CHAPTER FOUR

Economic Operation of Power Systems

❖Introduction
❖Economic Dispatch Problem
▪ Economic Distribution of Load between Units within a Plant
▪ Economic Dispatch Problem without Loss
▪ Economic Dispatch Problem with Loss
❖Unit Commitment

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Introduction of Economic Operation of PS

▪ For electric power industry, the efficient and optimum economic operation and
planning of electric power generation are the great role in power system.

▪ The optimum operation of PS involves the consideration of:

1. Economy of operation

2. System security

3. Emissions of certain fossil fuel plants

▪ The factor that influence the power generation to operate at minimum cost is
transmission losses.
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 Cont..
▪ When power plant is located far from load center, the transmission loss is high
then the plant uneconomical.

▪ Therefore, the main objective of PS operation is to minimum the operating cost

of different power plant.

▪ PS need to be operated economically to make electrical energy cost-effective to

the consumer in the face of constantly rising prices of fuel.

▪ Economic operation is very important for a PS to return a profit on the capital

invested.

▪ Operating cost plays an important role in the economic scheduling.

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▪ Operational economics involving power generation and delivery can be
subdivided into two parts:

i. Minimum cost of power production called economic dispatch

▪ This is the problem of economic dispatch which deals with determining the
power output of each plant to meet the specified load, such that the overall
fuel cost is minimized.

ii. Minimum-loss delivery of the generated power to the loads

▪ The This is the problem of optimal power flow, which deals with minimum
loss delivery, where in the power flow is optimized to minimize losses in the
system.
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 Economic Dispatch Problem
▪ For any specified load condition economic dispatch determines the power
output of each plant (and each generating unit within the plant) which will
minimize the overall cost of fuel needed to serve the system load.

▪ Thus, economic dispatch focuses upon coordinating the production costs at all
power plants operating on the system. The economic dispatch problem
basically determines the generation of different plants to minimize total
operating cost.

▪ The minimum-loss problem can assume many forms depending on how

control of the power flow in the system is exercised.

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 Cont..
▪ The economic dispatch problem and minimum-loss problem can be solved by
means of the optimal power-flow (OPF) program.

Economic Distribution of Load between Units within a Plant

▪ The most economic distribution of the output of a plant between the

generators, or units within that plant. This economic distribution develop the
economic scheduling of plant outputs for a given loading of the system and
without consideration of transmission losses.

▪ To determine the economic distribution of load between the various generating

units (consisting of a turbine, generator, and steam supply), the variable
operating costs of the unit must be expressed in terms of the power output.
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 Cont..
▪ The total cost of operation of generators includes fuel cost, Labour cost, and
Maintenance cost.

▪ The factors influencing the cost of generation are the generator efficiency, fuel
cost and transmission losses.

▪ The most efficient generator may not give minimum cost, since it may be
located in a place where fuel cost is high.

▪ Further, if the plant is located far from the load centers, transmission losses
may be high and running the plant may become uneconomical.

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 Cont..
Fuel cost

▪ It is important for thermal and nuclear power plants.

▪ It is the principal factor in fossil-fuel plants, and cost of nuclear fuel can also
be expressed as a function of output.

➢The economic dispatch is however determined in terms of fuel cost per unit
power generated and does not include capital investment, maintenance,
depreciation, start-up and shut down costs etc.

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 Cont..
▪ The fuel cost curve of generating units specified by input energy rate
Fi(Pgi) in Mkcal/hr or cost of fuel used per hour Ci(Pgi) in Rs/hr as
function of the generator power out put Pgi.

Where: Fi- input fuel of unit-i

Ci – cost of fuel of unit-i

Pgi – power generated of unit-I

▪ Each generating unit consists of a generator, turbine, steam generating unit

(boiler furnace), and auxiliary equipment.

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 Cont.…

Figure for Fuel Cost Curve

▪ (MW)min is the minimum loading limit of generator below which it is

uneconomical and (MW)max is the output limit. 4/22/2024

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 Cont.…
Incremental Fuel Rate:

▪ It is the slope of Fuel Cost Curve.

▪ The incremental fuel rate is equal to a small change in input divided by the
corresponding change in output.

▪ Incremental Fuel Rate = ∆𝐎𝐮𝐭𝐩𝐮𝐭

∆𝐈𝐧𝐩𝐮𝐭

Incremental cost curve:

▪ The unit of the incremental fuel cost is Rs / MWhr.

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 Cont.…
▪ The incremental fuel cost is a measure of how costly it will be
produce an increment of power.
▪ The incremental production cost is made up of incremental fuel
cost plus the incremental cost of labor, water, maintenance etc.
▪ The cost curve can be approximated by a linear curve.
▪ In any plant, all units normally operate between PGmin, the
minimum loading limit, below which it is technically infeasible to
operate a unit and PGmax, which is the maximum output limit.
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Cont..

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 Economic Dispatch Problem without Loss

▪ The fuel cost is the main cost in a thermal or nuclear unit. Then the fuel cost
must be expressed in terms of the power output.

▪ Other costs, such as the operation and maintenance costs, can also be
expressed in terms of the power output.

▪ Fixed costs, such as the capital cost, depreciation etc., are not included in the
fuel cost. Input cost can be expressed in terms of the power output as:

……….( 1)

▪ Where Fi is input cost of an unit- i, and Pi is power output of the unit-i

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 Cont.…
▪ The incremental operating cost of each unit is then computed as:
……….( 2)

▪ Let assume two units having different incremental costs supply a

load. There will be a reduction in cost if some amount of load is
transferred from the unit with higher incremental cost to the unit
with lower incremental cost.

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 Cont.…
▪ The load transfer will continue till the incremental costs of both
the units are same. This will be optimum point of operation for
both the units.

▪ The above principle can be extended to plants with a total of N

number of units. The total fuel cost will then be the summation
of the individual fuel cost (Fi).

Where i = 1,2,3 ... , N units.

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Cont.…

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Cont.…

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 Generating Limits

▪ It is not always necessary that all the units of a plant are available to share a
load. Some of the units may be taken off due to scheduled maintenance.

▪ Also it is not necessary that the less efficient units are switched off, during
off peak hours.

▪ To meet the sudden change in the power demand, it necessary to keep more
units to meet the load demand during that time. This safety margin in
generation is called spinning reserve.

Pr = Pg -Pd
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 Cont.…
▪ The power generation limit of each unit is then given by the inequality
constraints.

Where:
▪ Pmax is the upper limit (maximum limit) of power generation capacity.
▪ Pmin is lower limit of generating capacity.

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 Economic Dispatch Problem with Loss

▪ if load is distributed b/n the different plants that are joined by

transmission lines, then the line losses have to be explicitly
included in the economic dispatch problem.

▪ When the transmission losses are included in the economic

dispatch problem:

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▪ Now the solution become more complicated than the one
which does not include the network losses.
▪ From the derivative result one can deduce as there is no
linear equation and this necessitates a more complex solution procedure.

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Cont.…

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 Cont.…
Example

Solution

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Cont..

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 Cont..
Now solving for λ.

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Cont..

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Cont..

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Cont..

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 Unit Commitment
▪ The consumption of electrical energy also follows a predictable daily, weekly
and seasonal pattern. There are periods of high power consumption as well as
low power consumption. Therefore, possible to commit the generating units
from the available capacity into service to meet the demand.

▪ The plant commitment and unit ordering schedules extend the period of
optimization from a few minutes to several hours.

▪ From daily schedules weekly patterns can be developed. Likewise,

monthly, seasonal and annual schedules can be prepared taking into
consideration the repetitive nature of the load demand and seasonal
variations. 30

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 Cont..
▪ UC schedules required for economically committing the units in plants to service with
the time at which individual units should be taken out from or returned to service.

Constraints in Unit Commitment

▪ Many constraints can be placed on the UC 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.

▪ Spinning Reserve is the term used to describe the total amount of generation available
from all units synchronized (i.e., spinning) on the system, minus the present load and
losses being supplied.
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 Cont..
▪ Spinning reserve must be allocated to obey certain rules, usually set by
regional reliability councils that specify how the reserve is to be allocated to
various units.

▪ Typical rules specify that reserve must be a given percentage of forecasted

peak demand, or that reserve must be capable of making up the loss of the
most heavily loaded unit in a given period of time.

▪ Beyond spinning reserve, the unit commitment problem may involve various
classes of “scheduled reserves” or “off-line” reserves.

▪ Reserves, finally, must be spread around the power system to avoid

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transmission system limitations.
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 Reading Part

▪ Thermal Unit Constraints

▪ Hydro-Constraints:
▪ Fuel Constraints:

Unit Commitment Solution Methods

[Link]-list schemes,

[Link] programming (DP),

3. Forward Dynamic programming (FDP).

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