The integration of variable-speed pumped storage unit (VS-PSU) guarantees an efficient peak regulation and frequency modulation of the power grid. The present research analyzes the active power flow of the VS-PSU under synchronous, subsynchronous, and supersynchronous speed in both generation and pumping modes. The control strategy of the VS-PSU is realized by the dq-axis vector control method. Furthermore, the control of the VS-PSU integrated with wind power has been conducted using DIgSILENT platform with the VS-PSU of 300 kW capacity. Results show that the fluctuation of the power output of the wind power plant can be reduced effectively. The safe, economical, and stable operation of power system integrated with wind power can be achieved by the significant contribution of the VS-PSU.