By S.K. Soonee, Former and Founder CEO, POSOCO; Dr Deb Chattopadhyay, Senior Energy Specialist, The World Bank; and Debasis De, Former Executive Director, NLDC Grid-India
Optimisation is at the heart of the power sector’s operations and planning. Given that power procurement costs represent 70-80 per cent of a typical discom’s expenditure, optimising generation costs is crucial for financial sustainability and operational efficiency. However, despite the critical nature of this process, very few states in India have implemented economic dispatch regulations in true spirit, or are actively working on security-constrained economic dispatch (SCED) within the intra-state sector. State grid codes are mandated to mainstream SCED in line with the provisions in the Indian Electricity Grid Code, 2023.
Need for transition
The traditional merit order dispatch (MOD), commonly referred to as “bucket filling”, is prevalent in many states. Bucket filling is a simpler approximation of dispatch optimisation, but may often prove to be unworkable for practical implementation as it fails to meet operating constraints. Even if an MOD finds a workable/feasible solution, it may be suboptimal compared to SCED. It can neither consider all constraints in power system operation, nor ensure the least-cost solution. Each percentage of suboptimality at the national level may mean thousands of crores in additional operating costs. The deficiency of MOD can critically impact system operation, given the evolving complexity and dynamic nature of Indian power grids. This older method dispatches power based on a cost-only ranking of generators without adequately considering system constraints and operational limits. Consequently, it often leads to sub-optimal operational costs and inefficiencies. Further, traditional coding is used instead of linear programming (LP) formulation for optimisation, which may not guarantee global optimisation given various power system constraints, or provide the acceptable computational performance needed for a real-time environment.
Benefits of SCED
Recent assessments using a simple model indicate potential savings of 2-3 per cent in power procurement costs, translating into more than Rs 10,000 billion (or well over a $1 billion) in annual savings. These savings are achievable through SCED at the state, regional and national levels, as SCED optimises resource allocation by considering system constraints and operational limits, unlike MOD. Moreover, the benefits of transitioning to SCED extend beyond cost savings. Additional benefits include:
- Improved efficiency: SCED optimises resource usage, reducing the need for frequent changes to generation levels and start-up/shut-down decisions.
- Enhanced reliability: By incorporating system constraints, SCED ensures a more reliable and robust power system.
- Flexibility and scalability: SCED models are easily adaptable to new constraints or changing system conditions, maintaining robust dispatch processes that can progressively reflect the characteristics of new technologies.
- Environmental benefits: More efficient dispatch can lead to reduced emissions and better integration of renewable energy sources.
Key advantages of SCED over MOD
Systematic handling of constraints: SCED accounts for multiple constraints, including ramp rates, transmission limits and reserve requirements, ensuring feasible and reliable solutions.
Holistic optimisation: SCED ensures that the entire system is optimised holistically rather than treating components in isolation. It is a Make in India initiative, and can be easily implemented.
Optimal solutions: SCED finds the globally optimal solution, minimising costs while respecting all constraints. Bucket filling methods, using traditional coding, often lead to suboptimal solutions because they do not consider all constraints collectively.
Efficient solvers: SCED leverages highly efficient and reliable solvers such as CPLEX and GUROBI, which can effectively handle large-scale optimisation problems.
Marginal value extraction: LP formulation allows the extraction of marginal values (shadow prices) or “duals” of binding constraints, providing economic insights crucial for market operations and decision-making. Currently, the system marginal price of states being shown on the Merit India App is a crude approximation that can be erroneous, and should be replaced with the duals from SCED.
Reduced computation time: SCED typically requires less computational time than iterative and heuristic bucket filling methods, critical for real-time grid operations involving tight gate closure timings to accommodate various market products in a federated way.
Ease of auditing: The structured and standardised approach of LP models in SCED makes them highly transparent and easier to audit, validate and maintain, ensuring regulatory compliance and stakeholder confidence.
Practical applications and industry hesitation
Optimisation techniques have been around for several decades, with their mathematical underpinnings dating back centuries. However, the power industry has historically been conservative in adopting these techniques for practical applications. As Dr Narayan S. Rau points out in the preface to his 2003 IEEE Press book, “Optimisation Principles: Practical Applications to the Operation and Markets of the Electric Power Industry”, the power sector, except in the manufacturing apparatus, has been slow to adopt optimisation techniques such as optimal power flow (OPF). Dr Rau notes that despite the existence of OPF for at least a quarter of a century, it was often regarded as an academic curiosity rather than a practical tool. The deregulation of the power industry, with market rules and economic principles requiring sophisticated algorithms to price commodities at marginal costs, has necessitated the use of these techniques. OPF, essential for computing locational marginal prices of energy in a network, exemplifies this shift. Despite the increasing need for sophisticated methods and algorithms, there is still a lack of universal appreciation for these techniques among practising professionals. The rapid changes in the industry have left little time for professionals to catch up, often resulting in a lack of awareness about even elementary optimisation techniques.
Linear programming and GAMS for SCED: Efficiency and reliability
LP implementation through a General Algebraic Modelling System (GAMS) or any other similar language/tool provides a robust platform for SCED implementation. Unlike the traditional coding used by MOD, which requires thousands of lines of code, the GAMS language allows direct representation of the core equations, thus reducing the requirement to only hundreds, making it more efficient and less prone to errors. Moreover, GAMS provides access to highly efficient LP algorithms that execute optimisations in seconds, compared to the minutes taken by local codes. This speed and efficiency are critical for real-time grid operations. The key benefits of GAMS are:
- Efficient coding: GAMS simplifies the coding process, reducing complexity and the potential for errors, and ensures good documentation.
- Fast execution: Optimisations in GAMS are executed in seconds for a typical state-level SCED, which is crucial for real-time applications.
- Reliability and transparency: The structured approach of GAMS ensures reliable and transparent optimisation processes.
- Scalability: GAMS can handle large-scale optimisation problems, making it suitable for complex power systems.
Missed opportunities for states in India
States that have not yet transitioned to SCED are missing out on significant benefits such as:
- Cost efficiency: SCED optimisation leads to lower power procurement costs.
- Operational effectiveness: The ability to manage complex constraints improves overall system operations.
- Market flexibility: SCED supports better integration of renewable energy and market mechanisms.
- Environmental impact: More efficient dispatch can reduce emissions and support environmental sustainability.
- Regulatory compliance: Updated dispatch practices can ensure better compliance with national grid codes and standards.
Implementation challenges
Despite its clear advantages, implementing SCED has its own practical challenges, particularly at the state level. These include:
- Regulatory interventions: Many state regulations are outdated and are yet to support SCED. Updating these regulations is essential.
- Training and capacity building: There is a need for extensive training and capacity building among utility staff and regulators to enable them to appreciate and effectively implement and manage SCED.
- Technological upgrades: The transition to SCED requires investment in technology and software capable of handling the sophisticated optimisation processes.
- Developers’ expertise: Engaging developers with the requisite exposure and expertise in SCED through LP is crucial for a smooth transition.
- Stakeholder buy-in: Ensuring buy-in from all stakeholders, including discoms, regulators and government bodies, is essential for successful implementation.
Strategic initiatives and collaboration
India has greatly benefitted from implementing SCED at the inter-state generator level. To propagate these benefits, conducting sessions at every state load dispatch centre and power procurement cell in each state would be highly valuable. Partnering with local academia in each state would also be ideal, ensuring a broad-based and sustainable implementation of SCED. Organisations such as the World Bank, international development agencies and leading academic institutions such as IITs are ready to provide the necessary technical assistance, training and support to make intra-state SCED a reality and develop intrinsic capabilities within states. Regular reviews and updates through platforms such as the Forum of Regulators and the Forum of Load Despatchers can facilitate smooth implementation and continuous improvement of intra-state SCED.
Conclusion and the way forward
Transitioning from MOD to SCED is not just a technical upgrade. It is a strategic move towards a more efficient, reliable and cost-effective power system. As renewable energy and market dynamics evolve, adopting SCED with LP is essential for optimising power procurement and ensuring sustainable growth. The ability to extract marginal values, systematically handle constraints and reduce computational complexity underscores the superiority of SCED. In addition, its layered optimisation ensures cost savings and provides a win-win solution for all stakeholders, benefitting all states of India.