The challenges of deploying more renewable energy sources on an electric grid are caused largely by their inherent variability. In this context, energy storage can help make the electric delivery system more reliable by mitigating this variability. This thesis analyzes a series of models for procuring electricity and ancillary services for both individuals and social planners with high penetrations of stochastic wind energy. The results obtained for an individual decision maker using stochastic optimization are ambiguous, with closed form solutions dependent on technological parameters, and no consideration of the system reliability. The social planner models correctly reflect the effect of system reliability, and in the case of a Stochastic, Security Constrained Optimal Power Flow (S-SC-OPF or SuperOPF), determine reserve capacity endogenously so that system reliability is maintained. A single-period SuperOPF shows that including ramping costs in the objective function leads to more wind spilling and increased capacity requirements for reliability. However, this model does not reflect the inter temporal tradeoffs of using Energy Storage Systems (ESS) to improve reliability and mitigate wind variability. The results with the multiperiod SuperOPF determine the optimum use of storage for a typical day, and compare the effects of collocating ESS at wind sites with the same amount of storage (deferrable demand) located at demand centers. The collocated ESS has slightly lower operating costs and spills less wind generation compared to deferrable demand, but the total amount of conventional generating capacity needed for system adequacy is higher. In terms of the total system costs, that include the capital cost of conventional generating capacity, the costs with deferrable demand is substantially lower because the daily demand profile is flattened and less conventional generation capacity is then needed for reliability purposes. The analysis also demonstrates that the optimum daily pattern of dispatch and reserves is seriously distorted if the stochastic characteristics of wind generation are ignored.