1

An Economic Dispatch Algorithm For

Cogeneration Systems
M. A. Gonzalez Chapa, and J. R. Vega Galaz

Abstract—This paper presents an algorithm to solve the II. INTRODUCTION

economic dispatch problem for Combined Heat and Power
(CHP) systems. The algorithm takes the basis of Sequential
Quadratic Programming (SQP) algorithms used to solve
T HE staple differences between conventional and CHP
systems lies on the type of power we obtain from each
one as well as their overall cycle efficiencies. In conventional
nonlinear optimization problems and the logic of the Lagrangian
relaxation technique used before on optimal schedule of CHP, systems the energy from the fuel is used to produce electrical
but instead of consider linear inequality constraints, it temporary power while, in CHP systems the energy from the fuel is used
erase them from the problem, making the problem easier. Then a to produce mechanical/electrical and thermal power,
sequential quadratic programming algorithm solves partially the
increasing its efficiency in doing so. The energy saving
problem and it checks if the solution is inside the trust-region
that form the inequality constraints. If the solution is in the trust- potential as well as less greenhouse gas emission due to the
region the problem is trivial, if not then we use the right wise use of cleaner fossil fuels burned in CHP units, like
inequality line taking it like equality and solving the whole natural gas, give them advantage from conventional power
problem. The proposed algorithm improves the approach of the systems. The potential growth in Mexico for cogeneration
global solution. plants is estimated in 8425 MW for 2011 [1]. This growing
will get a better environmental impact coming from fossil
Index Terms—Co-generation Systems, Economic Dispatch,
fuels usage. We also will find a more DG in many places of
Sequential Quadratic Programming, Dispersed Generation.
the country that will need to be operated efficiently.
I. NOMENCLATURE The industries with necessities of both heat and power can
supply its own demands with CHP systems, although the
b,B = Conventional thermal units (boilers)
most of the times they follow interconnected to the electric
C = Cost function
utility. Therefore, depending on different operation scenarios,
chp,CHP = Combined Heat and Power
the owned CHP plants may sell or buy power to the public
DG = Dispersed Generation
electric grid. These power transactions must be taking into
ED = Economic Dispatch
account to get a more real optimal operation set point. This is
e,E = Conventional power units
illustrated in Fig. 1.
f = Coefficient that gives the equilibrium in a
characteristic inequality linear constraint for a co-generation
unit.
H = Heat
I/O = Input vs. Output curve
l,L = Characteristic inequality linear restrictions in co-
generation units.
m = Coefficient related with heat production in a
characteristic inequality linear constraint for a co-generation
unit.
P = Power
SQP = Sequential Quadratic Programming
u = Coefficient related with power production in a
characteristic inequality linear constraint for a co-generation
unit.
Fig. 1. Different operation scenarios for an industry that supplies its own energy
α , β, γ , δ, ε, ζ = Coefficients used in the fitted cost functions demands
The ED problem has been used in conventional power and
CHP systems. For the first ones it tries to find the set point for
M. A.. Gonzalez has just finished his M. Sc. at ITESM, Monterrey, N. L.,
Mexico. (e-mail: al782566@mail.mty.itesm.mx).
the electricity production such that the demand plus the
J. R. Vega is with SEISA, Avenida E 101, Parque Industrial Almacentro , system losses match the electricity production with minimum
Apodaca, NL 66600 Mexico (e-mail: rvega@seisa.com.mx).
 2

fuel cost. Some complications arise in CHP systems because u ⋅p +m ⋅h ≥f l = 1...L ( 6)

the dispatch has to find the set points of power and heat chp , l chp chp , l chp chp, l
production with the minimum fuel cost such that both Indeed, other two restrictions appear in the problem to
demands were matched, indeed, the CHP units should operate balance production and demand:
in a bounded power vs. heat plane. E CHP
The literature reports basically the traditional method to p +
e
∑ p
chp
∑
= p demand (7 )
solve the ED problem adapted for CHP plants based on e =1 chp = 1
Lagrangian relaxation [2], [3], [4]. However, each author adds B CHP
some new feature to arrive to the optimal solution. For ∑ h +
b
∑ h (8)
chp
= h demand
example [2] exploits the degree of separability of the cost b =1 chp = 1
function and constraints and solve the problem in two levels, Based on the separability degree addressed in [2], wherein the
one level for each unit and the other updates the incremental objective function of the problem (or Lagrangian function) is
cost for power and heat using sensitivity coefficients. [3] does the sum of cost functions for all units:
a physical interpretation of the feasibility region for the CHP
E CHP B
units, then solves the problem in two layers, one for heat and
the other for power. [5] uses the same method as [3] but
F= C +
e
∑ C
chp
+ ∑ C
b
( 9) ∑
e =1 chp = 1 b =1
adding a steam turbine working at full capacity. Relating both types of energy with a vector x, we have a
This paper presents an algorithm based on the SQP method to problem with a nonlinear objective function, restricted by
solve nonlinear constrained optimization problems and the linear equalities, linear inequalities and simple bounds:
logic of Lagrangian relaxation technique. This proposed
min F(x)
method is part of the author’s M. Sc. thesis [6].
x
III. ECONOMIC DISPATCH PROBLEM – SETUP s.t.
We are dealing with a system that includes conventional A ⋅x =B
eq eq
power units, co-generation units, and only heat units. Reliable
models describing the off-design operation (part-load A ⋅x ≤B
in in
relations between energy production and fuel consumption) of
each unit as well as trustable optimization methods are LB ≤ x ≤ UB (10)
required in order to improve the ED problem. Depending on The solution for this problem must satisfy the first order
the nature of these relations, the adequate method should be Kunh-Tucker conditions as well as the constraints:
applied to solve the dispatching problem; nevertheless, in ∂C
e − λp − µ = 0 e = 1,..., E (11)
practice convex quadratic or linear I/O relations are applied.
∂p e
The cost function for each unit is obtained when the I/O curve e
is multiplied by the cost of the fuel burned in the unit. ∂C L
Assuming convex I/O curves for conventional power and heat
only units their cost functions will be convex too: ∂p
chp
− λp − µ ∑ ⋅u
chp , l chp, l
= 0 chp = 1,..., CHP (12)
chp l = 1
2
C (p ) = α + β ⋅ p + γ ⋅ p (1) ∂C
e e e e e e e L
2 ∂h
chp
− λh − ∑ µ chp, l ⋅ m chp, l = 0 chp = 1,..., CHP (13)
C (h ) = α + β ⋅ h + γ ⋅ h ( 2) chp l =1
b b b b b b b
The restrictions in both units are simple bounds: ∂C
b − λh − µ = 0 b = 1,..., B (14)
min max
p ≤p ≤p (3) ∂h b
e e e b
min max Nonlinear constrained optimization problems like (10) are
h ≤h ≤h (4)
b b b well solved by sequential quadratic programming techniques.
Considering CHP units with convex quadratic cost functions: These techniques take basis of Newton’s method for
2 unconstrained optimization. At each major iteration an
C (p ,h )=α +β ⋅p +γ ⋅p approximation of the Hessian matrix of the objective function
chp chp chp chp chp chp chp chp
is made using a quasi-Newton updating method to form a
2
+δ ⋅h +ε ⋅h +ζ ⋅p ⋅h ( 5) quadratic programming sub problem whose solution is used to
chp chp chp chp chp chp chp
form a search direction for a line search procedure.
The operation in CHP units is to be inside a plane formed Despite this is a good method sometimes it doesn’t find a
by linear inequality relations between power and heat global optimum; it highly depends on good approximations
production: for the production levels given at the start of the SQP
technique. We think that this is caused by the iterative

procedure, because of the weakness of inequality constraints
compared with the strength of equality constraints.
A. Consideration for buying and selling power
The industries supplying their own energy demands with
CHP systems are almost always interconnected to the utility
electric grid. Indeed, sometimes they keep the boilers used
before the CHP to supply their thermal demands as auxiliary
or backup boilers.
We can model the utility electric system as an infinite bus
and take into account the purchase of power from the utility.
The cost equation to buy power is similar to (1) and has a
restriction like (3). The utility can buy surplus of power from
the co-generator at any time, but normally with a lower cost.
This transaction of power from the co-generator to the utility
or another customer can be taken into account too with the
opportunity to increase the profit. It should be added to the
objective function (9) as positive but restricted as negative
with:
max
−p ≤p ≤0 (15)
s s
These considerations don’t assurance the optimum selling
of power but we are considering that the main interest for the
industry still being supply their own energy demands.
The same could be applied to sell heat to other customers
but is not considered here.
B. Proposal for CHP Economic Dispatch Problem
The difficulties to solve a problem like (10) came from the
inequality linear constraints related with the µ multiplier. The
algorithm considered in this paper take the basis of the SQP
procedure and the logic of the Lagrangian relaxation
technique used before to solve the economic dispatch joined
together with the unit commitment problem [4]. The key lays
in making an easier problem when the inequality constraints
are temporary removed from the problem. Then the SQP
algorithm solves partially it and immediately is checked if the
solution is inside the trust-region that form the inequality
constraints. If the solution is in the trust-region the problem is
trivial, if not then we calculate the distances from the partial
solution to each linear inequality constraint taking them like
equality to be checked later if that point is inside the trust-
region and solving the whole problem. This is achieved with
analytical geometry and by so doing the approach of the
global solution is improved.
The distance from the partial solution to each now equality
constraint for one CHP unit operating into a plane bounded by
L lines is obtained with:
m ⋅h +u ⋅p
chp, l chp chp, l chp
dist = (16)
l =1
m2 + u2
chp, l chp, l
3
Where the upper term in (16) is the linear form of (6)
equalized to zero. When we calculate (16) we must be aware
that the imaginary line described by the distance from the
partial solution point to each now linear constraint touch a
feasible operating point over the linear constraint. The
algorithm can be described as follows:
0. The initial vector x0 that has approximate values for
power and heat generation of every unit included in the
system is given.
1. The local restrictions for power units and or for the utility
to buy and sell power, boilers and the global restrictions
are given.
2. The objective function as well as its gradient is given.
3. The partial solution with SQP gives a partial optimum
generation. Now we must consider the point (pchp,hchp) for
every CHP unit to be inside their feasible operation
region:
a. FOR chp=1:CHP
IF (pchp,hchp) ∈ Feasible Area
It found a local or global optimum
ELSE
i. It looks for the right CHP
restriction among all the restrictions
that form the plane power vs. heat.
It starts applying (16) and then using
analytical geometry. The simple
bounds related with the linear
restriction used should be updated
during the process.
ii. The SQP technique is used with
the now equality restrictions.
END
4. An optimum vector x with the production levels for all
units of the system is found.
IV. CASE STUDIES
Three case studies are considered in this paper. The first
one shows the efficacy of the proposed algorithm using
models of units taken from [1]. The second one uses the
models of units taken from [3] whose are the same used in [1]
but one steam turbine is added. In the last one we model a
combined cycle CHP plant and an auxiliary boiler used in a
paper mill located in northern Mexico with software of the
THERMOFLOW company; the purchase and sell of power to
the electric utility is considered.
The proposed algorithm is implemented in MATLAB
taking the basis of the fmincon subroutine.
A. Case No. 1
+f The system addressed in [3] has a conventional power unit,
chp, l two CHP units and a boiler. Numbering each unit, their cost
functions in USD/h and their capacity limits in MW are
expressed with:
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Fig. 3. Feasible Operating Region for Unit 3 in Case 1.

2
C = 50 ⋅ p ; 0 ≤ p ≤ 150
1 1 1
2 B. Case No. 2
C = 2650 + 14.5 ⋅ p + 0.0345 ⋅ p + 4.2 ⋅ h
2 2 2 2 In reference [5] a steam turbine is added to the system of
2 [3] to consider combined cycle CHP but unit 3 in [3] is a
+ 0.03 ⋅ h + 0.031 ⋅ p ⋅ h combined cycle CHP yet, although he made this
2 2 2
consideration. Indeed, the author establishes that the steam
2
C = 1250 + 36 ⋅ p + 0.0435 ⋅ p + 0.6 ⋅ h turbine is always working to give its upper power output of
3 3 3 3
80 MW while it consumes 120 MW of heat (this unit is
2 introduced in our problem as unit number 5). The power and
+ 0.027 ⋅ h + 0.011 ⋅ p ⋅ h
3 3 3 heat demands for this case are 250 MW and 115 MW
2 respectively.
C = 23.4 ⋅ h ; 0 ≤ p ≤ 2695.2
4 4 1 The steps of the algorithm are as follow: steps 0 to 2 are
The capacity limits for the CHP units (units 2 and 3) are trivial, in step 3 the partial solution is
represented in Fig.2 and Fig. 3. The power and heat demands x = [0 130 40 99.4 135.6 0 80 − 120] where the
for the system are 200 MW and 115 MW respectively. last two values inside the vector x are related with p5 and h5.
We start the operation of the algorithm giving the trivial For unit 3 the production of both power and heat is outside its
steps 0 to 2. In step 3 a partial solution feasible area and p = 1.1548h − 46.881 with its limits for
x = [0 160 40 0 115 0] is found; where x has the 3 3
production levels for every unit included in the system power 40 ≤ p ≤ 110.2 and heat 75 ≤ h ≤ 135.6 are applied;
3 3
x = [p p p h h h ]. With this solution the unit then the SQP solves again and find the partial vector
1 2 3 2 3 4
x = [0 130 40 159.9991 75.0009 0 80 − 120] where
3 is operating outside its feasible plane, that’s why (16) is
applied to all restrictions appearing in Fig. Y. The right linear unit 2 is operating outside its solution area. The restriction
constraint is p = 1.1548h − 46.881; its simple bounds p = 1.7819h − 105.74 and its capacity limits for power
3 3 2 2
81 ≤ p ≤ 215 and heat 104.8 ≤ h ≤ 180 are applied. At the
40 ≤ p ≤ 110.2 and 75 ≤ h ≤ 135.6 should be applied too, 2 2
3 3
end the global optimum for this case is
and then in the next step the algorithm founds the vector
x = [0 130 40 132.2970 75.0009 27.7022 80 − 120]
x = [0 160 40 39.9991 75.0009 0], which is the same
with an operational cost of 10,369.6 USD/h.
result, reported in [1]. The cost evaluated in the solution is
The solution obtained from [2] has the unit 2 operating
9,257.1 USD/h. outside its feasible plane as we can see in its solution vector
x = [0 130 40 160 75 0 80 − 120]. The operational
260
240 p2 = -0.1778h2 + 247
220 (0,247)
200
cost evaluated with this production is 10,192.33 USD/h.
(180,215)
Poower [MW]

180 When the SQP technique is used without the considerations

160 included in our algorithm the solution vector is
140
120 (0,100) (104.8,81) p2= 1.7819h2 - 105.74 x = [0 103.0512 66.9488 103.3769 98.2638 33.3593 80 −120]
100
80 and the operational cost is 10,623.4 USD/h that is greater than
60 p2 = -0.1698h2 + 98.8
40
the cost obtained with the proposed algorithm despite of the
20 input vector x0 is the same for both approaches.
0
0 20 40 60 80 100 120 140 160 180 200
Heat [MW] C. Case No. 3
Fig. 2. Feasible Operating Region for Unit 2. A combined cycle CHP plant and an auxiliary boiler are
140 modeled. They are owned by a paper mill industry located in
130 p3 = -0.1512h3 + 130.7
120
northern Mexico to supply both power and heat. The industry
110 (32.4,125.8) is interconnected to the electric utility system and the
Power [MW]

100 (135.6,110.2)
90 purchase and sale of power from and to it is considered but
80
70
with different cost functions because the cost of power sold
60 (15.9,44) (75,40) by the utility is much higher than the cost of power bought by
50 p3 = 1.1584h3 - 46.881
40 it.
30
p3 = -0.0677h3 + 45.076
20
10
0
0 10 20 30 40 50 60 70 80 90 100 110 120 130 140
Heat [MW]
 5

The cost function for the CHP plant is expressed by standard SQP to reach the solution inside the feasible region
2 of CHP units. This improvement is possible thanks to the
C ( p , h ) = −287.582 + 37.32778 ⋅ p + 0.0005 ⋅ p modification introduced in the standard SQP algorithm and
1 1 1 1 1
used in the three cases showed.
2
+ 3.898043 ⋅ h + 0.005 ⋅ h + 0.0025 ⋅ p ⋅ h Case 1 shows the same result presented in [3]. Case 2
1 1 1 1
shows an error in [5] that was corrected with our algorithm
and represented with Fig. 4. Its main restrictions are
giving moreover a better result than using only the SQP
expressed in Fig. 5.
technique. The case 3 includes sale and purchase of power to
the public utility from the CHP proprietary point of view, that
is, it was included not to optimize the sale of surplus power,
but to give additional earnings to the co-generator.

VI. REFERENCES
[1] Mexican Energy Secretary, "Prospectivas del sector electrico 2002-2011,"
Mexico, D.F., 2002.

[2] Frans J. Rooijers, and Robert A. M. van Amerongen, "Static economic

Dispatch for co-generation systems," IEEE Trans. Power Systems, vol. 9,
Fig. 4. Cost Function for Unit 1 in Case 3. no. 3, pp. 1392-1398, Aug. 1994.
The cost function for the power that the industry can buy
[3] Tao Guo, Mark I. Henwood, and Marieke van Ooijen, "Static economic
from the utility can be modeled as an infinite bus, and can be Dispatch for co-generation systems," IEEE Trans. Power Systems, vol. 9,
expressed by C = 60 ⋅ p restricted by 150≤ p ≤ 0 . The no. 3, pp. 1392-1398, Aug. 1994.
2 2 2
cost function that the industry can sell to the utility is [4] Erik Dotzauer, "Energy system operation by Lagrangian relaxation," Ph.D.
dissertation, Dept. Mathematics and Physics, Mälardalen University,
expressed with C = 20 ⋅ p restricted by − 150≤ p ≤ 0. The Sweden, 2001.
3 3 3
cost function model for the auxiliary or backup boiler is [5] Rasheek M. Rifaat, "Practical considerations in applying economical
expressed by C = 17.438 ⋅ h + 0.0158 and restricted by dispatch models to combined cycle cogeneration plants," in Proc. 1997
4 4 IEEE Communications, Power and Computing Conf., pp. 59-63.
0≤ h ≤ 123.0385.
4 [6] M. A. Gonzalez Chapa, "Metodology for the optimum operation in co-
generation plants," M. Sc. dissertation, Dept. Energy Eng., Instituto
54
53 Tecnologico y de Estudios Superiores de Monterrey, Mexico, 2003.
(7.39,51.25)
52
51 p1 = -0.1058h 1 + 52.071
50
p 1 = 0.2801h 1 + 49.156
49 VII. BIOGRAPHIES
Power [MW]

48
47 (1.483,49.58) (36.54,48.16)
46
45 M. A. Gonzalez Chapa (B. Eng. 2001, M. Sc.
44 2003) received his B. Eng. in mechanical
(1.483,42.23)
43
42 engineering at Universidad Autonoma de Nuevo
41 (36.54,38.09) Leon (UANL) where he was awarded several times
40
with the ‘Grupo de los Cien’ recognition. He
39 p 1 = -0.1198h1 + 42.418
38 received his M. Sc. in energy at Instituto
37 Tecnologico y de Estudios Superiores de Monterrey
0 2 4 6 8 10 12 14 16 18 20 22 24 26 28 30 32 34 36 38 (ITESM). This paper is part of his M. Sc. thesis
Heat [MW] Metodology for the optimum operation in co-
generation plants. His main research areas include
Fig. 5. Feasible Operating Region unit 1in Case 3.
thermo-mechanical, electric power and CHP systems evaluation, design and
At any time the power and heat demands are 35 MW and operation as well as alternate sources of energy, HVAC systems efficient design
40 MW respectively. and computerized energetic simulation.
Following the steps of the algorithm the final optimum
vector is x = [38.096 0 36.544 3.456 − 3.096] . Thus the
plant will operate with the CHP and boiler units and will sell
power to the utility. The operation cost is 1,286.2 USD/h. J. R. Vega Galaz (B. Eng. 1985, M. Sc. 1988, Ph. D.
Details on the modeling process can be obtained from the 1993, B. A. 1997) received his B. Eng. in
author M. Sc. thesis [6]. electromechanical engineering and his M. Sc. in
electrical engineering at ITESM. He received the Ph.
D. in electrical engineering at UANL. He was
awarded with the annual research prize of the UANL
V. CONCLUSIONS in 1994 with the doctoral thesis Methodology to
evaluate the economical an electrical feasibility of
The algorithm proposed in this paper to solve the ED cogeneration plants. He received the Bachelor in
problem shows a more effectively performance than the Philosophy in the Pontifical University of the Holy Cross in Rome, Italy. The
 6

thesis of the B. A. was related with philosophy of the science. He is now

working for SEISA, a pioneer company in Mexico dedicated to the design,
investment, construction, operation and maintenance of cogeneration and
renewable energy sources. He also teaches the subject of Cogeneration and
renewable sources of energy at ITESM in the Master in Engineering Program.