea2 = 1395.4 1100 = 295.4MW

Overall saving after interconnected:

CS = C C = 32, 246.44 31, 984.82 = 261.62$/hr

Assume 50-50 split of saving, Area 1 pays to Area 2:

CP = C1 C1 0.5CS
= 13, 677.21 8, 530.93 130.81 = 5, 015.47$/hr

29

Each area would have $130.81 reduction in operating cost per hour.
Alternatively, perform economic dispatch for separate areas with:

Area 1 with 50MW steps of power interchange (increase) since is higher.

Area 2 with 50MW steps of power interchange (decrease) since is lower.
Iterate until is equal..

Unit Commitment

To commit a generating unit is to turn it on; that is, to bring the unit up to
speed, synchronize it to the system, and connect it so it can deliver power
to the network.

The problem with commit enough units and leave them on line is one of
30

economics. A great deal of money can be saved by turning units off

(decommitting them) when they are not needed.

Since the load varies continuously with time, the optimum combination of units
may alter during any period. To determine which units of a plant should operate
for a given load is the problem of unit commitment (plant ordering).

Every electricity supply undertaking is normally under obligation to provide

power to its consumers with some degree of reliability. Therefore, it is necessary
to coordinate both the economy and reliability (security) of unit commitment.

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Economic Operation

5.1 Example 8
Suppose the following 3 units are available:
Unit 1:

Unit 2:
31
Unit 3:

Min

150 MW

C1

510 + 7.2P1 + 0.00142P12 MBtu/h

Min

100 MW

C2

310 + 7.85P2 + 0.00194P22 MBtu/h

Min

50 MW

C3

78 + 7.97P3 + 0.00482P32 MBtu/h

with fuel costs:

Max

Max

Max

Fuel cost1 = 1.1 $/MBtu

Fuel cost2 = 1.0 $/MBtu
Fuel cost3 = 1.2 $/MBtu

600 MW
400 MW
200 MW

F1 = Fuel cost1 C1 $/h

F2 = Fuel cost2 C2 $/h
F3 = Fuel cost3 C3 $/h

What is the cheapest way to supply a load of 550MW ?

To solve this problem, simply try all combinations of the 3 units (23

= 8). For each

feasible combination, the units will be dispatched using the techniques outlined in
previous sections on economics dispatch.
Unit

32

Max

Min

P1

P2

P3

F1

F2

F3

Total

MW

MW

MW

MW

MW

cost

200

50

400

100

600

150

400

150

3760

1658

5418

600

150

550

5389

5389

800

200

500

50

4911

586

5497

1000

250

295

255

3030

2440

5471

1200

300

267

233

50

2787

2244

586

5617

It is the cheapest to run the lowest cost unit (Unit 1) by itself.

This leads to the simple idea of merit loading.
This brute-force approach requires large amount of calculation.

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Economic Operation

Constraints in Unit Commitment

Many constraints can be placed on the unit commitment problem. Each individual
power system, power pool, reliability council and so forth may impose different rules
on the scheduling of units, depending on the generation makeup, load-curve
characteristics and such.

6.1 Spinning Reserve

33

Spinning reserve (SR) is the term used to describe system reserved generation
capacity, i.e. it is the amount of generation available from all units synchronized
(i.e. spinning) on the system minus the present load and losses being supplied.

PSR = PGen PLoad PLoss

Spinning reserve must be adequately carried so the loss of one or more units
does not cause too far a drop in system frequency.

Reserve allocation to various units has to obey certain rules, usually set by the

regional reliability councils.

Typical rules: SR largest loaded unit

SR given percentage of forecasted peak demand
and

allocated among fast-responding units and slow-responding units

Examples:
1. A generating plant has a policy to keep a 15% reserve for its peak demand.
If a forecast peak demand is 2200MW, the required spinning reserve would
be 2200MW x 0.15 = 330MW.
34

2. A power plant has 8 unit of 600MW generators. On a winter day, the

maximum demand is 1500MW. In order to cater the demand, 3 x 600MW
units are on. Therefore, a spinning reserve of 600MW is needed because the
largest or heavily loaded unit is 600MW.

Reserves should also be spread around the power system so as not to bottled
into a particular region due to transmission limitations if a large set is lost in the
another area bottling of reserves. Under severe condition, reserves can run

as islands supplying its own area when system failed.

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Region 1

Interchange, PT

Region 2

SR1

(Transmission limit, P
Tmax)

SR2

SR1 + SR2 may be globally adequate but if largest set in one region is lost, the
spare transmission available (i.e. 550MW - interchange) cannot meet the
reserve tranfser from the other region.

SR1 = 860MW, SR2 = 450MW, PT = 160MW, PT max = 550MW

Though the entire system has ample reserve (SR1 +SR2 =1310MW), lost of a
e.g.

35

1000MW generator in Region 2 would require a total power transfer of 710MW

from Region 1 and produces a bottling of reserve.

Beyond spinning reserve, the unit commitment problem may involve various
classes of scheduled reserves or off-line reserves such as diesel or
gas-turbine units, hydro-units and pumped-storage hydro-units.

It should also be noted that rules for spining reserve differs from one power

company to another power company as well as in different countries.

6.2 Thermal Unit Constraints

Thermal generator usually requires an up time of several hours to bring the boiler
temperature and turbine speed up to the full operational conditions before it can be
synchronized and bring on-line.
1. Minimum up time once the unit is running, it should not be turned off
immediately.
36

2. Minimum down time once the unit is decommitted, there is a minimum time
before it can be recommitted.
3. Crew constraints if a plant consists of two or more units, they cannot both be
turned on at the same time since there are not enough crew members at attend
both units while starting up.
4. Start-up cost it is the cost required to bring a thermal unit on-line. The start-up
cost can vary from a maxium cold-start value to a much smaller value if the unit

is already close to operating temperature.

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Economic Operation

5. Cooling and banking there are 2 approaches to treating a thermal unit during

its down period. The first is referred as cooling. It allows the units boiler to cool
down and then heat back up when recommitted. The second called banking
requires that sufficient energy be input to the boiler to just maintain operating
temperature. The costs for the two can be formulated as:
t

Start-up cost when cooling = Cc (1 e ) + Cf

Start-up
cost

Start-up cost when banking = Ct t + Cf

37

Cooling

where

Cf
Cc
Ct

time of cooling

thermal time constant

fixed cost

cold-start cost

cost of maintaining unit

at operating temperature

Banking

tc
Time-dependent start-up costs

Note: up to certain hours, the cost of banking will be less than the cost of

cooling, i.e. hot-start cost < cold-start cost

6.3 Must Run

Some units are given a must-run status for stability or security reasons or for such
purpose as supply of steam for uses (e.g. heating) outside the plant itself.

6.4 Fuel Constraints

Some units have limited fuel (for example due to late delivery, bad weather, high
price, forecast error, etc.) or else have constraints that require them to burn a
38

specified amount of fuel in a given time (for example due to contractual reasons).

Unit Commitment Solution Methods

The commitment problem can be outlined as:

There are N units to commit and dispatch and M load levels.

The operating limits on the N units are that any unit can supply the individual
loads and that any combination of units can supply also supply the loads.
The total number of combinations is therefore (2N

1)M (all generators off is

excluded) and will grow to a very large number as N and M increased.

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Economic Operation

7.1 Priority List

Optimum Combination

For a optimised system, units must be shut

down as the load goes down and then
recommitted as it goes back up.

39

A shut-

Load

Unit 1

Unit 2

Unit 3

1200

1150

down rule can be obtained for Example 8

1100

simply by a brute-force technique wherein all

1050

combinations of units will be tried for each load

1000

value taken in steps of 50 MW.

950
800

Total load
1200
MW

750

Unit 2

700

Unit 3

Unit 3
load-curve

650

Unit 2

600

600
MW

550
Unit 1

4 PM

4 AM

500
4PM

Time of day

The shut-down rule is quite simple: When load is above 1000 MW, run all 3 units;

between 1000 MW and 600 MW, run units 1 and 2; below 600 MW, run only unit 1.
Alternatively, this rule can be expressed as a priority list of units: 1, 2, 3. It shows
that unit 1 has the top priority to be committed while unit 3 has the lowest priority.
As the above priority list is derived by brute-force, it is very time consumming for a
large system. Simpler methods for the production of approximate priority lists have
40

been used by utilities. For the above example a simpler scheme is outlined below:
First derive the full load average production cost (FLAPC) table for all units as
follows and then a commitment scheme based on FLAPC can be drawn.
Unit

FLAPC ($/MWh)

Combination

Min MW

Max MW

9.79

2+1+3

300

1200

9.40

2+1

250

1000

11.19

150

400

The priority order based on FLAPC is 2, 1, 3.

Now the above merit order loading scheme is used.

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Economic Operation

7.2 Shut-Down Algorithm

The following simple shut-down algorithm can be used together with the priority list
when load is falling.
a) Will dropping the next unit leave enough generation on-line to meet demand
plus reserve requirements? If NO, operate as at present, if YES, goto (b).

41

b) Determine when the unit will be needed next (when load rises),
say H hours later.
c) If this is less than the minimum shut down time, keep the unit on-line,
if not goto (d).
d) Calculate two costs. First is cost for next H hours with unit on-line; second is
without unit (to choose between banking and cooling depending on cost).
If there is a saving, shut down the unit; otherwise, operate as at present.
e) Repeat this entire procedure for the each unit on the priority list.

7.3 Example 9

A supply system consists of four generators, each of which has a rating of 500MW
and a minimum permitted output of 100MW. The operating costs of the units are
given by the quadratic formula:

C = a + bP + cP 2
where C is in $/h and P in MW. The coefficient values are tabulated below:
42

Unit

500

0.02

1000

0.03

500

0.03

500

0.05

i) Determine the full load average production cost of each generator.

ii) Prepare a Priority List for generator loading and indicate the load MW range
over which each row of the list is valid.

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Economic Operation

iii) Given that

a) load curve :

MW
1600
1200
800
400

43
1

hr

b) spinning reserve is set to 10% of the total generation MW capacity on-line.

Ct t k$
where Ct = 0.8
starting cost when cooling : Cc (1 et/d ) k$ where Cc = 5 & d = 3

c) starting cost when banking :

d) minimum down time :

Unit

1 2 3 4

Hours 4 4 2 2
Determine a full unit commitment schedule for this system.

Solution:
i) G1: FLAPC =
G2: FLAPC =
G3: FLAPC =

44

G4: FLAPC =
ii)

C1 (500)
500
C2 (500)
500
C3 (500)
500
C4 (500)
500

=
=
=
=

500 + 7(500) + 0.02(500)2

500
1000 + 9(500) + 0.03(500)2
500
500 + 6(500) + 0.03(500)2
500
500 + 4(500) + 0.05(500)2
500

Priority list:

= 18 $/MWh
= 26 $/MWh
= 22 $/MWh
= 30 $/MWh

Merit order loading scheme:

Unit

FLAPC ($/MWh)

Priority

Combination

Min MW

Max MW

18

1+3+2+4

400

2000

26

1+3+2

300

1500

22

1+3

200

1000

30

100

500

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Economic Operation

iii) Full unit commitment schedule:

Hour

Load

Load+SR

1600

1760

1+3+2+4

1400

1540

1+3+2+4

G4: On to meet SR requirement

1200

1320

1+3+2

G4: Off for 4 hrs in banking mode

800

880

1+3+2

G2: On (minimum 4hr down time)

800

880

1+3+2

1200

1320

1+3+2

1400

1540

1+3+2+4

1400

1540

1+3+2+4

45

Unit Schedule

Remark

Should G4 be banked or cooled?

= (0.8)(4)
= 3.2 k$
Cooling cost = 5(1 e4/3 ) = 3.68 k$
Banking cost

cheaper option

G4 should be banked.

Other Types of Units

The systems treated so far have included only fossil-fuel generating units. In
practice, however, systems have a mix of different types of units including fossil-fuel,
nuclear, pumped-storage hydro, hydro and other types such as wind generators,
diesel and gas-turbine units, etc.

46

8.1 Nuclear Units

Although the fixed costs of a nuclear unit may be high, their operating cost are
low due to inexpensive nuclear fuel.

As such, nuclear units are normally base-loaded at their rated outputs. That is,
the reference power settings of turbine-governors for nuclear units are held
constant at rated output.

Nuclear units, therefore, become large in size and they are committed to supply
only base loads and do not normally participate in economic diapatch.

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Economic Operation

8.2 Pumped-Storage Hydro Units

Pumped-storage hydro is a form of energy storage and is the only practical

method of storing electric energy on a large scale.

During off-peak hours these units are operated as sychronous motors to pump
water to a higher elevation. Then during peak-load hours the water is released
and the units are operated as synchronous generators to supply power.
47

Economic operation of the power system is improved by pumping during

off-peak hours when the system (generation cost) is low, and by generating
during peak-load hours when is high. However, coordinations are needed for
incorporating pumped-storage into economic dispatch of fossil-fuel units.

Apart from demand regulation, a large proportion of the spinning reserve is

commonly put on the pumped-storage hydro units because of its fast pick-up.
As a results, pumped-storage plant are often not included in economic dispatch
analysis.

8.3 Hydro Units

The input-output relation of a hydro unit is a function of both discharge rate and
effective head.

Hydro units do not have any fuel cost.

They can follow rapid load changes more easily than steam units.
Further, hydro units can be committed within minutes while the commitment of
48

steam units requires several hours.

The last two features make hydro plants specially suitable for cold reserve and
for working as peaking and regulating plants.

However, while the fuel-supply is not a limiting factor in the operation of thermal
plants, the operation of hydro-electric plants is dependent on the availability of
water flow.

In other words, energy output (MWh) is fixed and the MW dispatch is regulated

by adjusting the operating hours in the case of hydro-elecric plants.

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Department of Electrical Engineering

EE4031 Power Systems

Tutorial on Economic Dispatch and Unit Commitment
1.

The fuel-cost curves for three generating units are given as follows :

C1 = 160 + 12 P1 + 0.025 P12

$/h

10 P1 120 MW

C2 = 160 + 17 P2 + 0.050 P22

$/h

10 P2 100 MW

C3 = 180 + 15P3 + 0.010 P32

$/h

10 P3 80

MW

where P1, P2 and P3 are in MW. Neglecting transmission losses, the three generators are
being dispatched economically.
a) Obtain by calculation the dispatch of a load of 220MW.
b) Plot the graph of incremental cost versus load from 30MW to 300MW and hence
determine the incremental cost for a load of 250MW.
2.

A two-bus system which has a total load of 400MW and no generator limits is shown in
Fig.1. The incremental fuel cost functions of the generators and the loss formula of the
transmission link are given below:
IC1 = 0.015P1 + 50
IC2 = 0.015P2 + 50

$/MWh
$/MWh

PL = 0.0008( P2 100) 2

MW

where IC1 and IC2 are the incremental costs of generator 1 and 2 when their outputs are
P1 and P2, respectively. PL is the power loss in the transmission link.
a) Neglecting transmission losses, find the optimal generation for each plant and the
system .
b) Using the solution of (a) as a starting point, find the optimal generation for each
plant and the transmission loss.
c) If the transmission loss is included but not coordinated,
i. how much will the total generation cost increase?
ii. what will be the transmission losses?

Fig.1

EE4031, KWCn, revised on 13 September 2010

3.

A small power system with total load of 800MW is served by three generating units
which have the following cost characteristics.
C1 = 5.0 + 7.0 P1 + 0.004 P12 $/h
C2 = 6.0 + 8.0 P2 + 0.006 P22 $/h

where P1, P2 and P3 are in MW

C3 = 7.0 + 9.5P3 + 0.008P $/h

2
3

a) Determine the optimal economic dispatch of generation and the marginal cost of
supplying an additional kWh of electricity.
b) If the transmission loss associated with generation is given by
PL = 0.005P32 MW
Using the results obtained in (i) as the initial estimates, determine the optimal
economic dispatch and hence obtain the corresponding transmission loss and the
average system electricity production cost in $/kWh.
4.

A supply system consists of four generators. The operating costs of the units are given by
the following quadratic formula :
C = a + bP + cP 2

where a, b and c are constants whilst C and P are in $/hr and MW, respectively. The
coefficient values and loading limits are tabulated below.
_

Unit
1
2
3
4

Loading Limits
Minimum
Maximum
(MW)
(MW)
125
550
100
450
75
500
75
400

Operating Cost Parameters

a
b
c
($/hr)
($/MWhr)
($/MW hr)
500
7
0.02
900
9
0.03
400
5
0.03
500
6
0.05
_

___

a) Determine the full load average production cost (FLAPC) of each generator.
b) Determine the priority order for the generators based on the FLAPC, and hence
prepare a merit order loading scheme with information on both the unit combination
and load MW range.
c) Comment on the optimality of this scheme and suggest a better approach to the
problem.
5.

A power system consists of four generators with the characteristics tabulated below.
Unit Merit
Order
1
2
3
4

Loading Limits
Minimum
Maximum
(MW)
(MW)
100
500
150
600
100
500
150
600

EE4031, KWCn, revised on 13 September 2010

Start-up Cost Coefficients

Cb
Cc

($/hr)
($)
( hr)
1100
5500
5
1300
5000
4
1200
5500
3
1300
6000
4
_

The units are scheduled according to a strict merit order with the following system and
operation constraints:
a) The spinning reserve requirement is 10% of the system loading MW capacity.
b) The restarting cost after banking and cooling for all generators are given by Cb t
and Cc (1 e t / ) , respectively, in dollars, where t is the time of cooling in hours.
c) The minimum down time for a generator taken off-line is 2 hours for all units.
The system demand over a ten hours period is given in the table below with the
assumption that the load demand remains constant for each hour.
Hour
Load (MW)

1
1100

2
800

3
1050

4
1200

5
1500

6
900

7
900

8
1200

9
1700

10
1800

Determine a full unit commitment schedule for the above system including specification
of which generator, if any, should be banked or cooled, when taken off.
6.

A supply system consists of four generators, each of which has a rating of 500MWand a
minimum permitted output of 50MW. The operating costs Co and the restarting cost Cr
after banking and cooling of the units are given by the following formulas.
Co = a + bP + cP 2
banking
C t
Cr = b
t /
CC (1 e ) cooling

where Co, Cr, P and t are in $/hr, $,MW, and hr, respectively, and the coefficient values
are tabulated below.
Unit
1
2
3
4

a
500
1000
600
700

b
7
9
6
4

c
0.02
0.03
0.03
0.05

Cb
1100
1300
1200
1300

5
3
2
4

Cc
5500
6000
5500
5000

a) Determine the full load average production cost of each generator.

b) Prepare a priority list for generator loading and indicate the load MW range over
which each row of the list is valid.
c) If the spinning reserve requirement is 10% of the system loading MW capacity and
the minimum down time is 2 hours for all units, determine the full generator
schedule for the following system demand over a nine hours period.
Hour
Load (MW)

1
1300

2
800

3
950

EE4031, KWCn, revised on 13 September 2010

4
1800

5
1700

6
850

7
800

8
950

9
1300

EE4031 Power Systems

Tutorial Solution on Economic Dispatch and Unit Commitment
1.

a) IC1 = 12 + 0.05P1

10 <= P1 <= 120 MW

IC2 = 17 + 0.10P2

10 <= P2 <= 100 MW

IC3 = 15 + 0.02P3

10 <= P3 <= 80 MW

P1 + P2 + P3 = 220

=>

0.02 P3 + 3 0.02 P3 2
+
+ P3 = 220
0.05
0.1
P3 = 112.5 MW

As P3 is over limit, P3 is restricted to its limit, i.e. P3 = 80 MW

P1 + P2 = 220 80 = 140

i.e.
=>

P1 +

0.05P1 5
= 140
0.1

P1 = 126.7 MW

As P1 is over limit, P1 is restricted to its limit, i.e. P1 = 120 MW

Hence, P2 = 140 120 = 20 MW
b) IC
12.5
15.2
16.6
18
28

IC1

IC2

IC3

P1

P2

P3

PD

12.5
15.2
16.6
18
-

18
28

15.2
16.6
-

10
64
92
120
120

10
10
10
10
100

10
10
80
80
80

30
84
182
210
300

Lookup from the above IC vs PD plot, IC for PD = 250MW is 22.25 $/MWh

EE4031, KWCn, revised on 13 September 2010

2.

a) As generator 1 and 2 has the same incremental cost function with no transmission
losses, generator 1 and 2 share the load equally, i.e.
P1 = 200 MW
P2 = 200 MW
= 0.015(200)+50 = 53 $/MWh
b) L1 = 1.0,

L2 =

1 =
1
PL 1.16 0.0016 P2
1
P2

L1 IC1 = 0.015P1 + 50 =

P1 = 50
0.015
P2 = 1.16 50
0.015 + 0.0016

0.015P2 + 50
=
1.16 0.0016 P2
P1 + P2 = (300 + 100) + PL
L2 IC2 =

)
(

= 400 + 0.0008 ( 1.16 50 100) 1.16 50 0.015 + 50

0.015
0.0016

0.015
0.0016

+
+

1.16 50 100
50 + 1.16 50 = 400 + 0.0008
0.015 0.015 + 0.0016
0.015 + 0.0016

Substitute = 53 $/MWh and iterate: 0 = 53.00 $/MWh hence, P1 = 274.73 MW

1 = 54.28 $/MWh
P2 = 125.80 MW
2 = 54.10 $/MWh
PL = 0.53 MW
3 = 54.12 $/MWh
c) i.

Loss included but not coordinated:

IC1 = IC2 P1 = P2
Hence, (1) becomes: 2 P2 = 400 + 0.0008( P2 100) 2 P1 = P2 = 204.36 MW
274.73

Therefore, cost increase =

125.8

IC1dP1 +

204.36

ii.
3.

a)

IC2dP2 = $371.2/h

204.36

Transmission loss, PL = 0.0008(204.36-100)2 = 8.713 MW

IC1 = 7.0 + 0.008P1 $/MWh

IC2 = 8.0 + 0.012P2 $/MWh
IC3 = 9.5 + 0.016P3 $/MWh

PD = P1 + P2 + P3 = 800MW

The required optimal condition is when = IC1= IC2= IC3

Hence

b) L1 = 1.0,

P1 = 479.81 MW
P2 = 236.54 MW
P3 = 83.65 MW
L2 = 1.0,

L1 IC1 = 7.0 + 0.008P1 =

L2 IC2 = 8.0 + 0.012 P2 =

and

= 10.84 $/MWh = 1.084 $/kWh

1 =
1
PL 1 0.01P3
1
P3

P1 = 7.0
0.008

P2 = 8.0
0.012

L3 =

EE4031, KWCn, revised on 13 September 2010

L2 IC2 =

9.5 + 0.016 P3
=
1 0.01P3

P1 + P2 + P3 = 800 + PL where

P3 =

9.5
0.016 + 0.01

PL = 0.005P32

9.5
9.5
7.0 + 8.0 +
= 800 + 0.005
0.008
0.012 0.016 + 0.01
0.016 + 0.01

9.5
= 800 + 0.005
0.016
+ 0.01

) 0.016 +9.50.01 0.000096 + 0.148 50

2

Use = 108.38 $/MWh as the initial estimate and iterate: 0 = 10.84 $/MWh
hence,
P1 = 522.63 MW
1 = 11.19
P2 = 265.08 MW
2 = 11.18
P3 = 13.15 MW
3 = 11.18
PL = 0.86 MW
Total production cost = C1 + C2 + C3 = 7,437.53 $/h
average production cost = 0.93 c/kWh

4.

a)

500 + 7 550 + 0.02 5502

= 18.91 $/MWh
550
900 + 9 450 + 0.03 4502
C2 =
= 24.5 $/MWh
450
400 + 5 500 + 0.03 5002
C3 =
= 20.8 $/MWh
500
500 + 6 400 + 0.05 4002
C4 =
= 27.25 $/MWh
400
C1 =

b) Generator
G1
G2
G3
G4

Priority order
1
3
2
4

Loading units
G1+G3+G2+G4
G1+G3+G2
G1+G3
G1
c)

Loading limits
Min
Max
375
1900
300
1500
200
1050
125
550

Scheme based on the priority ordering is not optimum as only average costs are
considered. A better approach would be one based on dynamic programming (DP)
using detailed production cost and economic dispatch analysis.

EE4031, KWCn, revised on 13 September 2010

5.

6.

Hour
1
2
3
4
5
6
7
8
9
10

Load
1100
800
1050
1200
1500
900
900
1200
1700
1800

Load+SR
1210
880
1155
1320
1650
990
990
1320
1870
1980

Hr: 6-7, Unit-3:

Banking
Cooling

= $12002 = $2400
= $5500(1 e-2/3) = $2676.2

Hr: 6-8, Unit-4:

Banking
Cooling

= $13003 = $3900
= $6000(1 e-3/4) = $3165.8

a) Unit
1
2
3
4

Unit Schedule
1+2+3
1+2+3
1+2+3
1+2+3
1+2+3+4
1+2
1+2
1+2+3
1+2+3+4
1+2+3+4

Unit-3: On (min 2hr down time)

Unit-3: Off for 2 hrs Banking

Unit-4: Off for 3 hrs Cooling

Cheaper

Cheaper

FLAPC($/MWh)
18
26
22.2
30.4

b) The FLAPC based priority order for the these units is as follows:
Unit
$/MWh
Min MW
Max MW
1
18
50
500
3
22.2
100
1000
2
26
150
1500
4
30.4
200
2000
c) Hour
1
2
3
4
5
6
7
8
9

Load
1300
800
950
1800
1700
850
800
950
1300

Load+SR
1430
880
1045
1980
1870
935
880
1045
1430

Unit Schedule
1+3+2
1+3+2
Unit 2: On (min 2 hrs down time)
1+3+2
1+3+2+4
1+3+2+4
1+3
Unit 2: Off for 2 hrs Banking
1+3
Unit 4: Off for 4 hrs Cooling
1+3+2
1+3+2

Hr 67, Unit 2: Banking = $1,3002 = $2,600

Cooling = $6,000(1e-2/3) = $2,919.5
Hr 69, Unit 4: Banking = $1,3004 = $5,200
Cooling = $5,000(1e-4/4) = $3,160.6

EE4031, KWCn, revised on 13 September 2010

cheaper choice

cheaper choice