Abstract A study of power system transient stability enhancement through effective use of the superconducting magnetic energy storage is presented. Simultaneous optimal modulation of the active and reactive power is formulated as a modulation which forces the fastest dissipation of energy released in the system by a given fault. For this definition the optimal modulation strategy has been derived from the direct Lyapunov method for a multi-machine nonlinear power system model. This theoretical optimal strategy can easily be technically realized as a nonlinear control using only locally measurable quantities. The validity and robustness of the proposed local control has been confirmed by simulation tests.