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This paper attempts to study the commercial impact of pumped storage hydro plant on the operation of a stressed power system. The paper further attempts to compute the optimum capacity of the pumped storage scheme that can be provided on commercial basis for a practical power system. Unlike the analysis of commercial aspects of pumped storage scheme attempted in several papers, this paper is presented from the point of view of power system management of a practical system considering the impact of the scheme on the economic operation of the system. A realistic case study is presented as the many factors that influence the pumped storage operation vary widely from one system to another. The suitability of pumped storage for the particular generation mix of a system is well explored in the paper. To substantiate the economic impact of pumped storage on the system, the problem is formulated as a short-term hydrothermal scheduling problem involving power purchase which optimizes the quantum of power to be scheduled and the duration of operation. The optimization model is formulated using an algebraic modeling language, AMPL, which is then solved using the advanced MILP solver CPLEX.

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