Definition: Economic Dispatch
The allocation of demand to individual generating units on line to effect the most economical production of electricity.
- 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 honour the operational and system constraints of the available resources and corresponding transmission capabilities. In the US Energy Policy Act of 2005 the term is defined as "the operation of generation facilities to produce energy at the lowest cost to reliably serve consumers, recognising any operational limits of generation and transmission facilities".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 MWh 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.