Recently, as the power demand grows, the concern on the Energy Storage System (ESS) is being increased. Among the various type of ESS, it is revealed that the Battery Energy Storage System (BESS) is the most economic and applicable. In this paper, the operating algorithm of the BESS including the solution of the power quality problem is studied. The BESS is connected to the power system in parallel, and the functions of the reactive power suppression and the harmonics and unbalanced current elimination, are added to the functions of the BESS. Through the computer simulations and experiments, the functions of the proposed algorithms are verified.