Using the thermal stratification phenomena in storing energy in thermal energy storage is a promising technology. In this work, we have studied the effect of the addition of encapsulated PCM to enhance thermal stratification in the storage system. We have developed a numerical model based on simplified energy balance equations considering thermal non- equilibrium between encapsulated phase change material (PCM) and heat transfer fluid (HTF), devoid of complicated momentum and energy equations. The effect of the location of PCM bed location in the storage system and HTF flow rate on the thermal stratification performance is investigated using stratification number, Richardson number, as well as, charging and storage efficiencies for the charging phase. The HTF flow rate is found to significantly affect the thermal stratification in the storage tank. The Richardson number increases by 400% if the HTF flow rate is doubled from 2 L/min.