Chiller plants provide a cost-effective cooling solution for medium and large buildings. A centralized air conditioning system requires less capital than a separate unit for each building area, and modern chillers with variable-speed compressors surpass the efficiency of most air conditioning alternatives. However, even lower operating costs are possible when a chiller plant is equipped with ice storage.

How Your Electricity Tariff Affects Cooling Expenses

If you compare old window-type or packaged terminal AC units with modern chillers, energy savings per ton are likely to exceed 60 percent. However, even efficient chillers have a significant running cost, due their high cooling output. There are two main reasons why running a chiller is expensive:

  1. Commercial buildings, which typically use chillers, are not only billed for the kilowatt-hours consumed. They also pay a power demand fee, which is based on the highest kilowatt demand value measured in a billing period. The yearly demand peak normally happens on a hot summer day where the chiller has to run at full capacity.
  2. Electricity consumers subject to time-of-day rates pay the highest kWh prices during peak hours, when the grid is burdened. Frequent chiller usage in hours with peak kWh prices guarantees a hefty power bill.

Note that these conditions are not mutually exclusive: some electricity consumers have tariffs that include both demand charges and time-of-day rates. However, the electricity tariff structure can also work in your favor if you reduce chiller usage during grid demand peaks and building consumption peaks.

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To reduce chiller output without compromising space cooling, you can equip your chiller plant with an ice storage tank. The chiller can be turned off to trim demand peaks or to minimize consumption during peak-rate hours, and the required space cooling is obtained by melting ice.

How Does a Chiller Plant with Ice Storage Work?

Under most tariffs, electricity is much cheaper during low-demand hours. There are two reasons for this: utility companies shut down their most expensive power plants at this time, and network losses are low because power lines are lightly loaded.

Chiller plants can use their cooling capacity to freeze and store ice when electricity is cheap (off-peak hours), and meet cooling demand by melting ice when electricity is expensive (peak hours). Even buildings subject to a fixed kWh price can benefit from ice storage, trimming down their own demand peaks and minimizing the corresponding demand charge.


Another advantage of ice storage that you can size your chiller with a smaller capacity. Assume you have a building with a peak cooling load of 200 tons, operating 10 hours per day:

  1. Without ice storage, you need a 200-ton chiller plant.
  2. On the other hand, if you have an ice storage system capable of delivering 75 tons of cooling, you only need a 125-ton chiller plant.

Note that a smaller chiller also brings a reduced electrical load. This way, you can use smaller conductors, electrical protections and transformers.

Additional Benefits of a Chiller Plant with Ice Storage

In addition to reducing your power bills, ice storage makes your cooling system more resilient. Consider the following benefits:

  1. Cooling output during blackouts: If the electric service is interrupted, you can continue delivering space cooling while the stored ice lasts. You still need a backup generator for HVAC pumps and fans, but the load on the generator is much lower when you subtract the chiller!
  2. No disruption during maintenance: You can use ice for space cooling whenever your chiller is under routine maintenance, providing comfort for building occupants.
  3. Using more power from renewable sources: You cannot run cooling systems with wind turbines and solar panels, since their energy output is variable. However, if you have an ice storage system, surplus generation from wind turbines or solar arrays can be used to make ice.

With ice storage, you may also have the chance to benefit from incentive programs. Some utility companies, including Con Edison in NYC, have programs where they reward you for lowering demand at times when the power grid is burdened. This can be easily accomplished by ramping down your chiller output and relying completely on ice for space cooling.


A chiller with ice storage offers you more operational flexibility, while reducing your space cooling expenses. Just keep in mind that each project is unique, and the potential savings from ice storage strongly depend on your electricity tariff. You can get a professional energy audit and energy modeling for your building to identify the most promising upgrades.

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