This paper develops a two-stage model to site and size a battery energy storage system in a distribution network. The purpose of the battery energy storage system is to provide local flexibility services for the distribution system operator and frequency containment reserve for normal operation (FCR-N) for the transmission system operator. In the first stage, the priority is to fulfil the flexibility needs of the distribution system operator by managing congestions or interruptions of supply in the local network. Thus, the first stage allocates the battery to ensure reliable electricity supply in the local distribution network. The minimum required size of the battery is also determined in the first stage. The second stage optimally sizes the battery energy storage system to boost the profit by providing frequency containment reserve for normal operation. The first and second stages both solve stochastic optimization problems to design the battery energy storage system. However, the first stage considers worst-case scenarios while the second stage utilizes the most probable scenarios derived from the historical data. To validate the proposed model, real-world data from the years 2021 and 2022 in Finland are employed. The battery placement is conducted for both the IEEE 33-bus system and a Finnish case study. The profitability of the model is compared across different cases for the Finnish case study. Finally, the paper assesses the impacts of cycle aging on the battery's total profit. ; © 2023 The Authors. Published by Elsevier Ltd. This is an open access article under the CC BY license (http://creativecommons.org/licenses/by/4.0/). ; fi=vertaisarvioitu|en=peerReviewed|