Demand response and distributed energy storage play a crucial role in improving the efficiency and reliability of electric grids. This paper describes a strategy for optimally integrating distributed energy storage units within a forward market to address space heating demand under a Stackelberg game in isolated microgrids. The proposed strategy performs distributed management in an offline fashion through proximal decomposition methods. It leverages stochastic programming to consider user flexibility degree and wind power generation uncertainties. Also, flexibility for demand response is realized through electric thermal storage (ETS). The performance of the proposed strategy is evaluated via simulation studies carried out through a case study in Kuujjuaq. Ten residential agents compose the demand side, each with flexibility levels and economic preferences. Economic benefits are evaluated on both sides across different ETS acceptance levels. The simulation results demonstrate significant benefits for the coordinator and customers. The proposed strategy reveals that ETS, in the presence of dynamic tariffs, reduces diesel consumption, maximizes renewable production and reduces grid stress.