The research work presented in this thesis concerns the investigation of the dynamic behaviour and control of electrical power networks with large-scale integration of wind power generated by fixed-speed induction generators. In order to gain physical insight into the dynamic interactions taking place among different types of generators and associated controllers, a hybrid analytical methodology based on a combination of linear eigenvalue analysis, frequency response and non-linear dynamic simulation is adopted. The modelling and dynamic performance of fixed-speed induction generators for power system stability studies are first investigated through a single-machine infinite-bus system. The third-order dynamic model is confirmed as a good compromise between simplicity and accuracy. An oscillation mode associated with induction generator rotor transients is shown to be well damped under most operating conditions. The impact of induction generation on the dynamics and control of electrical power networks are further investigated through islanded and grid-connected co-generation networks. It is shown that a large proportion of induction generators in a regional network significantly affects system oscillation mode, and consequently, power system stabilizer design. Through the effect of induction generation on power system transient performance, a trade-off is established between system oscillation stability and transient stability. The effects of static VAr compensator (SVC) on improvement of induction generator performance and overall system stability are examined. The performance capabilities of a compensator stabilizer additional to the SVC are demonstrated by comparison with those provided by the synchronous generator with AVR and PSS control.