ECE 476

Power System Analysis

Lecture 17: Economic Dispatch

Prof. Tom Overbye

Dept. of Electrical and Computer Engineering
University of Illinois at Urbana-Champaign
overbye@illinois.edu
Special Guest Lecturer: TA Iyke Idehen
Announcements
• Please read Chapter 7
• HW 6 is due today
• HW 7 is 6.62, 6.63, 6.69, 6.71 due on Oct 27; this one
must be turned in on Oct 27 (hence there will be no
quiz that day)

2
 Basic Gas Turbine

Fuel Combustion
100% AC
chamber 1150 oC Power
33%

Compressor Turbine Generator

Fresh 550 oC Exhaust

air gases 67%

Brayton Cycle: Working fluid is Maximum Efficiency

always a gas
550  273
 1  42%
Most common fuel is natural gas 1150  273
Typical efficiency is around 30 to 35%
3
 Combined Cycle Power Plant

Efficiencies of up to 60% can be achieved, with even higher

values when the steam is used for heating. Fuel is usually natural gas
4
Generator Cost Curves
• Generator costs are typically represented by up to
four different curves
– input/output (I/O) curve
– fuel-cost curve
– heat-rate curve
– incremental cost curve
• For reference
– 1 Btu (British thermal unit) = 1054 J
– 1 MBtu = 1x106 Btu
– 1 MBtu = 0.293 MWh
– 3.41 Mbtu = 1 MWh
5
I/O Curve
• The IO curve plots fuel input (in MBtu/hr) versus
net MW output.

6
Fuel-cost Curve
• The fuel-cost curve is the I/O curve scaled by fuel
cost. A typical cost for coal is $ 1.70/Mbtu.

7
Heat-rate Curve
• Plots the average number of MBtu/hr of fuel input
needed per MW of output.
• Heat-rate curve is the I/O curve scaled by MW

Best for most efficient units are

around 9.0

8
Incremental (Marginal) cost Curve
• Plots the incremental $/MWh as a function of MW.
• Found by differentiating the cost curve

9
Mathematical Formulation of Costs
• Generator cost curves are usually not smooth.
However the curves can usually be adequately
approximated using piece-wise smooth, functions.
• Two representations predominate
– quadratic or cubic functions
– piecewise linear functions
• In 476 we'll assume a quadratic presentation
Ci ( PGi )   i   PGi   PGi2 $/hr (fuel-cost)
dCi ( PGi )
ICi ( PGi )     2 PGi $/MWh
dPGi
10
Coal Usage Example 1
• A 500 MW (net) generator is 35% efficient. It is
being supplied with Western grade coal, which
costs $1.70 per MBtu and has 9000 Btu per pound.
What is the coal usage in lbs/hr? What is the cost?
At 35% efficiency required fuel input per hour is
500 MWh 1428 MWh 1 MBtu 4924 MBtu
  
hr  0.35 hr 0.29 MWh hr
4924 MBtu 1 lb 547,111 lbs
 
hr 0.009MBtu hr
4924 MBtu $1.70
Cost =   8370.8 $/hr or $16.74/MWh
hr MBtu
11
 Coal Usage Example 2

• Assume a 100W lamp is left on by mistake for 8

hours, and that the electricity is supplied by the
previous coal plant and that
transmission/distribution losses are 20%. How
coal has been used?
With 20% losses, a 100W load on for 8 hrs requires
1 kWh of energy. With 35% gen. efficiency this requires
1 kWh 1 MWh 1 MBtu 1 lb
    1.09 lb
0.35 1000 kWh 0.29 MWh 0.009MBtu

12
Incremental Cost Example
For a two generator system assume
C1 ( PG1 )  1000 20 PG1  0.01PG21 $ / hr
C2 ( PG 2 )  400 15 PG 2  0.03PG22 $ / hr
Then
dC1 ( PG1 )
IC1 ( PG1 )   20  0.02 PG1 $/MWh
dPG1
dC2 ( PG 2 )
IC2 ( PG 2 )   15  0.06 PG 2 $/MWh
dPG 2

13
Incremental Cost Example, cont'd
If PG1  250 MW and PG2  150 MW Then
C1 (250)  1000 20  250  0.01  2502  $ 6625/hr
C2 (150)  400 15  150  0.03  1502  $6025/hr
Then
IC1 (250)  20  0.02  250  $ 25/MWh
IC2 (150)  15  0.06  150  $ 24/MWh

14
Economic Dispatch: Formulation
• The goal of economic dispatch is to determine the
generation dispatch that minimizes the
instantaneous operating cost, subject to the
constraint that total generation = total load + losses
m
Minimize CT   Ci ( PGi ) Initially we'll
i 1 ignore generator
Such that limits and the
m losses
 PGi  PD  PLosses
i=1

15
Unconstrained Minimization

• This is a minimization problem with a single

inequality constraint
• For an unconstrained minimization a necessary
(but not sufficient) condition for a minimum is the
gradient of the function must be zero,
f ( x )  0
• The gradient generalizes the first derivative for
multi-variable problems:
 f (x) f (x) f (x) 
f ( x )   , , , 
 1 x  x2 x n 

16
Minimization with Equality Constraint

• When the minimization is constrained with an

equality constraint we can solve the problem using
the method of Lagrange Multipliers
• Key idea is to modify a constrained minimization
problem to be an unconstrained problem
That is, for the general problem
minimize f (x) s.t. g(x)  0
We define the Lagrangian L(x,λ )  f (x)  λ T g (x)
Then a necessary condition for a minimum is the
L x (x,λ )  0 and L λ (x,λ )  0
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Economic Dispatch Lagrangian
For the economic dispatch we have a minimization
constrained with a single equality constraint
m m
L(PG ,  )   Ci ( PGi )   ( PD   PGi ) (no losses)
i 1 i 1
The necessary conditions for a minimum are
L(PG ,  ) dCi ( PGi )
    0 (for i  1 to m)
PGi dPGi
m
PD   PGi  0
i 1

18
Economic Dispatch Example
What is economic dispatch for a two generator
system PD  PG1  PG 2  500 MW and
C1 ( PG1 )  1000 20 PG1  0.01PG21 $ / hr
C2 ( PG 2 )  400 15 PG 2  0.03PG22 $ / hr
Using the Largrange multiplier method we know
dC1 ( PG1 )
  20  0.02 PG1   0
dPG1
dC2 ( PG 2 )
  15  0.06 PG 2   0
dPG 2
500  PG1  PG 2  0
19
Economic Dispatch Example, cont’d

We therefore need to solve three linear equations

20  0.02 PG1   0
15  0.06 PG 2   0
500  PG1  PG 2  0
0.02 0 1  PG1   20 
 0 0.06 1  PG 2    15 
    
 1 1      500 
 PG1   312.5 MW 
 P    187.5 MW 
 G2   
    26.2 $/MWh  20
Lambda-Iteration Solution Method
• The direct solution only works well if the
incremental cost curves are linear and no generators
are at their limits
• A more general method is known as the lambda-
iteration
– the method requires that there be a unique mapping
between a value of lambda and each generator’s MW
output
– the method then starts with values of lambda below and
above the optimal value, and then iteratively brackets the
optimal value

21
Lambda-Iteration Algorithm

Pick  L and  H such that

m m
 Gi )  PD  0
P (  L
 Gi )  PD  0
P (  H

i=1 i=1

While  H   L   Do
 M  ( H   L ) / 2
m
If  Gi
P (  M
)  PD  0 Then  H
  M

i=1

Else  L   M
End While
22
Lambda-Iteration: Graphical View

In the graph shown below for each value of lambda

there is a unique PGi for each generator. This
relationship is the PGi() function.

23
Lambda-Iteration Example
Consider a three generator system with
IC1 ( PG1 )  15  0.02 PG1  $/MWh
IC2 ( PG 2 )  20  0.01PG 2  $/MWh
IC3 ( PG 3 )  18  0.025 PG 3   $/MWh
and with constraint PG1  PG 2  PG 3  1000 MW
Rewriting as a function of  , PGi ( ), we have
  15   20
PG1 ( )  PG2 ( ) 
0.02 0.01
  18
PG3 ( ) 
0.025
24
Lambda-Iteration Example, cont’d
m
Pick  L so  Gi )  1000  0 and
P (  L

i=1
m
 Gi )  1000  0
P (  H

i=1
m
Try  L
 20 then  PGi (20)  1000 
i 1
  15   20   18
   1000  670 MW
0.02 0.01 0.025
m
Try  H  30 then  PGi (30)  1000  1230 MW
i 1
25
Lambda-Iteration Example, cont’d

Pick convergence tolerance   0.05 $/MWh

Then iterate since  H   L  0.05

 M  ( H   L ) / 2  25
m
Then since  Gi
P (25)  1000  280 we set  H
 25
i 1
Since 25  20  0.05
 M  (25  20) / 2  22.5
m
 Gi
P (22.5)  1000  195 we set  L
 22.5
i 1
26
Lambda-Iteration Example, cont’d

Continue iterating until  H   L  0.05

*
The solution value of  ,  , is 23.53 $/MWh
Once  * is known we can calculate the PGi
23.53  15
PG1 (23.5)   426 MW
0.02
23.53  20
PG2 (23.5)   353 MW
0.01
23.53  18
PG3 (23.5)   221 MW
0.025
27
Generator MW Limits
• Generators have limits on the minimum and
maximum amount of power they can produce
• Often times the minimum limit is not zero. This
represents a limit on the generator’s operation with
the desired fuel type
• Because of varying system economics usually
many generators in a system are operated at their
maximum MW limits.

28
Lambda-Iteration with Gen Limits
In the lambda-iteration method the limits are taken
into account when calculating PGi ( ) :
if PGi ( )  PGi ,max then PGi ( )  PGi ,max
if PGi ( )  PGi ,min then PGi ( )  PGi ,min

29
 Lambda-Iteration Gen Limit Example
In the previous three generator example assume
the same cost characteristics but also with limits
0  PG1  300 MW 100  PG2  500 MW
200  PG3  600 MW
With limits we get
m
 PGi (20)  1000  PG1 (20)  PG 2 (20)  PG 3 (20)  1000
i 1
 250  100  200  450 MW (compared to -670MW)
m
 PGi (30)  1000  300  500  480  1000  280 MW
i 1 30
Lambda-Iteration Limit Example,cont’d
Again we continue iterating until the convergence
condition is satisfied. With limits the final solution
of  , is 24.43 $/MWh (compared to 23.53 $/MWh
without limits). The presence of limits will always
cause  to either increase or remain the same.
Final solution is
PG1 (24.43)  300 MW
PG2 (24.43)  443 MW
PG3 (24.43)  257 MW

31
Back of Envelope Values
• Often times incremental costs can be approximated
by a constant value:
– $/MWhr = fuelcost * heatrate + variable O&M
– Typical heatrate for a coal plant is 10, modern
combustion turbine is 10, combined cycle plant is 7 to 8,
older combustion turbine 15.
– Fuel costs ($/MBtu) are quite variable, with current
values around 1.5 for coal, 4 for natural gas, 0.5 for
nuclear, probably 10 for fuel oil.
– Hydro, solar and wind costs tend to be quite low, but for
this sources the fuel is free but limited

32
Inclusion of Transmission Losses
• The losses on the transmission system are a
function of the generation dispatch. In general,
using generators closer to the load results in lower
losses
• This impact on losses should be included when
doing the economic dispatch
• Losses can be included by slightly rewriting the
Lagrangian:
m m
L(PG ,  )   Ci ( PGi )   ( PD  PL ( PG )   PGi )
i 1 i 1

33
Impact of Transmission Losses
This small change then impacts the necessary
conditions for an optimal economic dispatch
m m
L(PG ,  )   Ci ( PGi )   ( PD  PL ( PG )   PGi )
i 1 i 1
The necessary conditions for a minimum are now
L(PG ,  ) dCi ( PGi ) PL ( PG )
   (1  )0
PGi dPGi PGi
m
PD  PL ( PG )   PGi  0
i 1

34
Impact of Transmission Losses
Solving each equation for  we get
dCi ( PGi ) PL ( PG )
  (1  )0
dPGi PGi
1 dCi ( PGi )
 
 PL ( PG )  dPGi
1  P 
 Gi 

Define the penalty factor Li for the i th generator

1 The penalty factor
Li 
 PL ( PG )  at the slack bus is
1  P  always unity!
 Gi 
35
Impact of Transmission Losses
The condition for optimal dispatch with losses is then
L1IC1 ( PG1 )  L2 IC2 ( PG 2 )  Lm ICm ( PGm )  
1
Since Li  if increasing PGi increases
 PL ( PG ) 
 1  P 
 Gi 
PL ( PG )
the losses then  0  Li  1.0
PGi
This makes generator i appear to be more expensive
(i.e., it is penalized). Likewise Li  1.0 makes a generator
appear less expensive.
36
Calculation of Penalty Factors

Unfortunately, the analytic calculation of Li is

somewhat involved. The problem is a small change
in the generation at PGi impacts the flows and hence
the losses throughout the entire system. However,
using a power flow you can approximate this function
by making a small change to PGi and then seeing how
the losses change:
PL ( PG ) PL ( PG ) 1
 Li 
PGi PGi PL ( PG )
1
PGi
37
Two Bus Penalty Factor Example

PL ( PG ) PL ( PG ) 0.37 MW

 0.0387   0.037
PG 2 PGi 10 MW
L2  0.9627 L2  0.9643
38