This thesis concerns the impact of energy storage on the power system. The rapidly increasing integration of renewable energy source into the grid is driving greater attention towards electrical energy storage systems which can serve many applications like economically meeting peak loads, providing spinning reserve. Economic dispatch is performed with bulk energy storage with wind energy penetration in power systems allocating the generation levels to the units in the mix, so that the system load is served and most economically. The results obtained in previous research to solve for economic dispatch uses a linear cost function for a Direct Current Optimal Power Flow (DCOPF). This thesis uses quadratic cost function for a DCOPF implementing quadratic programming (QP) to minimize the function. A Matlab program was created to simulate different test systems including an equivalent section of the WECC system, namely for Arizo-na, summer peak 2009. A mathematical formulation of a strategy of when to charge or discharge the storage is incorporated in the algorithm. In this thesis various test cases are shown in a small three bus test bed and also for the state of Arizona test bed. The main conclusions drawn from the two test beds is that the use of energy storage minimizes the generation dispatch cost of the system and benefits the power sys-tem by serving the peak partially from stored energy. It is also found that use of energy storage systems may alleviate the loading on transmission lines which can defer the upgrade and expansion of the transmission system.