Lecture 6

Economic Operation of Power

System
 Content
• Optimal Dispatch of Generation
– Operating Costs of thermal Plants
– Load Distribution Between Units in a plant
– Load Distribution between plants
– Economic dispatch with losses
 Introduction
• Economic operation is very important for a power
system to return a profit on the capital invested.
• Rates fixed by regulatory bodies and the importance of
conservation of fuel place pressure on power
companies to achieve maximum possible efficiency.
• Maximum efficiency minimizes the cost of a kilowatt-
hour to the consumer and the cost to the company of
delivering that kilowatt-hour in the face of constantly
rising prices for:
– fuel
– Labor
– supplies,
– maintenance.
• Operational economics involving power
generation and delivery can be
subdivided into two :
– Dealing with minimum cost of power
production called economic dispatch

– Dealing with minimum-loss delivery of

the generated power to the loads.
 Introduction Cont’
• The function of the economic dispatch calculation
(EDC) is to determine the set point power levels of
all generators in order to supply the demand
economically.
• The EMS program solves an optimization problem as
its objective the minimization of the total generation
cost.
• This objective quite naturally requires that the
generator cost-curves, which provide the cost per
hour of operating the generator as a function of its
set point power level.
• One equality constraint requires total generation
equal to total demand plus losses.
• A number of inequality constraints force the
solution to be physically realizable,
particularly in terms of respecting generator
maximum and minimum power limits.
 Operating Costs of thermal Plant
• Factors affecting power generation
– Operating efficiency of generators
– Fuel Cost (Cost in the region)
– Transmission losses. (Plant location)

The problem here is to determine the generation of

different plants such that the operating cost is
minimal (Economic scheduling).

Inputs to thermal plants Btu/h

Output power MW
• Converting the ordinate of heat rate curve from Btu/h to E/h,
results in a fuel cost curve
(Fuel Input)(Unit Cost of fuel )

𝑩𝒕𝒖 𝑬
Fuel Cost = … … … … … … . . (𝟏)
𝒉 𝑩𝒕𝒖

• In all practical cases fuel cost 𝐶𝑖 of generator i can be represented

as a quadratic function of real power generation

𝐶𝑖 = 𝛼𝑖 + 𝛽𝑖 𝑃𝑖 + 𝛾𝑖 𝑃𝑖2 𝑬/𝒉 … … … … … … . . (𝟐)

The most important characteristic is obtained by plotting the first
derivative of the fuel cost vs Real power . This know as the
incremental fuel cost curve
𝒅𝑪𝒊
= 𝟐𝜸𝒊 𝑷𝒊 + 𝜷𝒊 … … … … … … . . (𝟑)
𝒅𝑷𝒊
 DISTRIBUTION OF LOAD BETWEEN
UNITS WITHIN A PLANT
• An early attempt at economic dispatch called for supplying power
from only the most efficient plant at light loads.
• As load increased, power would be supplied by the most efficient
plant until the point of maximum efficiency of that plant was
reached.
• Then, for further increase in load the next most efficient plant would
start to feed power to the system
• A third plant would not be called upon until the point of maximum
efficiency of the second plant was reached.
• Even with transmission losses neglected, this method fails to
minimize cost .
 Plant Scheduling Methods
• At the plant level, several operating procedures were adopted in
the past leading to efficient operation resulting in economy
– Base loading to capacity
The turbo generators are successively loaded to their rated capacities in
the order of their efficiencies. That is to say, that the most efficient unit
will get greater share in load allocation which is a natural solution to the
problem.
– Base loading to most efficient load
In this case the heat rate characteristics are considered and the turbo-
generator units are successively loaded to their most efficient loads in
increasing order of their heat rates.

– Proportional loading to capacity

A third method that was considered as a thumb rule in the absence of
any technical data is to load the generating units in proportion to their
rated capacities as stated on the name plates.
• For economical division of load between units
within a plant, the criterion is that all units
must operate at the same incremental fuel
cost
 Example 6.1
• The incremental fuel cost in E/MWh for four units of a plant are :
𝑑𝑓
– 𝜆1 = 𝑑𝑃 1 = 0.012𝑃𝐺1 + 9.0
𝐺1
𝑑𝑓
– 𝜆2 = 𝑑𝑃 2 = 0.0096𝑃𝐺2 + 6.0
𝐺2
𝑑𝑓
– 𝜆3 = 𝑑𝑃 3 = 0.008𝑃𝐺3 + 8.0
𝐺3
𝑑𝑓
– 𝜆4 = 𝑑𝑃 4 = 0.0068𝑃𝐺4 + 10.0
𝐺4
𝝀 = 𝜆1 = 𝜆2 = 𝜆3 = 𝜆4
Assuming all four units operate to meet the total plant load of 800 MW. Find
the incremental fuel cost 𝝀 of the plant and the required output of each unit
for economic dispatch
• We need to solve for 𝜆 in this equation assuming zero losses
𝝀 = 𝑎 𝑇 𝑃𝑇 + 𝑏𝑇
𝑚 −1 𝑚 𝑚
1 𝑏𝑖
𝑎𝑇 = ෍ , 𝑏𝑇 = 𝑎 𝑇 ෍ , 𝑃𝑇 = ෍ 𝑃𝐺𝑖
𝑎𝑖 𝑎𝑖
𝑖=1 𝑖=1 𝑖=1
 Example 6.2

The generator’s operating costs in E/h are as follows for a

particular plant:
• 𝐶1 = 240 + 6.7𝑃1 + 0.009𝑃12 50 ≤ 𝑃1 ≤ 300
• 𝐶2 = 220 + 6.1𝑃2 + 0.005𝑃22 50 ≤ 𝑃2 ≤ 200
• 𝐶3 = 240 + 6.5𝑃3 + 0.008𝑃32 130 ≤ 𝑃3 ≤ 200
• Calculate the dispatch if the demand is 450 MW.
 DISTRIBUTION OF LOAD BETWEEN PLANTS

• Need to consider losses in the transmission lines

• Plant with lower incremental cost (further away from
load center may call for reducing its output).
• Need to coordinate transmission loss into the
scheduling of the output of each plant for maximum
economy at a given level o f system load
• For a system with m generating units
𝑚

𝐹 = 𝑓1 + 𝑓2 + 𝑓3 + … + 𝑓𝑚 = ෍ 𝑓𝑖 … … … … … … . . (𝟒)
𝑖=1

• where F is the cost function giving the total cost of all the
fuel for the ,entire system and is the sum of the fuel
costs of the individual units
• The total megawatt power input to the network
from all the units is the sum
𝑚

𝑃𝐺𝑇 = 𝑃𝐺1 + 𝑃𝐺2 + 𝑃𝐺3 + … + 𝑃𝐺𝑚 = ෍ 𝑃𝐺𝑖 … . . (𝟓)

𝑖=1
– The total fuel cost F of the system is a function of all
the power plant outputs.
– The constraining equation on the minimum value of
F is given by the power balance Equation
𝑚

𝑃𝐿 + 𝑃𝐷 − ෍ 𝑃𝐺𝑖 = 0 … … … … … … … . . (𝟔)
𝑖=1
• The objective is to obtain a minimum F for a fixed system
load 𝑃𝐷 subject to the power-balance constraint .
• The procedure for solving such minimization problems
call for the method of Lagrange multipliers.
• The new cost function F is formed by combining the total
fuel cost and the equality constraint of Eq. in the
following manner: 𝐸ൗ𝑀𝑊ℎ 𝑀𝑊
𝐸ൗ 𝑚
ℎ
𝐹 = 𝑓1 + 𝑓2 + 𝑓3 + … + 𝑓𝑚 + 𝜆 𝑃𝐿 + 𝑃𝐷 − ෍ 𝑃𝐺𝑖 … . (𝟕)
𝑖=1
• The augmented cost function F is often called the
Lagrangian , and we shall see that the parameter 𝜆 ,
which we now call the Lagrange multiplier , is the
effective incremental fuel cost of the system when
transmission-line losses are taken into account.
• The original problem of minimizing F subject to
power balance constraint is transformed by means
of the Lagrangian into an unconstrained problem
in which it is required to minimize F with respect
to 𝜆 and the generator outputs.
• Therefore, for minimum cost we require the
derivative of F with respect to each 𝑃𝐺𝑖 to equal to
zero.
𝑚
𝑑𝐹 𝑑
= 𝑓 + 𝑓2 + 𝑓3 + … + 𝑓𝑚 + 𝜆 𝑃𝐿 + 𝑃𝐷 − ෍ 𝑃𝐺𝑖 … (𝟖)
𝑑𝑃𝐺𝑖 𝑑𝑃𝐺𝑖 1
𝑖=1
• Since 𝑃𝐷 is fixed and the fuel cost of any one unit varies only if the
power output of the generator is varied. We can write:

𝑑𝐹 𝑑𝑓𝑖 𝑑𝑃𝐿
= +𝜆 − 1 = 0 … … … … … … . . (𝟗)
𝑑𝑃𝐺𝑖 𝑑𝑃𝐺𝑖 𝑑𝑃𝐺𝑖

Because 𝑓𝑖 depends only on 𝑃𝐺𝑖 Solving for 𝜆

𝑑𝑓𝑖 1
𝜆= … … … … … … . . (𝟏𝟎)
𝑑𝑃𝐺𝑖 1 − 𝑑𝑃𝐿
𝑑𝑃𝐺𝑖

𝑑𝑓𝑖
𝜆 = 𝐿𝑖 … … … … … … . . (𝟏𝟏)
𝑑𝑃𝐺𝑖

Where 𝐿𝑖 is called the penalty factor of plant i

• The result of Eq. (11) means that minimum fuel cost is obtained
when the incremental fuel cost of each unit multiplied by its
penalty factor is the same for all generating units in the system.

𝑑𝑓𝑖
The products 𝐿𝑖 are each equal to 𝝀 called the system 𝝀,
𝑑𝑃𝐺𝑖
which is approximately the cost in Emalangeni per hour to increase
the total delivered load by 1 MW.

For a system of three units, not necessarily in the same power plant,
Eq. (11) yields
𝑑𝑓1 𝑑𝑓2 𝑑𝑓3
𝝀 = 𝐿1 = 𝐿2 = 𝐿3
𝑑𝑃𝐺1 𝑑𝑃𝐺2 𝑑𝑃𝐺3
 Solution Procedure 𝜆 iteration
• Step 1
– Specify the system load level 𝑃𝐷
– For the first iteration, choose initial values for the system 𝜆 [One way to
make this initializing choice is to assume that losses are zero].
• Step 2
– Solve for values of 𝑃𝐺𝑖
– Compute the transmission loss.
• Step 3
– Compare 𝑡ℎ𝑒 𝑝𝑜𝑤𝑒𝑟 𝑏𝑎𝑙𝑎𝑛𝑐𝑒
𝑚

෍ 𝑃𝐺𝑖 to 𝑃𝐷 + 𝑃𝐿
𝑖=1
– I f power balance is not achieved within a specified tolerance, update the
system 𝜆 by setting
𝜆 (𝑘+1) = 𝜆 (𝑘) + ∆𝜆 (𝑘)
One possible formula for the increment ∆𝜆 (𝑘)
𝑚
𝜆 (𝑘) − 𝜆 (𝑘−1)
(𝑘) (𝑘)
∆𝜆 (𝑘) = 𝑚 𝑃𝐷 + 𝑃𝐿 − ෍ 𝑃𝐺𝑖
σ𝑖=1 𝑃𝐺𝑖 (𝑘) − σ𝑚𝑖=1 𝑃𝐺𝑖
(𝑘−1)
𝑖=1
 Example 6.3

• Determine the penalty factor of the plant shown

in the figure below

and find the cost of power if the incremental cost of

production is
𝑑𝐶1
= 0.1𝑃1 + 3.0
𝑑𝑃1
 Example 6.4

Figure below shows a two generator system supplying a load

PD = 50 MW, connected at Bus 2.

𝑃𝐷 = 50 𝑀𝑊

The fuel cost of generator G1 and G2 are C1(PG1) = 10000 E/MW hr and C2(PG2)

= 12500 E/MW hr and the loss in the line is Ploss(pu) = 0.5(PG1)2, where the loss
coefficient has been expressed in pu on a base of 100 MVA.

Find the most economic power generation schedule of the plants.