This paper presents a novel solution method for joint energy and Spinning Reserve (SR) dispatch problem. In systems in which the Lost Opportunity Cost (LOC) should be paid to generators, if the LOC is not considered in the dispatch problem, the results may differ from the truly optimum solution. Since the LOC is a non-differentiable function, including it in the formulation makes the problem solving process to be time-consuming and improper for real time applications. Here, the joint energy and SR dispatch problem considering the LOC in the objective function is reformulated as a Linear Programming (LP) problem which its solving process is computationally efficient. Also, with reliance on the performance of LP problem solving process, an iterative algorithm is proposed to overcome the self-referential difficulty arising from dependence of the LOC on the final solution. The IEEE 30-bus test system is used to examine the proposed solution method.

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