The thesis describes the development of a generic nonlinear computer model of a pumped storage hydroelectric scheme. The model combines the hydraulic, electrical and control systems. In particular, this model includes the water hammer effects, the hydraulic coupling in the common water supply tunnel, the power system stiffness and the electrical coupling between the generator and the power system. The benefit of the simulation is that it gives insight into the plant characteristics and improves understanding of the physical phenomena involved. A specific case of the model for Dinorwig power station is tested against the plant responses and establishes a good degree of confidence in the simulation. The model is used to evaluate governor performance and establish stability boundaries for various operating conditions. The model is also used to design a new black-start regime which allows Dinorwig to energise the power system after blackout, with individual units picking up incremental loads up to 15% of machine rating while ensuring that frequency deviations remains within limits. Another application of the model is to explain why a period of sustained power oscillation occurred at Dinorwig and to identify under what circumstances this can take place. Linearised system models are used for governor tuning and root locus and Bode plot methods applied to establish the optimum governor settings for different operation conditions. The results demonstrate the significance of hydraulic coupling and the power system (grid) size on governor tuning. The final part of the work addresses conversion of the model to run in real-time and interfacing it with an actual unit governor. The results demonstrate the practicality of the hardware-in-the-loop simulation as a technique for safely implementing and testing new controllers or enhancements to the current controller.