Walk through the plant room of a large office tower, shopping centre or hospital and you'll probably find one thing in common: cooling equipment working hardest during the hottest and usually most expensive hours of the day.
That's a challenge for building owners. Electricity demand peaks when temperatures rise and HVAC systems are under maximum strain. For decades, engineers have looked for ways to break that connection between cooling demand and peak electricity costs. One of the most effective solutions is thermal energy storage (TES).
Instead of producing cooling exactly when it's needed, TES allows buildings to produce cooling energy at night when the demand load is lower and chillers can work more efficiently. That cooling energy is then stored and used during the day, reducing the amount of work the chiller plant needs to perform when power costs are highest.
In simple terms, thermal energy storage acts like a battery for cooling. Rather than storing electricity, it stores cold energy that can be released when the building needs it most.
For large commercial buildings, particularly those in hot climates such as the UAE and wider GCC region, the financial and operational benefits can be substantial. Lower demand charges reduced peak electricity consumption and smaller chiller plant requirements are all part of the attraction.
What is thermal energy storage in HVAC?
Thermal energy storage (TES) is a system that produces and stores cooling energy during off-peak hours for use during peak-demand periods.
Most HVAC systems generate cooling and use it immediately. TES takes a different approach. Cooling is produced overnight, stored in dedicated tanks and then discharged during the day when building occupants require it.
The concept isn't particularly complicated. The timing is what makes the difference.
In some cases, electricity providers charge higher rates during periods of peak demand & peak temperatures. By shifting cooling production away from those periods, building operators can reduce operating costs without sacrificing comfort.
This approach is particularly attractive in facilities that experience predictable cooling loads. Office buildings, universities, airports, hotels and healthcare facilities often follow relatively consistent occupancy patterns, making them ideal candidates for thermal energy storage.
Rather than forcing chillers to work hardest during the afternoon peak, TES allows a part of that cooling demand to be met using energy that was produced hours earlier.
How does thermal energy storage work?
Thermal energy storage works by charging a storage medium when ambient temperatures are lower and demand loads are lower enabling equipment to work more efficiently (generally in the late night/ early morning) and discharging that stored cooling when the equipment is forced to work inefficiently (during the afternoon), effectively reducing demand load. .
Every TES installation operates around two distinct phases: charging and discharging.
During the charging phase, chillers generate cooling energy and store it in the form of ice or chilled water. During the discharge phase, that stored cooling is supplied to the building, reducing the need for daytime chiller operation.
This load-shifting strategy aligns with the objectives of ASHRAE Standard 90.1, which promotes energy-efficient building design and operation in commercial facilities.
The exact storage medium may differ from one project to another, but the operating principle remains largely the same.
The charge cycle: making and storing cold energy
The charge cycle uses off-peak electricity to create and store cooling energy.
Most systems begin charging late in the evening when occupancy levels fall and utility rates decrease. Chillers operate continuously, producing either ice or chilled water depending on the storage design.
That cooling energy is directed into heavily insulated storage tanks where it remains available until required. Because thermal losses are minimal, the stored energy can remain effective for many hours.
A complete charging cycle generally depends on storage capacity, chiller size and building cooling demand.
From an operational standpoint, the charge cycle allows facilities managers to take advantage of lower-cost electricity while preparing for the following day's cooling demand.
The discharge cycle: delivering cooling during peak hours
The discharge cycle supplies stored cooling to the building during periods of high demand.
As temperatures rise and occupants arrive, the system begins drawing cooling energy from storage rather than relying entirely on the chiller plant.
Cold water circulates through air handling units, fan coil units or other distribution equipment in much the same way as a conventional chilled water system. The difference is that the cooling energy was generated hours earlier.
For facilities facing high demand charges, this reduction in peak electrical consumption is often where the biggest savings occur.
Ice storage systems: how they work
Ice storage systems store cooling energy by freezing water during off-peak hours and melting it later to meet building cooling demands.
What makes ice storage so effective is the physics behind it. When water changes from liquid to solid, it releases a large amount of energy known as the latent heat of fusion. That phase change allows ice to store significantly more cooling energy in a much smaller volume than chilled water.
To put that into perspective, ice stores approximately 144 BTU per pound during melting. Chilled water, by comparison, stores roughly 1 BTU per pound for every degree Fahrenheit of temperature change.
For building owners working with limited plant room space, that difference can be a game-changer. An ice storage system often requires only a fraction of the storage volume needed for a chilled water system providing the same cooling capacity.
That's one reason why ice storage has become popular in dense urban development’s where every square metre of usable space matters.
Internal melt vs external melt ice systems
Ice storage systems typically use either an internal melt or external melt configuration.
In an internal melt system, ice forms around a network of submerged tubes inside the storage tank. During discharge, a warmer glycol solution, heated up by the building or load, circulates through those tubes, melting the ice from the inside out and transferring cooling energy into the building's distribution system.
External melt systems work slightly differently. Ice still forms around coils within the tank, but during discharge, water flows over the outside surfaces of those ice-coated coils. As the ice melts, cooling energy is transferred into the circulating water stream.
Both approaches are widely used throughout commercial HVAC applications. The choice often comes down to project requirements, maintenance preferences and system design considerations.
Regardless of the configuration selected, most ice storage systems rely on a glycol-water solution as the primary heat transfer fluid.
The role of glycol in ice storage
Glycol allows ice storage systems to operate at temperatures below the freezing point of water.
Without glycol, the circulating fluid inside the system would freeze long before sufficient ice could be produced. To avoid that problem, engineers typically use a solution containing a mixture of ethylene or propylene glycol mixed with water.
This lowers the freezing point of the glycol-water mix and enables chillers to operate at temperatures where pure water would generally freeze.
There are two trade-offs, however.
Producing ice requires chillers to operate at lower evaporator temperatures than conventional chilled water systems. Lower evaporator temperatures reduce chiller efficiency, meaning the equipment consumes more energy to generate the same amount of cooling.
Additionally, the inclusion of glycol in a water system reduces the heat transfer efficiency of the fluid, reducing the amount of cooling per kW of electricity.
These are 2 of the most important design considerations when evaluating an ice storage project. The space savings and demand reduction benefits are substantial, but they must be balanced against the efficiency penalty associated with ice production.
Chilled water storage systems: how they work
Chilled water storage systems store cooling energy by holding large volumes of cold water in insulated tanks.
Unlike ice storage, chilled water systems do not rely on a phase change. Instead, they use sensible heat storage, which means cooling energy is stored through temperature differences.
Most chilled water TES systems operate with storage temperatures between (4°C and 5.5°C). Water is cooled during off-peak periods and stored until required by the building.
The concept is straightforward, but the engineering behind it is surprisingly elegant.
Rather than separating warm and cold water with a physical barrier, many systems rely on a natural phenomenon known as stratification.
Stratified tank design
Stratification allows warm and cold water to coexist within the same storage tank while remaining largely separated.
Cold water is denser than warm water. As a result, chilled water naturally settles toward the bottom of the tank while warmer water remains near the top.
Engineers use this behaviour to create a distinct thermal boundary known as a thermocline. During discharge, chilled water is drawn from the bottom of the tank and supplied to the building. As it absorbs heat from occupied spaces, the warmer return water is directed back into the top of the storage tank.
When designed correctly, the thermocline remains relatively stable, preserving the effectiveness of the stored cooling energy.
The main disadvantage is size compared with an ice storage tank.
Chilled water systems require substantially larger storage tanks than ice systems. Typical designs require approximately 15 cubic feet of storage per ton-hour of cooling capacity, compared with roughly 2 to 4 cubic feet per ton-hour for ice storage.
That larger footprint can be difficult to accommodate in densely developed commercial sites where space is already limited.
Ice storage vs chilled water storage: key differences
Ice storage and chilled water storage achieve the same objective, but they do so in very different ways.
The biggest difference is storage density. Ice can store considerably more cooling energy within a smaller footprint, making it attractive for projects where plant room space is limited.
Chilled water systems, on the other hand, generally operate more efficiently because chillers can run at higher evaporator temperatures. They avoid the efficiency penalty associated with freezing water.
Supply temperatures also differ. Ice storage systems can deliver colder supply temperatures, which may allow smaller air distribution equipment and reduced airflow requirements in certain applications.
From a maintenance perspective, both technologies are reliable when properly maintained. However, chilled water systems are often considered simpler because they avoid glycol management and low-temperature ice-making requirements.
As a general rule, ice storage tends to favour space-constrained urban developments, while chilled water storage often suits campuses, industrial facilities and large commercial sites where land availability is less of a concern.
Neither technology is universally better. The most suitable choice depends on site constraints, utility tariffs, cooling loads and long-term operating objectives.
Control strategies
Two common variations are used:
Chiller-priority partial storage: The chiller meets most daytime cooling demand while storage assists during peak periods.
Storage-priority partial storage: Stored cooling is used first, with the chiller providing additional capacity when required.
The business case: energy cost savings and peak demand reduction
Thermal energy storage reduces operating costs by shifting cooling production away from expensive peak electricity periods, & timespans where chillers work most inefficiently.
For many building owners, this is the single biggest driver behind TES adoption.
Instead of operating chillers at maximum capacity during the afternoon, cooling is produced overnight when electricity demand across the grid is lower. The stored energy is then used when rates increase.
There are capital cost benefits as well.
Without TES, cooling equipment must often be sized to accommodate the building's highest possible cooling load during peak outdoor conditions. With storage helping to cover peak demand, engineers can design chiller plants around average loads rather than maximum loads.
This can reduce expenditure on chillers, pumps, electrical infrastructure and distribution equipment.
Over the lifespan of a large commercial facility, those savings can become substantial.
TES suitability: which buildings benefit most?
Thermal energy storage delivers the strongest financial return in large buildings with significant cooling requirements.
Not every facility is a good candidate.
According to Design & application guides published, TES economics become more compelling as cooling loads increase. Buildings with cooling capacities exceeding 100 tons (approximately 352 kW) typically offer the strongest business case.
District cooling is a common example. So are universities, airports, hospitals, hotels, shopping centres and mixed-use developments.
Electricity tariff structures matter just as much as building size. Facilities operating in regions with large differences between daytime and nighttime electricity rates generally achieve faster payback periods.
Climate also plays an important role.
Across the UAE, Saudi Arabia, Qatar and other GCC markets, cooling loads remain high for much of the year. These conditions create an ideal environment for thermal energy storage because cooling demand is both significant and predictable.
Smaller buildings can still benefit from TES, but the economics are often harder to justify once cooling capacities fall below the 100-ton threshold.
TES and sustainability: reducing grid strain and carbon impact
Thermal energy storage supports sustainability goals by reducing peak electricity demand and improving overall energy system efficiency.
The environmental benefits extend beyond the building itself.
Peak demand periods place enormous strain on electrical infrastructure. Utilities often need to activate less efficient generation sources to meet these short-duration spikes in demand.
By shifting cooling production to off-peak periods, TES helps flatten demand curves and improve grid stability.
This flexibility also complements renewable energy generation.
As solar and wind capacity continue to expand, energy production increasingly occurs at times that do not perfectly align with building demand. TES provides a mechanism for storing cooling generated during periods of abundant renewable electricity and using it later when demand increases.
The concept has attracted growing attention from policymakers and industry organisations.
In the UAE, Dubai has mandated the use of thermal energy storage for district cooling as early as 2008 where the large tonnages involved make TES an obvious choice
For organisations pursuing net-zero strategies or aligning with the objectives of the 2015 Paris Agreement, TES can contribute to broader carbon reduction goals while delivering measurable operational benefits.
Maintenance and operational considerations
Thermal energy storage systems are generally reliable and require relatively modest maintenance when properly designed and commissioned.
Ice storage systems are particularly straightforward in many respects.
The ice coils themselves contain no moving parts, reducing the likelihood of mechanical failures. Most routine maintenance focuses on system monitoring rather than component replacement.
An ice inventory sensor typically requires adjustment twice per year to maintain accurate performance readings. The glycol solution used within the system usually requires only an annual laboratory analysis to confirm concentration levels and fluid condition.
Chilled water systems require a different maintenance focus.
Because large volumes of water are stored for extended periods, water quality management becomes especially important. Parameters such as pH, dissolved oxygen levels and corrosion inhibitor concentrations must be monitored regularly.
Guidance from ASME and ASHRAE recommends ongoing water treatment programmes to minimise corrosion, scaling and biological growth within chilled water systems.
Regardless of the storage technology selected, preventative maintenance remains essential to ensuring long-term performance and reliability.
About Daikin
Daikin MEA is a leading provider of advanced HVAC, chiller and building cooling solutions across the UAE, GCC, Middle East and Africa.
From large commercial developments and healthcare facilities to hospitality projects and industrial complexes, Daikin supports customers with energy-efficient cooling strategies tailored to local climate conditions and operational requirements. For organisations exploring thermal energy storage in HVAC, Daikin combines global engineering expertise with regional experience to help deliver efficient, reliable and future-ready cooling infrastructure.
With a comprehensive portfolio of chillers, controls and integrated HVAC technologies, Daikin helps building owners optimise energy performance while maintaining occupant comfort throughout the year.
Frequently asked questions about thermal energy storage in HVAC
What is the difference between ice storage and chilled water storage in HVAC?
Ice storage uses the latent heat of phase change to store significantly more energy per unit volume than chilled water storage. Typical ice systems require approximately 2 to 4 cubic feet of storage per ton-hour compared with around 15 cubic feet per ton-hour for chilled water systems. However, ice storage requires lower operating temperatures that can reduce chiller efficiency.
How much can thermal energy storage reduce energy costs?
Thermal energy storage can reduce HVAC operating costs by approximately 20% to 60% according to EPRI research on ice storage and cold air distribution systems. These savings are achieved by shifting chiller operation from inefficient peak ambient periods to off-peak & lower ambient hours.
Is thermal energy storage suitable for buildings in hot climates?
Hot climates with large cooling demands and , large swings in intraday weather & feasible peak to off peak electricity tariff differences are among the best environments for thermal energy storage. Large commercial buildings across the UAE and wider GCC region frequently benefit from TES because cooling loads remain consistently high throughout much of the year. However, system design must account for high ambient temperatures and local operating conditions.
Does a TES system replace the chiller entirely?
Thermal energy storage does not replace the chiller but changes when the chiller operates. In a full storage system, the chiller runs primarily at night to charge storage tanks while daytime cooling comes from stored energy. However, partial storage systems continue to use the chiller during the day to supplement stored cooling capacity.
Thermal energy storage offers building owners a practical way to reduce peak demand charges, improve energy efficiency and support long-term sustainability goals. To learn more about the right TES strategy for your facility, contact us and speak with the Daikin MEA team.
