The objective of the proposed research is to develop a degradation-aware optimization framework for Battery Energy Storage Systems (BESS) that quantifies trade-offs between market participation and battery lifespan. While BESS are essential for integrating renewable energy, degradation costs frequently outpace market revenues, threatening economic viability. The framework optimizes BESS sizing, location, and dispatch while incorporating real-world aging mechanisms that conventional methods overlook. Validation using IEEE test systems and Georgia Power utility data demonstrates practical applicability in high renewable penetration scenarios. The analysis identifies critical thresholds where aggressive market participation reduces lifetime value despite higher short-term revenues. This work provides power system operators with practical tools for evaluating BESS investments that balance revenue generation and asset longevity. By reframing battery storage as a lifetime value challenge rather than purely an operational problem, this research offers utilities a concrete framework for deploying economically sustainable storage systems.