In the report that is before you, a method has been investigated to increase the capacity of domestic hot water tanks. To do so without having to increase the volume of the tank, a phase change material has been included in an annular space around the tank. To test the performance of such a system, three main topics are dealt with in this report. First of all, the most suitable phase change material was selected. There exist many types of phase change materials, all having completely different properties, advantages and disadvantages. Secondly, weak spots were indicated during melting of the phase change material. These spots indicate the locations of the worst heat transfer rate, and to improve the performance of the system, these spots can be treated separately in future experiments or models, for example by placing fins at those locations. Finally, the response time of the phase change material was investigated during a typical discharge cycle to investigate the amount of latent heat that was released to the water. To model the charging- and discharging cycle, the vorticity stream method was used to create a two dimensional axisymmetric model. This model was implemented into MATLAB. The Boussinesque approximation was assumed to take into account buoyancy effects. Furthermore, only diffusive heat transfer was assumed to take place throughout the PCM and the effect of convection was neglected. Results showed that paraffin based PCMs are most suitable for applications in domestic hot water tanks. They are inert and stable, and their thermal properties do not degrade in time. They have suitable melting temperatures and high latent heat. To increase the thermal conductivity, dispersion of high density alumina particles was applied. Although the charging model did not reach the asymptotic range of convergence, it was shown that melting 5.0 cm PCM required long periods of time. After 9 hours, part of the PCM was still in its solid phase. Due to thermal stratification in the tank, the slowest melting rate was seen at the lower outer edges of the tank. During the discharge cycle, it was shown that not all PCM was able to release its latent heat to the water: 16.9% did not solidify. This occurred at an adapted flow rate to match the discharge time for both tanks. For higher flow rates, used in domestic hot water tanks, the amount of liquid PCM would even be greater, resulting in less latent energy release to the water. Based on the fact that 5.0 cm PCM did not increase the heat capacity of the tank, and all the previously mentioned factors, it is concluded that the performance of a hot water tank enhanced with PCM in an annular space does not increase the performance of a domestic hot water tank. Some suggestions were made regarding the possibilities of increasing the performance of the tank in future models and experiments.