This paper investigates how large-scale energy storage can assist the integration of fluctuating renewable energy by using the Irish energy system, pumped hydroelectric energy storage (PHES), and wind power as a case study. In total three key aspects were investigated in relation to PHES: its operation, size, and cost. From the results it was evident that PHES can increase the wind penetration feasible on the Irish energy system and also reduce its operating costs. However, under predicted 2020 fuel prices and a conventional 6% interest rate, these savings may not be sufficient since the savings are sensitive to changes in the PHES capacities used, fuel prices, interest rates, and the total annual wind energy produced. Finally, the optimum capacities of PHES identified for Ireland in 2020 were compared to two other alternatives which required the same investment: domestic heat pumps and district heating with CHP These alternatives offer similar savings to PHES, but are not as sensitive to changes in fuel prices, interest rates, and wind power production. This outlines the importance of considering all sectors of an energy system when assessing future alternatives, as significant savings are feasible using existing technologies, especially by integrating the electricity and heat sectors. (C) 2011 Elsevier Ltd. All rights reserved.