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Dispatch refers to the selling of electricity by an power generation or distribution company to users depending on demand.
Mostly this sale is a very complicated process which the SLDC (State Load Dispatch Centre) has to conduct everyday throughout the year with the power generation companies so that there is no deficit of electricity anywhere along the national grid. This generation is funded by the government under which the companies operate.
An example:
Company A say has capacity of 500 MW and company B has capacity of 600 MW, company C has capacity of 1200 MW. Total generation capacity of 2300 MW is thus obtained on any normal day. Suppose on a day, all plants have reduced capacities of 300, 450, and 950 MW respectively for A, B and C due to some reason. SLDC finds that the demand for that day is around 1450 MW. SLDC then contacts the companies A, B, and C and asks them to generate less power such that the total demand for the day is sufficiently met. But they have to take note that individual power sold by each company does not exceed their reduced capacities for that time period. Now, if during a normal day, if either company A or B just fails to produce enough electricity, but company C is just going fine, then upon request from SLDC, they must cover up the deficit. Payments are made such that each company gets the correct amount they deserve.
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