Economic load dispatch is an optimization problem that is solved by the power system operator in order to allocate the power that is needed to be produced by generating stations taking in consideration their production costs and the demand profiles of utilities. For the economic dispatch problem we need the production costing functions or curves of various types of generating stations.

The dispatch problem has evolved in accordance with the complexity of the technical and economic operation of the system. Frequently also referred to as the Optimal Power Flow (OPF) formulation, it encompasses the spot pricing mechanisms, the allocation of transmission rights and the power flow constraints in order to determine the dispatch from generators. As a by-product of the above solution, we obtain the price of electricity at various buses on the network. The well-known Locational Marginal Prices (LMPs) are derived by one such formulation. The dispatch problem is therefore one of the connecting links between the actual power flow and the economics of operation.

— *Vijay Pakka 26/11/2010 13:08*