This paper presents a new algorithm for Combined Heat and Power (CHP)
economic dispatch. The CHP economic dispatch problem is decomposed int
o two subproblems: the heat dispatch and the power dispatch. The subpr
oblems are connected through the heat-power feasible region constraint
s of co-generation units. The connection can be interpreted by the uni
t heat-power feasible region constraint multipliers in the Lagrangian
function, and the interpretation naturally leads to tile development o
f a two-layer algorithm. The outer layer uses the Lagrangian Relaxatio
n technique to solve the power dispatch iteratively. In each iteration
, the inner layer solves the heat dispatch with the unit heat capaciti
es passed by the outer layer. The binding constraints of the heat disp
atch are fed back to the outer layer to move the CHP economic dispatch
towards a global optimal solution.