Energy storage system（ESS） is of great potential to be applied to suppress power system low-frequency oscillation（PSLFO）. This paper presents an in-depth investigation on the mechanism about how and why ESS can effectively provide damping to PSLFO. The conventional method of damping torque analysis（DTA） is used to reveal how the damping contribution from ESS is distributed in a multi-machine power system， and affected the damping of power system oscillation modes. Based on the revealed damping distribution of ESS， a new method is proposed to design ESS stabilizer. Analysis and simulation results show PSLFO suppression mechanism by ESS with DTA may be properly revealed and check the feasibility of ESS setting method as well. Finally， an application example for large-scale real power system with the proposed method is given.