With the integration of renewable energy into the distribution network, the uncertainty of their output significantly increases network losses, negatively affecting the economic performance and stability of the distribution network. To address this critical issue, this paper proposes the introduction of an energy storage system (ESS) into the distribution network and the construction of a bi-level optimization model for ESS capacity allocation. The bi-level optimization model comprises two layers: the planning layer and the operational layer. The planning layer takes into account both the investment and operational costs of the ESS to optimize capacity allocation, ensuring cost-effectiveness. Meanwhile, the operational layer focuses on the daily operational scheduling of the ESS with the primary goal of minimizing the daily operational costs of the distribution network. To validate the effectiveness of the proposed model, extensive simulations are conducted using the IEEE 33-bus distribution system. The simulation results clearly demonstrate that the proposed model significantly reduces network losses, smooths voltage fluctuations, and enhances the economic operation of the distribution network, confirming its practical applicability and efficiency.