In this paper we describe the operation of an XUV high gain FEL operating within a bypass of an electron storage ring, and discuss the implications on storage ring optimization imposed by FEL requirements. It transpires that, in the parameter regime of interest, collective effects within the beam play an important role. For example, intrabeam scattering dilutes the transverse emittance of the beam and the microwave instability increases the momentum spread. Both phenomena reduce the effectiveness of the FEL. A computer code, ZAP, has been written which, for a given lattice design, takes all such effects into consideration and produces a figure of merit for FEL operation for that machine. We show the results of ZAP for several storage ring designs, all optimized for FEL operation, and present a design example of a facility capable of producing coherent radiation at 400 Å with tens of megawatts of peak power.
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