Pumped storage plays an important role in enhancing new energy consumption and guaranteeing the safety of power grid operation, but the problems of large investment and difficult cost recovery have led to the low motivation of pumped storage construction. Based on this, a method of optimizing the capacity allocation of pumped storage power plant considering the flexibility demand in the market environment is proposed. The upper layer model considers the time cost of pumped storage construction capital, and establishes the pumped storage capacity optimization allocation model with the goal of maximizing the return on investment; the lower layer simulates the participation of pumped storage in the electric energy market and auxiliary service market, and establishes the market unification clearing model with the goal of minimizing the cost of grid operation, and according to the value of the services provided by the pumped storage, such as peak shifting, frequency shifting, and standby, the revenue of the pumped storage participation in the spot market is obtained; the revenue is also fed back to the upper layer for further optimization of the pumped storage capacity. The revenue is fed back to the upper layer to further optimize the pumped storage capacity allocation.

pumped storage; markets; optimal allocation; cost recovery