Economic Dispatch & its various impacts on Power System Generation

Economic dispatch is the short-term determination of the optimal output of a number of electricity generation facilities, to meet the system load, at the lowest possible cost, subject to transmission and operational constraints. The Economic Dispatch Problem is solved by specialized computer software which should honor the operational and system constraints of the available resources and corresponding transmission capabilities. It may also be defined as "the operation of generation facilities to produce energy at the lowest cost to reliably serve consumers, recognizing any operational limits of generation and transmission facilities"[1] The main idea is that in order to serve load at minimum total cost, the set of generators with the lowest marginal costs must be used first, with the marginal cost of the final generator needed to meet load setting the system marginal cost. This is the cost of delivering one additional MW of energy onto the system. The historic methodology for economic dispatch was developed to manage fossil fuel burning power plants, relying on calculations involving the input/output characteristics of power stations. The author has tried to discuss its various impacts in power system generation.