Abstract: Demand response has been incorporated into the distribution energy storage capacity configuration problem with distributed generations in this paper. First, the characteristics of virtual storage load such as air conditioners and electric vehicles have been studied and the demand response models of controllable loads have been established. Then, taking into account the mutual benefits of users and power companies, an optimization model of energy storage capacity configuration and TOU power price calculation has been established with the objective of maximizing economic efficiency and peak load shifting. Finally, using the actual data of a certain city grid as an example to calculate the energy storage capacity configuration and TOU power price, the calculation results show that the proposed method can better stabilize the fluctuation of system load, and the economic benefits of users and power companies are more assured.