The objective of this paper is to develop a two dimensional two-phase model to study the dynamic behavior of a packed bed thermal energy storage system, which is composed of spherical capsules of encapsulated phase change material (PCM-sodium nitrate) and high temperature synthetic oil (Therminol 66) as heat transfer fluid. The heat transfer coefficient is calculated based on the phase change process inside the capsule by enthalpy formulation model and the flow inside the system is predicted by solving the extended Brinkman equation. After model validation, the developed model is used to investigate the influence of capsule size, fluid temperature (Stefan number), tank size (length and diameter), fluid flow rate and the insulation layer thickness of tank wall on the performance of the system. The dynamic behavior of the system, subjected to partial charging and discharging cycles, is also analyzed. It is found that increasing the capsule size, fluid flow rate, or decreasing the Stefan number, results in an increase in the thermocline region which finally decreases the effective discharge time and the total utilization. (C) 2014 Elsevier Ltd. All rights reserved.