Electrochemical energy storage is considered to be the best quality participant in the ancillary services market because its power and energy can respond quickly to demand. However, nowadays the trading mechanisms of the ancillary services market are mainly aimed at conventional generators，which results in the lack of bidding and settlement mechanisms for energy storage participation in the ancillary services market. In this case，the trading mechanisms of energy storage participating in the peak shaving market is focused on in this paper. Based on the relationship between the charge-discharge depth and its life and the equivalent annual cost, this paper suggests that the energy storage quotation in peak shaving bidding should be various based on the charge-discharge depth zones. Besides, the one-part and two-part settlement methods in the peak shaving market are came up. According to the calculation of the investment cost and peak shaving benefit of electrochemical energy storage，charging and discharging price models suitable for energy storage to participate in peak shaving are proposed. The mentioned methods are verified by a specific case to analyze the cost- effectiveness of electrochemical energy storage in peak shaving.

electrochemical energy storage; peak shaving cost- effectiveness; peak shaving mechanism; charge-discharge depth