Abstract: To address the burden of peak shaving in power system caused by the integration of large-scale renewable energy, several provinces have imposed mandates on thermal power units to assume the responsibility of peak shaving. Given the significant expenses associated with offering deep peak shaving services using thermal power units, thermal power units retrofitted with energy storage have emerged as an alternative technical approach for them to assume peak shaving responsibilities. In this study, the cost and benefit of deep peak-shaving retrofit of thermal power units and the installation of energy storage facilities are analyzed, and an optimization model is proposed for the configuration and operation of the combined thermal power generation system. Then, the piecewise linearization and binary expansion method are adopted to simplify this model, realizing the rapid solution of it. The case results show that, compared with thermal power only carrying out deep peak-shaving retrofit or energy storage installation, the retrofit of thermal power units by deep peak-shaving retrofit combined with energy storage configuration can improve the peak-shaving capability and operating economy of thermal power units more effectively.