The basic principle of pumped storage hydro power plants operation is electricity consumption for pumping water during the period of low demand, with the purpose of storing hydro energy for electricity generation in the period of high demand. However, pumped storage hydro power plants can also provide ancillary services, which are becoming more interesting today, given the expected growth in the need for electric power system regulation. Economic feasibility of pumped storage hydro power plants was based on the current electricity market situation analysis and analysis of ancillary services procurement and contracting. Calculation of electricity generation and consumption of pumped storage hydro power plants was performed using an optimization method, with the objective of maximizing the operating profit. Three different sizes of pumped storage plants installed capacity were selected. Optimization of plants operation was conducted for generation scenarios of pumped storage plants operation on the basis of hourly market prices differences (i.e. price arbitrage) and with the additional ancillary services provision. Results of the performed optimization showed that pumped storage hydro power plants can profitably operate in the current market conditions in both generation scenarios (without and with ancillary services provision). In order to determine the profitability of investments in new pumped storage hydro power plants, an economic profitability analysis was performed, which showed that the ancillary services provision is necessary for the profitability of investments in new pumped storage hydro power plants. By comparing results for different sizes of installed capacities in pumped storage hydro power plants, it was observed that in the current market conditions better profitability indicators were achieved for smaller installed capacity compared to the analysed larger installed capacity. In addition, a sensitivity analysis was conducted, in order to examine the impact on pumped storage hydro power plants profitability of different electricity market prices and of the obligation to pay transmission network usage charge.