This paper assesses impact of using phase change materials (PCM) in buildings to leverage its thermal energy storage capability. The emphasis is from an electricity demand side perspective with case studies that incorporates wholesale electricity market data of New Zealand. The results presented in this paper show that for space heating application significant advantages could be obtained using PCM built structures. These positive impacts include peak load shifting, energy conservation and reduction in peak demand for network line companies and potential reduction in electricity consumption and savings for residential customers. This paper uses a testing facility that consists of two identically designed and shaped offices built at Tamaki Campus location of the University of Auckland, New Zealand. The walls and ceilings of one office are finished with ordinary gypsum boards while the interior of the other office is finished with PCM impregnated gypsum boards. Controlled heating facility is provided in both the offices for maintaining temperature within the range of human comfort. This facility is equipped with advanced data acquisition equipment for data monitoring and archiving both locally within the offices and also remotely. Through actual observations and analysis this paper demonstrates two major impacts of DSM. First, the application of phase change material (PCM) in building environment enabling efficient thermal storage to achieve some reduction in the overall electrical energy consumption. Second, assessment of peak load shifting achieved for space heating in a PCM building during a typical winter period in New Zealand. (C) 2010 Elsevier Ltd. All rights reserved.