Material Insights · Understanding the Material World

Latent heat and cold storage: Economics

Why demand charges, not wholesale markets, pay for ice

What this tab covers Economics and financial structure: capital versus operating cost, levelised cost of storage, and how the asset earns money.

Ice storage earns its keep by cutting demand charges and allowing smaller chillers, with paybacks of a few years in good tariff regimes. High-temperature metal PCMs have no proven economics yet.

Capex versus opex

Favourable

In a vendor example for a 400-ton cooling plant, adding ice tanks raised equipment cost from USD 240,000 to USD 324,000, but smaller chillers saved about USD 13,000 in electrical work. For homes, a US DOE-funded ice system under development (2021) is expected to add USD 800 to 2,500 to a new air-conditioning system, raising its cost by 20% to 60%. IRENA puts cooling storage installation at USD 60 to 230 per kWh. Operating costs are small, with no stack or cell replacements.124

Incremental cost, 400-ton plant (vendor example) USD 84,0002 Residential ice add-on USD 800-2,500 per system (20-60% cost increase, projected)4 Cooling storage installed cost USD 60-230 per kWh1

Levelised cost of storage

Mixed

No published levelised cost figures for ice or PCM storage were found. Payback is the usual metric: about 3.9 years in the vendor example, and as little as 2 to 4 years projected for the residential system, depending on time-of-use tariffs. These are not comparable with a 4-hour lithium battery's USD 210 to 292 per MWh of electricity (Lazard 2026), because ice delivers cooling, not power.2410

Simple payback, commercial (vendor example) about 3.9 years2 Payback, residential as low as 2-4 years (projected)4 Lithium LCOS comparator, 4-hour (2026) USD 210-292 per MWh10

Revenue stack and market participation

Favourable

Value comes from demand charges, time-of-use differences and smaller chillers, not from wholesale markets. The vendor example saves about USD 21,500 a year in demand charges at USD 14 per kW. At 55 Water Street the project developer reports USD 2.5 million a year in savings with up to 2.1 MW less summer peak. Aggregated, CALMAC claims over 1 GW of peak reduction across more than 4,000 sites, so utilities can treat fleets of ice tanks as demand response.23

Annual demand-charge saving (vendor example) about USD 21,5002 New York office tower, peak cut and savings up to 2.1 MW; USD 2.5 million a year (developer claim)3 Fleet peak reduction (company claim) over 1 GW, over 4,000 installations2

Sources

  1. Innovation Outlook: Thermal Energy Storage IRENA, 2020
  2. Thermal Battery systems: CALMAC ice storage (Trane sales brochure IB-SLB001, company data) Trane Technologies, 2020
  3. Energy storage case study: ice thermal storage in a 53-storey Manhattan office building (ES-newwater-cs) NYSERDA, 2018
  4. Ice Storage and Other Thermal Storage-Related Systems (project page: Mainstream Engineering with the National Laboratory of the Rockies) US Department of Energy, 2021
  5. Lazard's Levelized Cost of Energy+ (LCOE+), July 2026 (LCOS) Lazard, 2026