In making short-term optimal operation schemes of cascade reservoirs, water flow hysteresis between the upper reservoir and the lower reservoir is often considered as constant, which cannot really reflect the hysteresis variation between different water flows and will lead to losses of the optimal operation scheme’s benefit. To depict the water flow hysteresis, a Dynamic Water Flow Hysteresis Method (DWFHM) is proposed, based on the space mapping principle. With the mapping operator in the DWFHM, the lower reservoir inflow can be directly obtained. Besides, the DWFHM is used to deal with the hydraulic relation constraint in the short-term optimal operation model of cascade reservoirs. Then, the improved model is applied to the Jinguan cascade reservoirs in the Yalong River basin and solved by an Improved Progressive Optimal Algorithm (IPOA). The results are as follows. (1) Compared with the traditional Fixed Water Flow Hysteresis Method (FWFHM), the inflow processes of the lower reservoir obtained by the DWFHM are more in line with the actual values, due to full consideration of the attenuation effect. (2) The optimal operation with the DWFHM can effectively increase the generated energy (2827 MW·h and 504 MW·h in the non-flood season and the flood season, respectively). Through the analysis of this case, the DWFHM developed in this study can effectively improve the practicability of the optimal operation scheme and reduce the risk in the operation of cascade reservoirs.
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