What is PSSE environment manager?

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The PSS/E environment manager is used for compiling dynamic models for stability simulations. These are user models which are not part of the standard dynamic models in PSS/E. In the past, DOS compiler was used, now, Environment Manager allows drag and click for allowing PSS/E read models out of fortran or python. If you are not using any user models (*.lib or *.obj) then you don't need the Environment Manager.

I think you could delete it; its just an icon.

I don't use the environment manager, but its useful for setting up those environment variables that PSSE needs to run from within Python. Kind of like this blog post on running PSSE from inside Python.

If you don't set up the environment variables one of two things will happen:

1. Python will not be able to locate the psspy library;
2. PSSE will cause Python to crash when you load a saved case.

Neither is what you want as an engineer :)