The present paper describes the application of computational fluid-dynamics (CFD) to the design and characterization of a medium scale energy storage unit for district heating systems. The shell-and-tube LHTES unit contains a technical grade paraffin (RT100) as phase change material (PCM) and uses water as heat transfer fluid (HTF). The system has been designed to transfer heat from the district to the building heating networks. After an initial description of the LHTES unit and a wide literature overview on the subject, the paper discusses the need for thermal enhancement to improve the thermal conductivity of the PCM. A solution based on a paraffin-graphite composite with a 15% graphite volume fraction has been found to be well performing in this particular application. Several operating scenarios characterized by heat requests ranging between 130 kW and 400 kW have been explored and the main outputs presented as function of Re and St numbers. The timewise variations of other significant quantities, such as liquid fraction, sensible and latent energy content, HET outlet temperature and heat fluxes have been also presented and discussed. A final discussion on the possible system configurations shows that in comparison to traditional water storage systems for district heating, LHTES systems provide, depending on the chose alternative, higher energy storage densities. (C) 2012 Elsevier Ltd. All rights reserved.