Economic Dispatch
Economic Dispatch for Power Generation · Also known as: ED, Least-Cost Generation Dispatch
Economic Dispatch (ED) is the process of optimally allocating power output among committed generators to meet demand at minimum fuel cost. Introduced by Kirchmayer in 1958, ED is a fundamental real-time optimization problem solved every few minutes in power system operations. Unlike Unit Commitment (which decides generator on/off), ED assumes generators are already committed and focuses on splitting load most economically. ED's rapid feedback enables efficient real-time power plant operations.
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When to use it
ED must run continuously during grid operations, typically every 5-30 minutes. Essential when fuel costs vary significantly among generators or when real-time prices are used. Used in competitive electricity markets to compute locational marginal prices (LMPs). Less critical when all generators have similar costs. Requires accurate, real-time cost data and fast convergence.
Strengths & limitations
- Fast; can be solved in seconds even for large systems
- Provides economically optimal generation split given committed units
- Produces marginal cost (lambda) useful for real-time pricing and market signals
- Well-established methods with proven convergence for continuous problems
- Assumes generators are already committed; does not decide on/off status
- Ignores transmission network losses and congestion; may be infeasible on actual network
- Requires accurate fuel cost data which changes with market conditions
- Does not include discrete constraints (minimum up/down times, startup costs)
Frequently asked
What is the lambda (λ) computed by ED?
Lambda is the system marginal cost: the incremental fuel cost to serve one more megawatt of demand. At optimality, all units operate at the same lambda. In competitive markets, lambda is the wholesale electricity price (LMP).
Why would ED tell a generator to produce above or below its natural operating point?
ED balances economic efficiency: if a generator's marginal cost is below system average, ED increases its output to reduce total cost. Generators with costs above average are turned down if possible.
How does ED handle generator constraints?
Generators at minimum load or maximum capacity are treated as inequality constraints. ED optimizes remaining generators to equal lambda. If no solution exists (infeasibility), ED will violate one constraint at minimum economic loss.
Can ED handle transmission line constraints?
Classical ED ignores the network; line congestion is handled by security-constrained OPF, which includes line thermal limits. OPF is more accurate but slower than ED.
Sources
- Kirchmayer, L. K. (1958). Economic Operation of Power Systems. Wiley & Sons. link ↗
- Horton, G. K. (1970). Techniques for the economic dispatch of generation. IEEE Transactions on Power Apparatus and Systems, 89(5), 893-901. link ↗
- Wood, A. J., Wollenberg, B. F., & Sheblé, G. B. (2013). Power Generation, Operation, and Control (3rd ed.). Wiley-Interscience. link ↗
How to cite this page
ScholarGate. (2026, June 3). Economic Dispatch for Power Generation. ScholarGate. https://scholargate.app/en/electrical-engineering/economic-dispatch
Which method?
Set this method beside its closest kin and read them side by side — the library lays the books on the table; the choice is yours.
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- Unit CommitmentElectrical Engineering↔ compare