Charging of modular thermal energy storage tanks containing water with submerged Phase Change Materials (PCMs) using a constant temperature coil heat exchanger was numerically investigated. Under appropriate operating conditions, the energy density of this hybrid system can be significantly increased (two to five times) relative to a system containing water only (sensible energy storage system). However, due to the low thermal conductivity of PCMs, the geometry and configuration of the PCM encapsulation requires optimization to meet typical charging and discharging cycles. In the current study rectangular PCM modules in a modular storage tank (similar to 200 L) were studied to determine the effect of PCM volume fraction and spacing between the modules on the heat transfer characteristics as well as the charging rate of the storage system. Two-dimensional Computational Fluid Dynamics (CFD) simulations using ANSYS CFX 14.0 showed an 85% increase of the charge rate of the system by increasing the PCM volume fraction from 0.025 to 0.15. The charge rate was not affected when the PCM volume fraction was increased beyond 0.15. For a fixed coil heat exchanger design, further increase of the PCM volume fraction caused the thermal resistance on the PCM side to be significantly lower than that on the coil side. As a result, further increase of the charge rate necessitates increasing the surface area of the heat exchanger. Simulations showed that the gap spacing between the PCM modules had a negligible impact on the heat transfer characteristics for the studied cases, where the gap spacing was larger than the thermal boundary layer thickness.