Space heating and cooling accounts for approximately 65% of residential secondary energy consumption, of which almost 40% is met using electricity in Canada. This demand places a significant peak load on the electrical grid that must be managed to reduce the required generating and transmission capacity within the grid. It is proposed that this demand side management can be achieved using thermal storage coupled with a heat pump to charge during off-peak periods and use the stored heating and cooling during peak periods. Through this work, TRNSYS Types were validated to model the performance of a liquid to liquid heat pump, medium temperature chiller and using sensible storage tanks and stratified cold thermal storage. A new TRNSYS Type was developed and validated to model a compact ice storage system to store cooling potential. These components were combined, and the coupled performance of the heat pump connected to both hot and cold thermal storage was determined. It was found that higher flow rates resulted in better performance, when compared to using low flow rates that resulted in the stratification in the storage tanks. The complete system was then integrated into a house modelled situated in Ottawa and different combinations were examined for the total energy consumption, peak consumption, annual costs, and greenhouse gas emissions. In all cases, total consumption, energy costs and greenhouse gas emissions increased, although certain combinations showed greater potential, with the greatest potential being the offsetting of peak cooling loads, when compared to heating loads. This system was then implemented in locations across North America, with different rate structures and climactic conditions. It was found that locations with a high difference between the peak and off-peak rate, and high cooling loads had the greatest potential for reducing peak consumption and reducing utility costs. When looking at life cycle costs, rate increases selected over the 15-25-year period examined greatly influenced the economics. In conclusion, the system is technically feasible, where a large portion of cooling peak loads can be offset, but to be economically feasible, government incentives or a high annual rate of utility cost increases must occur.