An Application of Cost Minimization Algorithm to Economic Justification of Installing Distributed Generation

Distributed generation (DG) may represent a viable option for the consumers to decrease their energy bills. In order to achieve maximum savings, the generating units must be operated according to optimal dispatch schedules. Due to various electricity pricing tariffs, which often include the peak demand component, this task is different from solving the classical economic dispatch problem. There are several optimization algorithms presented in the literature intended to help the consumers to find the best dispatch solutions in order to minimize overall energy costs. In this paper, one of those optimization algorithms is used as an auxiliary tool for economic evaluation concerning installation of new generating facilities.