The optimization of placement and capacity of energy storage in a distribution system is capable of reducing the investment in energy storage as well as optimizing the economic benefit of the whole grid. In order to achieve this goal

an optimal method for the placement and capacity of energy storage in the distribution system is proposed

which adds the energy storage capacity correction step to the traditional method

thus effectively achieving lower investment and faster speed at the same target. First

the optimal model for placement and capacity of energy storage is established

which takes the minimum value of the total cost of the whole power grid as the objective while the energy storage capacity

location

charging and discharging power as optimization variables and the limitation on energy charged state

the charging/discharging efficiency and the upper and lower bounds for voltage as constraint conditions. Then

the method solving the model is given. In the end

an IEEE 33-node distribution grid is taken as an example to verify the better performance of the proposed method for its smaller energy storage capacity and lower total cost of power grid. This work is supported by National High Technology Research and Development Program of China (863 Program) (No. 2011AA05A117) and National Natural Science Foundation of China (No. 51277129).