Abstract: Some regions in China have constructed complementary joint power plants containing wind, photovoltaic, and water storage. With the development of the electricity spot market, pumped storage power plants under the current two-part tariff system face difficulty reflecting the value of flexible adjustment capacity and limited profit space. This paper proposes a capacity allocation strategy for pumped storage plants in a dual mode with complementary renewable energy sources and independent participation in multi-level markets such as electric energy, frequency regulation, and reserve. Based on the operation mechanism of the spot market, considering the rival offer and the uncertainty of renewable energy output, a bi-level model of pumped storage capacity allocation under the dual mode is constructed. The upper level makes capacity allocation decisions intending to maximize pumped storage revenues, in which pumped storage power plants in the complementary mode form a consortium with wind and photovoltaic units at an agreed price, and the lower level conducts a joint clearing of the energy and ancillary markets intending to minimize the total cost to society. A multi-scenario approach is used to describe the revenue risk from wind and photovoltaic power output fluctuations, and a bi-level smart adaptive particle swarm optimization is used to solve the model. The simulation results of the case prove that after pumped storage adopts the capacity allocation strategy proposed in this paper, the benefit of participating in market competition is significantly improved compared with the benefit of a two-part tariff, and the complementary mode reduces the appraisal cost of renewable energy generating units due to the fluctuation of the output while increasing the benefit of the pumped storage itself, reduces the dependence on the capacity tariff and provides theoretical references for the future cost recovery and profitability of the pumped storage plant.