MSc Advanced Electrical Power Systems Engineering

Year of entry: 2024

Course unit details:
Power System Operation and Economics

Course unit fact file
Unit code EEEN60321
Credit rating 15
Unit level FHEQ level 7 – master's degree or fourth year of an integrated master's degree
Teaching period(s) Semester 1
Offered by School of Electrical and Electronic Engineering
Available as a free choice unit? No



1. Introduction to optimisation and optimal economic system operation

i)   Introduction to power system economics: electricity as a commodity and trade-off between economical and secure supply (1 lecture)

ii)  Introduction to nonlinear optimization concepts and Karush-Kuhn-Tucker (KKT) conditions (1 lecture)

iii) Introduction to economic dispatch, KKT solution, and interpretation of Lagrange multipliers (2 lectures)

iv) Introduction to unit commitment (1 lecture)


2. Electricity markets and power system economics

i)   Foundations of microeconomics: Supply and demand; price elasticity; surplus; social welfare; market equilibrium; theory of the firm; fixed cost, marginal cost, average cost (2 lectures

ii)  Introduction to risk: Definition; price risk management and contracts; principles of portfolio design (1 lecture)

iii) Industry restructuring: Objectives; unbundling; market players; basic structures: pool, bilateral and mixed (1 lecture)

iv) Electricity marketplaces: Forward and spot (balancing) markets; power exchanges; generation scheduling; two-settlement system (1 lecture)

v)  Participation in electricity markets: producers, retailers, customers, hybrid participants (2 lectures)

vi) Network effects: Locational marginal pricing; transmission losses and constraints; transmission rights (3 lectures)


3. Concepts of power system security

i)   Supply and demand balance over different timeframes: ancillary services in a market environment and concept of (N-x) security (2 lectures)

ii)  Optimal power flow and DC approximation (2 lectures)


4. Power system investment

i)   Generation investment: Drivers for capacity expansion and retirement; risks (1 lecture)

ii)  Transmission investment: Costing and pricing of transmission networks; value of transmission; need for regulation; approaches to transmission pricing (4 lectures)



Unit title Unit code Requirement type Description
Advanced Power System Analysis EEEN60311 Pre-Requisite Compulsory


The unit aims to:

The unit aims to introduce the student to the operation of power systems. The emphasis is placed on the need to balance the desire to operate (as well as plan) as economically as possible with the need to maintain the security of the system. In order to do so in a market context, the unit also gives an understanding of the economic principles underlying the introduction of competition in the supply and retail of electricity as well as the opening of the transmission and distribution systems to third party access.


Learning outcomes

Students will be able to:
Knowledge and Understanding
  • Describe how mathematical optimisation techniques can be applied to the economic operation of power systems
  • Discuss how security considerations affect the operation of a power system
  • Explain the techniques used to balance supply and demand in a power system over different time scales
  • Master basic concepts from microeconomics and the theory of the firm
  • Explain the objectives/principles of market-based operation of power systems
  • Discuss alternative organisations for electricity marketplaces
  • Explain the foundations of locational marginal pricing and its use in transmission congestion management
  • Explain the notion of price risk and discuss means to mitigate it
  • Understand the drivers and risks behind generation and transmission capacity expansion

Intellectual Skills

  • Appreciate the complex interplay between economic and security considerations in the operation of a power system
  • Evaluate the behaviour of electricity market agents
  • Critically analyse transmission and distribution investment/pricing practices
  • Determine optimal investment strategies for simple transmission and generation expansion problems

Practical Skills

  • Carry out calculations relevant to the optimisation of power system operation (i.e. economic dispatch)
  • Use a software package to perform the complex optimisation calculations required to dispatch generating units in a power system subject to network constraints
  • Calculate economic indicators in the context of electricity markets
  • Calculate the outcome of simple electricity markets
  • Perform locational marginal price calculations on simple transmission networks

Assessment methods

Unseen written examination

Four compulsory questions, answer all questions

Duration: 3 hours

Calculators are permitted

This examination forms 80% of the unit assessment


The number of laboratories attended: 2

Laboratory 1

The length of each laboratory: 3 hours

A report of a maximum of 10 pages on on Optimal Power Flow and Power System Operation

This course work forms 20% of the unit assessment

Laboratory 2

Power system design exercise running through the entire semester for full time students only

Satisfactory engagement with the exercise and participation in the group presentation

This course work is a pass / fail

Study hours

Scheduled activity hours
Lectures 24
Practical classes & workshops 3
Tutorials 12
Independent study hours
Independent study 111

Teaching staff

Staff member Role
Joseph Mutale Unit coordinator
Victor Levi Unit coordinator

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