Merit order
In a centralized management scheme, the ranking is such that those with the lowest marginal costs are the first sources to be brought online to meet demand, and the plants with the highest marginal costs are the last to be brought on line.
Sometimes generating units must be started out of merit order, due to transmission congestion, system reliability or other reasons.
A study by the Fraunhofer Institute ISI found that this "merit order effect" had allowed solar power to reduce the price of electricity on the German energy exchange by 10% on average, and by as much as 40% in the early afternoon.
In 2007[needs update]; as more solar electricity was fed into the grid, peak prices may come down even further.
[3] A 2013 study estimated the merit order effect of both wind and photovoltaic electricity generation in Germany between the years 2008 and 2012.
For each additional GWh of renewables fed into the grid, the price of electricity in the day-ahead market was reduced by 0.11–0.13 ¢/kWh.
On the other hand, solar energy tends to be most abundant at noon, whereas peak demand is late afternoon in warm climates, leading to the so-called duck curve.
[citation needed] A 2008 study by the Fraunhofer Institute ISI in Karlsruhe, Germany found that windpower saves German consumers €5 billion a year.
It is estimated to have lowered prices in European countries with high wind generation by between 3 and 23 €/MWh.
[citation needed] 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 can be solved by specialized computer software which should satisfy 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 total welfare is then The economic dispatch task is to find the combination of rates of production and consumption (Sk, Dk) which maximise this expression W subject to a number of constraints: The first constraint, which is necessary to interpret the constraints that follow, is that the net injection at each bus is equal to the total production at that bus less the total consumption: The power balance constraint requires that the sum of the net injections at all buses must be equal to the power losses in the branches of the network: The power losses L depend on the flows in the branches and thus on the net injections as shown in the above equation.
Note that the net injection at the slack bus is not included in this equation for the same reasons as above.
The analysis can be simplified using a linearised model called a DC power flow.
[1] Due to the added complexity, a number of algorithms have been employed to optimize this environmental/economic dispatch problem.
[12] The LEEM estimates changes in emissions associated with incremental changes in power demand derived from the locational marginal price (LMP) information from the independent system operators (ISOs) and emissions data from the US Environmental Protection Agency (EPA).
[12] LEEM was developed at Wayne State University as part of a project aimed at optimizing water transmission systems in Detroit, MI starting in 2010 and has since found a wider application as a load profile management tool that can help reduce generation costs and emissions.
