Due to high penetration of renewable energy into the electrical power system in recent years it has become a challenge to make the smart grid robust in terms of voltage deviation and frequency fluctuation. To mitigate these issues, proper selection of energy storage system (ESS) is becoming an essential part of future grid design. Along with type, rating and placement of storage are also important to achieve a specific objective. In this paper, battery energy storage system (BESS), one of the prominent energy storage systems, has been utilized to accelerate the voltage and frequency recovery process under post-fault scenario. A methodology has been developed to find suitable placement and rating of BESS in an islanded microgrid. Simulations carried out in a 43 bus industrial microgrid show that, in comparison to centralized placement, distributed placement of BESS offers better recovery service with lower individual rating.