This study simulates an increased thermal capacitance (ITC) and thermal storage management (TSM) system to reduce the energy consumed by air conditioning and heating systems. The ITC/TSM is coupled with phase change materials (PCM), which enable tank volume reduction. The transient energy modeling software, the Transient System Simulation Tool (TRNSYS), is used to simulate the buildings' thermal response and energy consumption, as well as the ITC/TSM system and controls. Four temperature-controlled operating regimes are used for the tank: building shell circulation, heat exchanger circulation, solar panel circulation, and storage. This study also explores possible energy-saving benefits from tank volume reduction such as losses associated with the environment temperature due to tank location. Three different tank locations are considered in this paper: outdoor, buried, and indoor. The smallest tank size (five gallons) is used for indoor placement, while the large tank (50 gallons) is used either for outdoor placement or buried at a depth of 1 m. Results for Atlanta, Georgia show an average 48% required energy decrease for cold months (October-April) and a 3% decrease for warm months (May-September) for the ITC/TSM system with PCM when compared with the reference case. A system with PCM reduces the tank size by 90% while maintaining similar energy savings.