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With the increased integration of wind energy into power networks it has become more important to have a reliable system for mitigating the fluctuations of output power supplied to the grid. This paper proposes a new control scheme to smooth the output power fluctuations of an aggregated wind firm using Flywheel energy storage system (FESS) and short-term ahead prediction of wind speed. In the proposed system, the kinetic energy of the FEES is utilized to smooth the output power fluctuations of wind farm. In addition, the stored energy of FESS is utilized in most efficient way by correcting the power reference using prediction base control. This helps to reduce the overall system cost by keeping the size of the energy storage system at minimum. The effectiveness of the proposed control is verified by using PSCAD/EMTDC.