The use of SEHRAC (storage-enhanced heat recovery room air-conditioner) for space cooling and free water heating has been confirmed effective but its overall performance will unavoidably be affected by the associated increase in water temperature in the heat recovery water tank. Measures to enhance the heat storage capacity of the water tank will thus be beneficial to the overall performance of SEHRAC. But virtually none has been done to date. For achieving this objective, the use of PCM (phase change material) in the water tank was proposed in this study. A prototype SEHRAC integrated with an expanded graphite/paraffin composite PCM was designed and setup in a test facility for laboratory experiments. Two identical sets of experiments with and without the use of PCM (wPCM and woPCM scenarios) under a range of outdoor temperature conditions were conducted. It was found that the wPCM scenario, as compared to the woPCM scenario, the overall coefficient of performance was 6.9%-9.8% higher and the heat retention time of the tank water was 21.1% longer. The results confirmed that the performance of SEHRAC could be improved by the use of PCM. (C) 2015 Elsevier Ltd. All rights reserved.