Energy balance in a power system must be maintained at all times, regardless of the variations in generation and consumption. Large Pumped Hydro Storage Plants (PHSPs) are introduced to the power system to accumulate the excess of energy during the low demand (nighttime), and provide it back during the high demand (daytime). As we are heading towards the Renewable Energy Sources (RES)-dominated power systems, their stochastic nature and ever-increasing share are altering the daily load curve of the system, increasing the need for highly-flexible energy storage capacities. Further, the PHSPs strategy of accumulating the energy during the nighttime to provide it back during the daytime is not profitable anymore in the deregulated market, where high volumes of RES-generated energy can become available midday. Thus, from both engineering and commercial interests, PHSPs must be enabled to respond faster and provide a higher array of ancillary services to keep up the pace with the power system evolution. While we are witnessing scaling-up of alternative energy storage facilities, e.g. battery-based, PHSPs readily offer by far the highest share of energy storage capacity in the power system. High flexibility can be yielded through conversion of existing fixed-speed PHSPs to variable speed operation, by decoupling the machine from the grid by an AC-AC power electronics converter. The Modular Multilevel Converter (MMC) is inherently scalable to the voltage and power levels of machines typically found in large PHSPs, i.e. 6kV to 20kV and 80MVA to 400MVA , and this thesis is based around its implementation in variable speed PHSP retrofitting scenario. To operate the machines originally designed for sine-wave grid power supply, at rated torque and over the entire frequency range for the highest flexibility, the MMC-specific internal energy balancing actions have to be performed in a machine-friendly way. Starting from the two extreme reference designs – a Half-Bridge (HB)-only Indirect MMC (I-MMC) requiring prohibitively high Common-Mode (CM)-voltage stress to the machine, and a Full-Bridge (FB)-Active Front-End (AFE)-based I-MMC providing CM-voltage-free operation at prohibitively high losses, the thesis introduces two novel control- and design methods based on Hybrid MMC (H-MMC) AFE, where hybrid refers to a mix of HB and FB Submodules (SMs) in each branch. The first method offers reduced CM-voltage stress to the machine, at 56% FB SM share in the AFE stage, while not compromising the grid-code compatibility. The CM-voltage reduction is achieved by reducing DC link voltage reference with machine speed down to 50% , requiring less-severe balancing action in the Low Frequency (LF) operating region. The second method enables CM-voltage-free rated-torque machine operation over the full speed range, through down-to-zero DC link voltage reduction capability, requiring 62% FB SM share in the AFE. DC link voltage reference variation with the machine speed in Variable Speed Drive (VSD) MMC eliminates the need for CM-voltage-based balancing intervention in the LF region. While this method cannot operate at unity grid-side power factor below rated machine speed, thus not offering full grid-code compatibility, a design trade-off is offered between the attainable power factor range and FB SM share. A comprehensive set of test scenarios has been performed for each of the newly introduced methods to verify the validity.