This paper analyzes the feasibility and physical significance of using energy storage in damping power oscillations at theΔδ-Δωphase plane. A conclusion is drawn that in a single machine infinite bus system if the energy storage device provides active power in reverse phase of the speed difference or with -90°to the generator power angle, then it can effectively provide damping torque for the system. Then the progress of designing parameters of power oscillation damping controller based on residues analysis method is presented. Using residues analysis method as a guide, the effect of storage locations and input feedback signals on power oscillation damping is analyzed. When the energy storage devices are located at the terminals of tie-line, better damping effect is achieved than at the middle of the line. And phase difference is superior to the line power as an input feedback signal. Because of the physical fuzziness and difficulty in measurement in practice, a control strategy is presented using a synthetic phase difference as input feedback signal. The control strategy is proved effective in many operation modes, such as power flow reversal, generator output variation and so on.