EE5512 Power System Operation and Control

Lecture 9 – Economic Dispatch of Thermal Units (Part E)

Spring 2022

Raheel Zafar
Department of Electrical Engineering
Lahore University of Management Sciences
[email protected]

Outline
• Economic dispatch with transmission losses
• Iterative method for ED with losses
• Example
• Locational marginal price (LMP)
• Security-constrained economic dispatch

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 Economic Dispatch with Transmission Losses
• Generators and load centers are
often located in different areas.
• The electric power produced at the
generator areas requires
transmission network to deliver to
the consumers, which incurs losses
in the transmission network.
• Figure shows symbolically an all-
thermal power generation system
connected to an equivalent load bus
through a transmission network.

Economic Dispatch with Transmission Losses cont..

• The losses in the transmission system are a function of the generation

dispatch.
• In general, using generators closer to the load results in lower losses.
• Transmission losses cannot be avoided so the impact of losses should be
included when doing the economic dispatch.
• The inclusion of losses impacts the necessary conditions for an optimal
economic dispatch.
• The power balance constraint must be expanded to the one shown below:

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 Economic Dispatch with Transmission Losses cont..

• Two general approaches to the solution of problem with losses:

1. The first is the development of a mathematical expression for the losses
in the network solely as a function of the power output of each of the
units (loss-formula method)
2. The other basic approach to the solution of this problem is to
incorporate the power flow equations as essential constraints in the
formal establishment of the optimization problem (optimal power flow)
• The same procedure involving Lagrange relaxation method is followed in
the formal sense to establish the necessary conditions for a minimum cost
operating solution.

Economic Dispatch with Transmission Losses cont..

• Losses can be included by slightly rewriting the Lagrangian to include losses PLoss:

𝐿= 𝐶 (𝑃 ) + 𝜆 𝑃 + 𝑃 (𝑃 , 𝑃 , … , 𝑃 )− 𝑃

• It must be recognized that the loss in the transmission network, PLoss, is a function of
the network impedances and the currents flowing in the network.
• For our purpose, the currents will be considered only as a function of the independent
variables PGi and the load PD.
• The necessary conditions for a minimum are now (coordination equations):
( )
= −𝜆 1− =0
𝑃 +𝑃 −∑ 𝑃 =0

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 Economic Dispatch with Transmission Losses cont..

( )
• Solving for 𝜆, we get: 𝜆 =  

• Define the penalty factor 𝑃𝐹 for the 𝑖 generator

𝑃𝐹 =

• is called the incremental loss at bus i.

• It is much more difficult to solve economic dispatch with losses since it requires the
computation of the network loss in order to establish the validity of the solution in
satisfying the constraint equation.
• Previously (without PLoss), we simply solve a set of linear algebra equations, then we
can obtain the optimal ED solution.
• Now, with PLoss, we no longer have a set of linear equations.

Economic Dispatch with Transmission Losses cont..

• The condition for optimal dispatch with losses is then

𝑃𝐹 𝐼𝐶 𝑃 = 𝑃𝐹 𝐼𝐶 𝑃 = 𝑃𝐹 𝐼𝐶 𝑃 =𝜆

𝑃𝐹 = .

• So, if increasing 𝑃 increases the losses then

> 0 ⇒ 𝑃𝐹 > 1.0

• This makes generator 𝑖 appear to be more expensive i.e., it is penalized .

• Likewise 𝑃𝐹 < 1.0 makes a generator appear less expensive.

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 Economic Dispatch with Transmission Losses cont..

Iterative Method for ED with Losses

We no longer have a set of linear equations. This necessitates a more complex solution
procedure as follows:
Step 1 Pick a set of starting values for PG1, PG2, and PG3 that sum to the load.
Step 2 Calculate the incremental losses as well as the total losses PLoss. The incremental
losses and total losses will be considered constant until we return to step 2.
Step 3 Calculate the value of 𝜆 that causes PG1, PG2, and PG3 to sum to the total load plus
losses. This is now as simple as the calculations in previous examples since the equations
are again linear.
Step 4 Compare the PG1, PG2, and PG3 from step 3 to the values used at the start of step
2. If there is no significant change in any one of the values, go to step 5; otherwise, go
back to step 2.
Step 5 Done.

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 Example
Consider a three generator system with
𝐼𝐶 𝑃 = 7.92 + 0.003124 𝑃
𝐼𝐶 𝑃 = 7.85 + 0.003880 𝑃
𝐼𝐶 𝑃 = 7.97 + 0.009640 𝑃
and 𝑃 = 850 MW.
We will include a simplified loss expression:
𝑃 = 0.00003 𝑃 + 0.00009 𝑃 + 0.00012 𝑃
This simplified loss formula will suffice to show the difficulties in calculating a dispatch
for which losses are accounted.
Note that real-world loss formulae are more complicated than the one used in this
example.

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Example cont..

Applying the coordination equations,

𝑑𝐶 (𝑃 ) 𝜕𝑃
=𝜆 1−
𝑑𝑃 𝜕𝑃
we have
7.92 + 0.003124𝑃 = 𝜆[1 − 2(0.00003)𝑃 ]
7.85 + 0.003880𝑃 = 𝜆[1 − 2 0.00009 𝑃 ]
7.97 + 0.009640𝑃 = 𝜆[1 − 2(0.00012)𝑃 ]
and
𝑃 +𝑃 +𝑃 − 850 − 𝑃 =0

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 Example cont..

150 ≤ 𝑃 ≤ 600 MW 100 ≤ 𝑃 ≤ 400 MW 50 ≤ 𝑃 ≤ 200 MW

Step 1 Pick the 𝑃 , 𝑃 , and 𝑃 starting values as
𝑃 = 400 MW, 𝑃 = 300 MW, 𝑃 = 150 MW
Step 2 Incremental and total losses are
𝜕𝑃
= 2 0.00003 400 = 0.0240
𝜕𝑃
𝜕𝑃
= 2 0.00009 300 = 0.0540
𝜕𝑃
𝜕𝑃
= 2 0.00012 150 = 0.0360
𝜕𝑃
Total losses are 15.6 MW.

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Example cont..

Step 3 Solve for 𝜆

7.92 + 0.003124𝑃 = 𝜆(0.9760)
7.85 + 0.003880𝑃 = 𝜆(0.9460)
7.97 + 0.009640𝑃 = 𝜆(0.9640)
and
𝑃 + 𝑃 + 𝑃 − 850 − 15.6 = 0
These equations are now linear, so we can solve for 𝜆 directly.
Direct solution approach for 𝜆 results in,
𝜆 = 9.5252 $/MWh
𝑃 = 440.68 MW, 𝑃 = 299.12 MW, 𝑃 = 125.77 MW

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 Example cont..

Step 4 Since these values for 𝑃 , 𝑃 , and 𝑃 are quite different from the
starting values, we will return to step 2.
Step 2 The incremental losses are recalculated with the new generation values:
𝜕𝑃
= 2 0.00003 440.68 = 0.0264
𝜕𝑃
𝜕𝑃
= 2 0.00009 299.12 = 0.0538
𝜕𝑃
𝜕𝑃
= 2 0.00012 125.77 = 0.0301
𝜕𝑃
Total losses are 15.78 MW.

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Example cont..

Step 3 Solve for 𝜆

7.92 + 0.003124𝑃 = 𝜆(0.9736)
7.85 + 0.003880𝑃 = 𝜆(0.9462)
7.97 + 0.009640𝑃 = 𝜆(0.9699)
and
𝑃 +𝑃 +𝑃 − 850 − 15.78 = 0
Direct solution approach for 𝜆 results in
𝜆 = 9.5275 $/MWh
𝑃 = 433.94 MW, 𝑃 = 300.11 MW, 𝑃 = 131.74 MW

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 Example cont..

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Locational Marginal Price (LMP)

• Locational marginal price (LMP) is the cost of providing one additional unit
(1 MW) power at a specific bus or location.
• LMP is for the wholesale electric energy markets to reflect the value of
electric energy at different locations.
• LMP is used in deregulated wholesale electric energy markets in the
United States.
• The concept of LMP becomes very important when the transmission
system cannot carry the power flow that might result from a simple
application of economic dispatch with regard to transmission limits.

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 Locational Marginal Price (LMP) cont..

• To begin, we will assume two-bus

system.
• The generator cost functions used here
will be piecewise linear for ease in
calculating the economic dispatch.
• Create the following priority list to
serve the load demand:

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Locational Marginal Price (LMP) cont..

• The final value of 7.50 is called the “clearing

price” since at that cost all the load is
satisfied.
• A very important observation at this point is
that if we were to add 1 MW to the load at
either bus, that additional load would be
supplied from segment B at a cost of 7.50
$/MWh.
• Thus, we can say that the cost of additional
load at either bus is 7.50 or that marginal
price of power at either bus is 7.50.
• The electric power industry has settled on the
term locational marginal price or LMP for this
concept.

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 Locational Marginal Price (LMP) cont..

• Where the concept of LMP becomes very important is when the transmission system
cannot carry the power flow that might result from a simple application of economic
dispatch with regard to transmission limits.
• Suppose now that the transmission line between buses 1 and 2 is limited to a
maximum of 100 MW flow in either direction.
• The economic dispatch now must respect the flow limit.
• The generation dispatch is:

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Locational Marginal Price (LMP) cont..

• We need to focus on here is the LMP for bus 1 and 2.

• Bus 1: If we add 1 MW of load to the load on bus 1, it must come from segment B of
generator 1 at a cost of 7.50. The LMP for bus 1 then is 7.50.
• Bus 2: If we add 1 MW to the load at bus 2, it must come from segment D of generator 2
since no more power can come over the transmission line. Thus, the LMP at bus 2 is 8.0.
• Whenever we ignore transmission losses (such as in the linear or DC power
flow), we can make the following observation:
• When all LMP values are the same, none of the transmission lines are at maximum flow.
• When the LMP values at different buses differ, the cause is a limiting transmission line.
• In an AC power system with transmission losses, the LMPs reflect the cost of
generation, the incremental losses of transmission system, and the limiting
transmission lines.

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 Security-Constrained Economic Dispatch
• What are NOT modeled in economic dispatch so far?
• Power flow equations
• Line limits
• Reliability requirements
• Nodal power balance equations
• These factors can be incorporated as essential constraints in the formal
establishment of the optimization problem.
• This general approach is knows as the optimal power flow (OPF).
• As such practical factors cannot be neglected, today’s economic dispatch also
needs to consider them; it becomes security-constrained economic dispatch
(SCED) that is often used interchangeably with OPF/SCOPF.

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Suggested Readings
• Wood | 1.6, 3.1, 3.4, 3.9, 3.10, Appendix 3A

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 Thank you!

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