EE 220

Economic Operation

Economic Operation of Power System

One of the objective of power system planners
and operators is to minimize the cost of operating
a power system
A power system is composed of several
components:

Generators
Transmission Lines
Transformers
Capacitors, Inductors
Other devices such as breakers, synchronous
condensers etc.

Economic Operation of Power System

However generator units have the major
contribution in operating costs since fuel is
needed
Fuel can be oil, coal, uranium, natural gas
Fuel prices are volatile and dictated by market
forces
Although hydro plants are cheaper but its
availability is inferior than those plants that
utilizes conventional fuel

Objectives of Economic Operation

Study
Optimize certain controllable power system
variables to achieve a desired objective
The common objectives are:
Minimize generator operating cost
Minimize copper loss (I2R)
Optimize transmission/distribution configuration
(advance)

Controllable Variables
Generator active power output
Generator reactive power output
Transmission/distribution configuration
through breaker configuration
Status of power system components: ON/OFF

Optimization
Refers to choosing the best element from some set of
available alternatives [1]
In the simplest case, this means solving problems in
which one seeks to minimize or maximize a real
function by systematically choosing the values of real
or integer variables from within an allowed set
Although brute-force method can be employed to
find the optimal solution to a problem, however a
large-scale and realistic system has several or hundreds
of variables that must be taken into consideration

Optimization Techniques
Conventional Optimization Methods

Unconstrained Optimization
Nonlinear Programming (NLP)
Linear Programming (LP)
Quadratic Programming (QP)
Generalized Reduced Gradient Method
Newton Method
Network Flow Programming (NFP)
Mixed Integer Programming (MIP)
Interior Point Programming

Optimization Techniques
Intelligent Method
Neural Networks (NN)
Evolutionary Programming (EP)
Particle Swarm Programming (PSO)

Optimization Techniques
Optimization with Uncertainties
Probabilistic Optimization
Fuzzy Set
Analytic Hierarchal Process

Conventional Optimization Methods

Unconstrained Optimization
Serves as basis for constrained optimization
formulation
No constraints i.e. transmission limit, generator
limit
Approaches gradient method, line search,
Lagrange multiplier method

Conventional Optimization Methods

Linear Programming
Linearization of nonlinear equations are necessary
Has two major components:
(1) Objective
(2) Constraints

Has reliable convergence

Very easy to formulate once linearization is performed
Very fast
However due to the linearization properties some nonlinear
properties introduce approximation inaccuracies i.e. line losses
However its solution/precision is generally acceptable for most
applications
Trivia: The Philippine Wholesale Electricity Spot Market uses LP
solution to optimize schedules and derive process

Conventional Optimization Methods

Nonlinear Programming
Directly handles non-linear equations in the
problem solution
However it requires a good approximation of a
starting point to start (aids in finding the global
extreme points)
More accurate than LP since little or no
information is lost
This is generally slower than LP
More complicated to formulate

Conventional Optimization Methods

Interior Point Programming
Can handle linear and non-linear equations
Accuracy is greater than LP
Although is harder to formulate

Intelligent Methods
Non-traditional method of finding optimal
solution
Usually simulates a natural event or phenomenon
Example of a natural event: Evolution which was
used as a pattern for Evolutionary algorithm
(mutation, reproduction, selection etc.).
Usually used for academic and research since
commercial systems utilizes conventional
methods

Optimization with Uncertainties

Several events/parameters are probabilistic/uncertain
in nature
For Power System: Real-time demand is uncertain but
can be forecasted
This type of optimization considers several parameters
as probabilistic inputs to determine a solution
Probabilistic inputs are usually modeled using
Probability Distribution Functions (PDF) i.e. Normal
Curve
Usually helpful when analyzing possibilities and
uncertainties

Unconstrained Optimization
Extreme point of a function f(X) defines
either a maximum or a minimum of the
function f.

f(x)

x1

x2

x3

x4

x5

A point X0 = (x1, , xj, , xn) is a maximum if

f X 0 h f X 0
for all h = (h1, , hj, , hn) such that |hj| is sufficiently small for all j.

A point X0 = (x1, , xj, , xn) is a minimum if

f X 0 h f X 0

x6

Necessary and Sufficient Conditions

for Extrema
Assuming that the first and second partial derivatives of
f(X) are continuous at every X,
A necessary condition for X0 to be an extreme point of f(X)
is that

f X 0 0
A sufficient condition for a stationary point X0 to be
extremum is that the Hessian matrix H = 2f(X) evaluated
at X0 is

Positive definite when X0 is a minimum point

Negative definite when X0 is a maximum point

Example
Consider the function
f(x1, x2, x3) = x1 + 2x3 +x2x3 x12 x22 x32
The necessary condition

f X0 0

Example
f
1 2 x1 0
x1
f
x3 2 x2 0
x2
f
2 x2 2 x3 0
x3

Solution to 3 unknowns and 3 equations:

X0

1,2,4
2 3 3

Lagrange Method
A method that provides a strategy in finding
the maximum/minimum of a function subject
to constraints
Named after Joseph Louis Lagrange, an Italian
born mathematician

Lagrange Equation
L( x, ) f ( x) g ( x) c
Where is a Lagrange Multiplier

Lagrange Method
f(x): is a function representing controllable
variables i.e. cost-function that depends on
number of controllable output product
g(x): A function representing a set of
constraints i.e. maximum limit a controllable
variable can be delivered

KarushKuhnTucker conditions
Optimality Conditions
Are necessary conditions for the solution of a
nonlinear optimization problem to be optimal
Originally developed by Harold W. Kuhn and
Albert W. Tucker and later developed by
William Karush

KarushKuhnTucker conditions
Optimality Conditions
1.

L 0 0 0
x , , 0
xi

2. gi x0 0
3. hi x0 0

4. i 0 gi x0 0

0
i 0

i 1

i 1
i 1
i 1

N
Ng
Ng

KarushKuhnTucker conditions
Optimality Conditions
Condition 1 partial derivative of Lagrange
function must equal zero at the optimum.
Conditions 2 and 3 restatement of
constraint conditions.
Condition 4 complementary slackness
condition. Slack variables or excess is equal to
zero in optimal condition

Example
Consider two thermal plants feeding a given power demand. The
fuel costs of each is related to the output power as follows:

F1 4 P1 0.01P12
F2 2 P2 0.03P22
The objective is to minimize the total cost of operation while
satisfying the equality constraint

P1 P2 PD

Example
The modified cost is
L( P1 , P2 , ) 4P1 2P2 0.01P12 0.03P22 PD P1 P2

The necessary conditions for minimization are

L( P1 , P2 , )
4 0.02 P1 0
P1
L( P1 , P2 , )
2 0.06 P2 0
P2
L( P1 , P2 , )
P1 P2 PD

Example
For this simple system we are able to eliminate l and P2 to obtain a single
equation in P1 given by

0.08P1 2 0.06PD 0
PD
50
100
200
250

P1
12.5
50
125
162.5

P2
37.5
50
75
87.5

4.25
5
6.5
7.25

Reference
[1] , Wikipedia. [Online] [Cited: May 2, 2010.]
http://en.wikipedia.org/wiki/Optimization_%28mathe
matics%29.
[2] Zhu, Jizhong., Optimization of Power System
Operation. New Jersey : John Wiley & Sons, 2009.
[3] Nerves, Allan C., "EE358: Economic Operation of
Power System (Lecture Notes)." Diliman : EEEI,
University of the Philippines-Diliman, 2005. Lecture 1.
[4] , Joseph Louis Lagrange. Wikipedia. [Online] [Cited:
May 2, 2010.]
http://en.wikipedia.org/wiki/Joseph_Louis_Lagrange.