# Latent heat and cold storage: Economics Why demand charges, not wholesale markets, pay for ice Source page: https://www.materialinsights.org/energy/e_latent_heat/sg-econ/ 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.^[1](https://www.irena.org/-/media/Files/IRENA/Agency/Publication/2020/Nov/IRENA_Innovation_Outlook_TES_2020.pdf)^[2](https://elibrary.tranetechnologies.com/public/commercial-hvac/Literature/Sales/IB-SLB001-EN_12012020.pdf)^[4](https://www.energy.gov/node/4814345) Incremental cost, 400-ton plant (vendor example) USD 84,000^[2](https://elibrary.tranetechnologies.com/public/commercial-hvac/Literature/Sales/IB-SLB001-EN_12012020.pdf) Residential ice add-on USD 800-2,500 per system (20-60% cost increase, projected)^[4](https://www.energy.gov/node/4814345) Cooling storage installed cost USD 60-230 per kWh^[1](https://www.irena.org/-/media/Files/IRENA/Agency/Publication/2020/Nov/IRENA_Innovation_Outlook_TES_2020.pdf) #### 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.^[2](https://elibrary.tranetechnologies.com/public/commercial-hvac/Literature/Sales/IB-SLB001-EN_12012020.pdf)^[4](https://www.energy.gov/node/4814345)^[10](https://www.lazard.com/media/kcfconhf/lazards-lcoeplus_vf.pdf) Simple payback, commercial (vendor example) about 3.9 years^[2](https://elibrary.tranetechnologies.com/public/commercial-hvac/Literature/Sales/IB-SLB001-EN_12012020.pdf) Payback, residential as low as 2-4 years (projected)^[4](https://www.energy.gov/node/4814345) Lithium LCOS comparator, 4-hour (2026) USD 210-292 per MWh^[10](https://www.lazard.com/media/kcfconhf/lazards-lcoeplus_vf.pdf) #### 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.^[2](https://elibrary.tranetechnologies.com/public/commercial-hvac/Literature/Sales/IB-SLB001-EN_12012020.pdf)^[3](https://www.nyserda.ny.gov/-/media/Project/Nyserda/Files/Publications/Case-Studies/EnergyStorage/ES-newwater-cs.pdf) Annual demand-charge saving (vendor example) about USD 21,500^[2](https://elibrary.tranetechnologies.com/public/commercial-hvac/Literature/Sales/IB-SLB001-EN_12012020.pdf) New York office tower, peak cut and savings up to 2.1 MW; USD 2.5 million a year (developer claim)^[3](https://www.nyserda.ny.gov/-/media/Project/Nyserda/Files/Publications/Case-Studies/EnergyStorage/ES-newwater-cs.pdf) Fleet peak reduction (company claim) over 1 GW, over 4,000 installations^[2](https://elibrary.tranetechnologies.com/public/commercial-hvac/Literature/Sales/IB-SLB001-EN_12012020.pdf) #### Sources 1. [Innovation Outlook: Thermal Energy Storage](https://www.irena.org/-/media/Files/IRENA/Agency/Publication/2020/Nov/IRENA_Innovation_Outlook_TES_2020.pdf) IRENA, 2020 2. [Thermal Battery systems: CALMAC ice storage (Trane sales brochure IB-SLB001, company data)](https://elibrary.tranetechnologies.com/public/commercial-hvac/Literature/Sales/IB-SLB001-EN_12012020.pdf) Trane Technologies, 2020 3. [Energy storage case study: ice thermal storage in a 53-storey Manhattan office building (ES-newwater-cs)](https://www.nyserda.ny.gov/-/media/Project/Nyserda/Files/Publications/Case-Studies/EnergyStorage/ES-newwater-cs.pdf) NYSERDA, 2018 4. [Ice Storage and Other Thermal Storage-Related Systems (project page: Mainstream Engineering with the National Laboratory of the Rockies)](https://www.energy.gov/node/4814345) US Department of Energy, 2021 5. [Lazard's Levelized Cost of Energy+ (LCOE+), July 2026 (LCOS)](https://www.lazard.com/media/kcfconhf/lazards-lcoeplus_vf.pdf) Lazard, 2026 ## Other sections - [Summary](https://www.materialinsights.org/energy/e_latent_heat/index.md) - [Overview](https://www.materialinsights.org/energy/e_latent_heat/overview/index.md) - [Correlation](https://www.materialinsights.org/energy/e_latent_heat/correlation/index.md) - [Science and technology](https://www.materialinsights.org/energy/e_latent_heat/sg-sci/index.md) - [Engineering and performance](https://www.materialinsights.org/energy/e_latent_heat/sg-eng/index.md) - [Impact and additionality](https://www.materialinsights.org/energy/e_latent_heat/sg-impact/index.md) - [What to track](https://www.materialinsights.org/energy/e_latent_heat/tracking/index.md) - [Relationships](https://www.materialinsights.org/energy/e_latent_heat/links/index.md)