Latent heat storage (LHS) represents a valuable technology for the integration of intermittent renewable energy sources in existing and future energy systems. Improvements in LHS can be sought by enhancing heat transfer efficiency, compactness and diminishing the environmental impact of storage systems. In this paper, direct contact latent heat storage (DC-LHS) using esters as phase change material (PCM) is proposed as a promising compact storage technology to achieve high performance both in terms of heat transfer and sustainability. The technology allows for the heat transfer fluid (HTF) to flow directly through the PCM, forming a large amount of small droplets and thus providing a large heat exchange surface area between the two materials. At the same time, using biobased esters as PCM, gives the technology clear ecological advantages when compared to alternative types of compact energy storage. Furthermore, no complex heat transfer enhancing structures are necessary in a DC-LHS, further reducing the environmental impact and enabling very high energy densities. In this paper, the feasibility of this concept is explored for the first time by developing and testing an experimental DC-LHS device using methyl palmitate as PCM and water as HTF. The thermal performance and stability of the material combination are analysed by different melting–solidification experiments and distinctive effects are identified and comprehensively discussed for the first time. The basic concept as well as the novel material combination are validated. The study finds the critical challenges that must be overcome in order for this highly promising technology to be successfully implemented.