This paper presents the study of a thermoelectric cooler (TEC) designed for small-scale space conditioning applications in buildings. A theoretical study was undertaken to find the optimum operating conditions, which were then applied in the laboratory testing work. A TEC unit was assembled and tested under laboratory conditions. Eight pieces of Ultra TEC were shown to generate up to 220 W of cooling with a COP of 0.46 under the input current of 4.8 A for each module. Thermo-economical analysis was carried out and results showed that a system with PV panel can compete with an equivalent system without a PV panel when PV costs fall down to or lower than 1.25 pound per Watt. For the cases without a PV panel, the system with a high level of TEC power input delivered a better performance in terms of the average cooling energy price than that system with a low level of TEC power input after critical interest rate (currently 4%). Copyright (C) 2009 John Wiley & Sons, Ltd.