Abstract. The present work discusses the utilization of phase change materials for energy storage in geothermal space heating systems. Thermodynamics and thermoeconomics of the combined heating and thermal storing system were studied to show the scope of energy storage and cost savings. A computational model of the combined space heating and thermal storage system was developed and used to perform thermodynamic studies of the heat storage process and heating system efficiency at different times and ambient temperatures. The basis for these studies is daily variations in heating demand that is higher during the night than during the day. The results show the scope of the utilization of phase change material for low ambient temperature conditions. Under proper conditions a sufficient amount of exergy is stored during the charging period at a low ambient temperature to fulfill the daytime heat load requirement. Under these conditions the cost flow rate of exergy storage is found to be lower than the radiator heating cost flow rate. Thus, the use of exergy storage at low ambient temperatures for heating at higher ambient temperatures makes a significant contribution to cost savings.