With the development of energy storage in the frequency regulation market, it is urgent to solve the impact of the decision?making behavior of alliance containing energy storage on the clearance result and the problem of the maximization of its own profit. First, the concept of degree of participation is proposed to explore the influence of the difference of declared power and price in the energy and frequency regulation markets, and then a bi?level optimization model is constructed to maximize the profits of the alliances and to minimize the cost of distribution system operator (DSO). The game equilibrium problem is solved by the path?following interior point algorithm and genetic algorithm, and the Nash equilibrium of the markets is achieved for obtaining the optimal bidding strategies of alliances in two markets. Finally, the proposed model and algorithm are validated on IEEE 33?bus system. The market clearing result and its own profit under the influence of different degree of participation are analyzed, and the results show that reasonable selection of degree of participation can obtain higher profits.