Energy Storage Scheme (ESS) is of great importance to realize energy management and to optimally utilize Renewable Energy (RE) integration in the electricity system. An increasing exploitation of RE in electricity system raises the concern about the need for Ancillary Services (AS) in a power system. These services are required for maintaining the reliability and security of the supply. This paper proposes a market-based participation of ESS to support large-scale RE penetration for the procurement of energy and AS using Virtual Power Plant (VPP) in a deregulated environment. The proposed VPP consists of a pumped-storage system as one of the recognized ESS and Renewable Power Producers (RPPs). This optimization problem is formulated and solved using an optimal power flow technique which considers network constraints and power flow limits. Spinning Reserve (SR) as one of the main AS is considered in this paper, which is procured under Spinning Reserve Market (SRM). The ability of the proposed approach to provide both energy and SR is tested on 3 case studies and demonstrated by considering a modified IEEE-30 bus test system. Results show that the VPPs can play a significant role in increasing the penetration of RE for the procurement of energy and AS. (C) 2018 Elsevier Ltd. All rights reserved.