Abstract The latent heat thermal energy storage system (LHTES) utilizes phase change material (PCM) to store energy. The non-uniformity in heat transfer between heat transfer fluid (HTF) and PCM along the height of the widely used vertical cylindrical shell and tube type storage tank causes a reduced thermal performance of the storage. Hence, in the present work, a passive heat transfer enhancement technique is proposed through a novel funnel shaped configuration of the shell and tube LHTES to achieve more uniform temperature distribution in the PCM as compared to the cylindrical shell and tube LHTES. Additionally, longitudinal fins are introduced in the HTF tube further to enhance the heat transfer between HTF and PCM. A numerical model is developed using the enthalpy-porosity technique to analyze the phase change phenomenon. The thermal performance of the funnel LHTES is evaluated using the first and second law of thermodynamics. The funnel LHTES with the lateral shell surface tilting up to a height of 250 mm shows higher melt fraction and energy efficiency by 11.5% and 66.6%, respectively compared to the cylindrical LHTES. The latent heat content of the funnel LHTES with a shell tilt height of 250 mm during the charging and discharging period is improved by 1.72 and 1.11 times, respectively than that of the cylindrical LHTES. A significant improvement in the rate of solidification of PCM during the discharging process is obtained with the funnel LHTES.