Abstract The increased penetration of renewables has prompted the integration of battery energy storage systems (BESSs) in active distribution networks. The BESS not only act as backup power supply but also provides various ancillary services with extra degree of flexibility to distribution networks by changing its’ role as generation and load. In this study, a new optimization framework is developed to optimally allocate the intense wind power generation units and BESSs considering its ancillary services in distribution systems. The BESSs are strategically allocated at two sites in coordination with the renewable generating source. One is installed at grid substation to participate in central ancillary services whereas; second will be used to participate in distributed ancillary services. The objective is to minimize the cost of annual energy loss while performing various ancillary services in distribution network. The proposed optimization framework is implemented on a real-life 108-bus Indian distribution system for different cases and solved using genetic algorithm. The comparison of simulation results show that the proposed optimization framework provides more energy loss reduction, improved system voltage and power factor at higher penetration of wind power generation units as compared to the cases in which ancillary services are not considered in planning.