Due to the pressing timeframe to meet emissions reduction targets, electrification of heat is the fastest approach for decarbonising buildings. However, the high power demand of electric heating and cooling devices poses a significant challenge to the electricity supply chain when they are deployed on mass. Adding rooftop solar photovoltaic systems does not necessarily eliminate this problem. Cheap and safe thermal storage offers a potentially viable solution allowing electric HVAC & hot water systems to be deployed with minimal impact on the grid. We propose such a multi-function thermal system combining solar photovoltaics, heat pump, and thermal storage for supplying residential heating, cooling and hot water demand. We investigate the effectiveness of this system in terms of electricity demand management and solar utilisation in different geographical locations. The results illustrate that with effective control, such a system can reduce a building’s annual grid-electricity demand by about 50% to 80%, and increase its solar self-consumption to around 60%. The temporal load profile is also significantly reduced and flattened, allowing high level of distributed PV penetration without negative impacts on the grid. We show that these benefits can be earned at a reasonable cost to consumers helping them to reap a positive rate of return compared to alternative options for different climatic and regional conditions. The proposed thermal storage system is demonstrated as a cost-effective and safe distributed energy solution to ease the stress exerted on the grid from excess PV power as well as heating and cooling related peak demand.