Optimal Pricing of Production Changes in Cascaded River Systems with Limited Storage

Optimization of hydroelectric power production is often executed for river systems consisting of several powerplants and reservoirs located in the same region. For hydropower stations located along the same river, the release from upstream reservoirs ends up as inflows to downstream stations. Calculating marginal cost for a string of powerplants with limited reservoir capacity between them, requires a new approach compared to heuristically calculating marginal cost for single plants in well-regulated hydrological systems. A new method, using marginal cost curves for individual powerplants to generate an overall marginal cost curve for interlinked power stations has been developed. Results based on a real-world case study demonstrate the advantage of the proposed method in terms of solution quality, in addition to significant insight into how optimal load distribution should be executed in daily operations