A detailed heat transfer model of a storage tank was developed to assess the performance of a district heating system with de-centralized storage solutions. The performance of two cases, with water and a low-cost phase change material emulsion as storage medium was analysed for 40 residential buildings in Zaragoza (Spain). The chosen configuration is a typical cylindrical tank with internal coils through which the district heating water flows for the charge and discharge. This decentralized thermal energy storage unit reduced peak demand and mass flow in the network, allowing additional buildings to connect to a saturated grid. Four configurations were examined: (1) A 180 m3 water tank reduced district heating power demand by 36.6 %. (2) The same 180 m3 tank using the emulsion required fewer coils, lowering costs, stabilizing TES temperature, and increasing water supply temperature, thus extending system lifespan. (3) A 130 m³ tank with the emulsion offered operational characteristics similar to the water tank, with economic and structural benefits from reduced size. (4) An 180 m³ optimised tank with the emulsion achieved a 38.8 % reduction in district heating power demand. These configurations demonstrate the efficiency and cost-effectiveness of using phase change material emulsion in thermal energy storage systems.