Ahstract-Optimal operation of hydrothermal systems is very complex hecause it corresponds to a mnltiperiod, stochastic, large scale and characterized hy a nonseparable objective function optimization problem As a result it is traditionally carried out without taking into account transmission constraints or considering them in n very simplified wny. This approach is not adequate lo address certain kind of problems such as cost-benefit studies of transmission interconnections in hydro systems or the study of spatial distributions of spot prices ("zones" identification) through the electric network, due to hydro and power flow constraints. In this paper we address the problem of stochastic optimization of large scale transmission constrained hydrothermal systems with applications to the Brazilian case.
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