## 1 Introduction  
With fast development of the social economy and improvement of living standards of the residents, the national demand for electricity is growing increasingly. Meanwhile, the characteristics of the user's peak-to-valley difference are more obvious, which causes a large peak shaving pressure on the power system [1; 2]. Although numbers of new energy sources connected to the grid have alleviated power shortage, the uncertainty and intermittents have serious impact on the power quality of the grid [3; 4; 5]. Under this background, the issue of grid auxiliary services has been given widespread attention. Energy storage, as an important approach to enhance the flexibility, economy and safety of traditional power systems [6; 7; 8], has gradually entered the auxiliary service market. So far, the United States, Japan, Germany and other countries have formulated a series of relevant industrial development plans and policies [9]. With rapid development of energy storage, China has also introduced a series of policies in recent years to encourage install user-side energy storage [10] and to support the user-side energy storage providing the auxiliary services [11]. Consequently, driven by these policies, China has currently focused on the development of the user-side energy storage. Nowadays, the high investment cost of energy storage has become a key factor limiting its large-scale application [12]. The optimal capacity allocation and economic researches of the energy storage is crucial to the development of the energy storage industry. Hence, many scholars have carried out researches on this issue [13; 14; 15; 16]. The investment optimization model is established in [13] to evaluate the value of large-scale storage energy in multiple links of generation, transmission and distribution. Nevertheless, the energy storage cost in the model does not consider the operation and maintenance cost. A comprehensive evaluation method is proposed for energy storage investment in distribution networks with high penetration of photovoltaic (PV) [14]. Aimed at peaking shaving and valley filling applications, the author of [15] carries out the economic evaluation in the wind-storage combined power generation system with a composite filter structure. However, these articles ignore the time value of funds by setting the fixed annual income, which causes the imperfections in the assessment of the overall value of energy storage. Meanwhile, the economic differences of different type of energy storage batteries are not considered. User-side applications focus on the user's own revenue, while grid side applications pay more attention to reduce load fluctuation in order to lighten the burden of load supply pressure. The difference in the research perspective determines that the above studies cannot be directly applied to the user side. In the user-side energy storage research, the optimal design model is proposed to obtain energy storage configuration for industrial small-scale photovoltaic systems (SS-PV) [17]. Based on energy costs, emission reduction benefit and investment payback period, the three indicators comprehensively assess their economic performance and investment risks. In [18], the full life cycle cost model of the battery is established. Through analysis and calculation, the iron-lithium battery can only reduce the cost to 50%, and the energy storage on the user side can be economically feasible. It is unrealistic to limit the cost of technology and reduce costs in a short period of time, so it is necessary to find new ways of profit. With the openness of auxiliary services market in China, the participation of energy storage in auxiliary services will bring new revenue points to users, but there is still no specific commercial operation mechanism. Based on the development trend of energy storage participating in the auxiliary service market in China, this paper proposes an energy storage allocation model and economic evaluation method for the user-side energy storage providing different auxiliary services.