**3.1 Evolution of economic dispatch**

The evolution timeline of economic dispatch could be divided into the following three major periods:


#### **3.1.1 Classical dispatch**

Since the birth of control center's energy management system, classical dispatch monitors load, generation and interchange (imports/exports) to ensure balance of supply and demand. It also maintains system frequency during dispatch according to some regulatory standards, using Automatic Generation Control (AGC) to change generation dispatch as needed. It monitors hourly dispatch schedules to ensure that dispatch for the next hour will be in balance. Classical dispatch also monitors flows on transmission system. It keeps transmission flows within reliability limits, keeps voltage levels within reliability ranges and takes corrective action, when needed, by limiting new power flow schedules, curtailing existing power flow schedules, changing the dispatch or shedding load. The latter set of monitoring and control functions is typically performed by the transmission operator. Traditionally, generation scheduling/dispatch and grid security are separate independent tasks within control centers. Other than some ad hoc analysis, classical dispatch typical only addresses the real-time condition without much consideration of scenarios in the past or the future.

#### **3.1.2 Market-based dispatch**

Ensuring reliability of the physical power system is no longer the only responsibility for the RTO/ISOs. A lot of the RTOs/ISOs are also responsible for operating wholesale electricity markets. An electricity market in which the ISO or RTO functions both as the "system operator" for reliability coordination and the "market operator" for establishing market prices allows commercial freedom and centralized economic and reliability coordination to co-exist harmoniously (Figure 2). To facilitate market transparency and to ensure reliability of the physical power system, an optimization-based framework is used to provide an Taking advantage of the mathematical rigor contained in formal optimization methodology, the rules are likely to be more consistent, and thus more defensible against challenges that effective context for defining comprehensive rules for scheduling, pricing, and dispatching. invariably arise in any market.

Congestion management via the mechanism of locational marginal pricing (LMP) becomes an integral part of design of many wholesale electricity markets throughout the world and security-constrained economic dispatch (SCED) becomes a critical application to ensure the transmission constraints are respected while generation resources are being dispatched economically. The other important aspect of market-based dispatch is the size of the dispatch system. A typical system like PJM or Midwest ISO is usually more than 100GW of installed capacity. Advances in mathematical algorithms and computer technology really make the near real-time dispatch and commitment decisions a reality.

Fig. 2. Dual functions of RTO/ISO and dual solutions of SCED
