Thinking about “going solar”? Then you need to know about these two options: solar panels and solar thermal systems. Both rely on sunlight we see every day but turn it into energy in very different ways.
Understanding the difference matters because the right choice depends on what you actually need. In 2025, the technology has become more refined, and it is difficult to make a decision that isn’t as simple as “panels vs. heaters.”
In this guide, we’ll break down photovoltaic vs solar thermal so that you can get a clear comparison to help point you in the right direction.Â
So both are “solar panels,” but they serve different needs. If your goal is to power your household electric appliances, PV is the choice. If your main concern is hot water or heating then solar thermal is more efficient and cost-effective.
And this is how you can see the key difference between photovoltaic and solar thermal system: one directly produces electricity and the other capture heat.
When comparing photovoltaic vs solar thermal in 2025, it is helpful to look at the different system types and where each technology really shines. Both have grown into specialized categories with clear roles in residential, commercial, and industrial energy use.
These types of photovoltaic systems cover everything from a small home setup to a national grid supply.
But there’s nuance:
Performance depends heavily on factors like temperature, irradiance, shading, and the balance of direct normal irradiance (DNI) vs global horizontal irradiance (GHI).
In 2025, PV is more cost-effective for multipurpose energy needs, while solar thermal is only attractive for simple heating applications.
Not every solar technology works equally well in every situation. The choice between solar PV for homes vs solar thermal depends on your end goal—electricity, hot water, or large-scale energy. Let’s break it down by project type.
For households that mainly need hot water and have limited roof space, solar thermal water heaters are often the most efficient solution. Flat-plate or evacuated tube collectors can easily handle daily hot water needs without taking up much space.
But if the priority is electricity—to run appliances, charge EVs, or interact with the grid—solar PV systems with battery storage are the better choice. PV is also more versatile because it supports both self-consumption and net metering.
Most commercial properties consume more electricity than heat. That makes PV systems the natural fit for offices, retail outlets, and warehouses. Larger rooftops or carports can host high-capacity PV arrays.
However, in businesses like hotels, gyms, or laundries that need both electricity and hot water, hybrid PV-T (photovoltaic-thermal) systems provide a smart balance. These systems generate electricity while capturing excess heat from panels.
When it comes to the best solution for industrial process heat, solar thermal technologies lead. Large fields of flat-plate or evacuated tube collectors can provide hot water or steam for industries like textiles, chemicals, or food processing.Â
In high-temperature processes, concentrated solar thermal systems (CSP) deliver steam at industrial scales, often more efficiently than using PV with electric boilers.
On the utility scale, the debate often comes down to PV vs CSP for power generation. PV farms dominate globally due to their lower cost, scalability, and falling module prices.Â
However, CSP plants still have a niche advantage in regions with strong Direct Normal Irradiance (DNI), since they can incorporate thermal storage to deliver power after sunset.
In 2025, hybrid solar solutions like PV-T systems—short for photovoltaic-thermal hybrid—are getting a lot of attention. The idea is simple: instead of just generating electricity with a PV panel, you also capture the heat that would normally be wasted.Â
A PV-T unit combines a solar panel on top with a thermal collector underneath. The panel makes electricity, while the collector grabs the excess heat for hot water, space heating, or even industrial use.
The big benefit? More energy from the same space. A PV-T setup can produce both power and heat, making it a smart option for rooftops with limited space—think city homes, offices, or small commercial buildings. There’s also a bonus: because the thermal collector cools the PV cells, the panels often run more efficiently than standalone PV.
That said, there are trade-offs. PV-T systems cost more upfront and are trickier to install and maintain compared to single-technology systems. Their performance also depends on climate and whether there’s a consistent need for both electricity and heat. Without good heat storage, some of that captured energy could go to waste.
Research from NREL shows that in “mixed-use” scenarios—where you need both power and moderate heat—PV-T can outperform separate systems over its lifetime. But if your project only needs electricity or only needs heat, going with just PV or solar thermal is usually more cost-effective.
PV-T is practical in 2025 if you’re tight on space or need both heat and electricity. Otherwise, simpler systems may still give you the best bang for your buck.
When deciding between PV and solar thermal technologies, local solar resources make all the difference. Two key metrics—DNI (Direct Normal Irradiance) and GHI (Global Horizontal Irradiance)—help guide the choice.
In regions with high DNI, such as deserts in the Middle East, North Africa, the American Southwest, and parts of India, CSP and concentrating thermal systems perform extremely well because they thrive on strong, direct rays. These areas are best suited for utility-scale CSP or large solar thermal plants producing electricity and industrial heat.
In areas with moderate DNI but high GHI, like much of Europe and Southeast Asia, PV systems are typically the better choice. PV panels can capture diffuse light even under hazy or cloudy conditions, making them more versatile in variable climates.
One thing people often overlook when choosing between PV and solar thermal is how policies and incentives can tip the balance. In 2025, solar PV incentives tend to be more generous and wide-reaching. Things like tax credits, feed-in tariffs, and net metering make PV especially appealing, since you can lower your upfront cost and even get paid for sending extra electricity back to the grid.
For solar thermal systems, the incentives are usually more targeted. Instead of net metering, you’re more likely to see rebates for solar water heaters or support through renewable heat schemes. These programs are great if your main goal is to cut heating costs for water or space heating, but they’re often smaller in scale compared to PV benefits.
Permitting is another difference worth noting. With PV, you’ll usually deal with electrical permits and utility approvals because the system ties into your home’s wiring and, often, the grid. Solar thermal, on the other hand, leans more on plumbing and mechanical permits, since it’s about moving heat and fluids rather than electricity.
So, if you’re leaning toward PV, expect broader financial incentives but more utility paperwork. If you’re considering thermal, you might get simpler rebates but deal more with plumbing codes.
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1. Which is better for hot water?
For hot water, solar thermal systems are usually more efficient than PV. They directly capture heat from the sun, making them ideal for domestic hot water and space heating.
2. Can PV replace a solar water heater?
Yes, but not directly. PV panels generate electricity, which can then power an electric water heater. However, this is less efficient than using a dedicated solar thermal water heating system.
3. Is CSP viable for small businesses?
Not usually. Concentrated Solar Power (CSP) is designed for large-scale, high-DNI regions and requires significant land and investment. Small businesses typically benefit more from PV or smaller solar thermal setups.
4. Which is better, PV or CSP?
It depends on the project. PV is more versatile and cost-effective for homes, businesses, and cloudy regions, while CSP shines in sunny deserts for utility-scale projects.
5. What is the difference between solar thermal and solar panels?
Solar PV panels produce electricity, while solar thermal systems capture heat for water, space, or industrial uses. Both are solar-powered, but they serve different needs.
6. Is solar thermal better than PV for hot water?
Yes. If your main goal is hot water, solar thermal is more efficient and usually cheaper. PV works better when you need electricity as well as heating.
If you’re trying to decide between PV and solar thermal, consider these key factors:
This is where Arka360 comes in. Installers and businesses can simulate site performance, run ROI comparisons, and generate customized solar proposals. This saves time and helps you make confident, data-driven decisions.
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It is alright to be confused when choosing between solar PV and solar thermal in 2025. It all comes down to your needs. PV is the go-to choice for electricity and versatile applications, while thermal shines in direct heating tasks. Hybrid systems can deliver the best of both in certain projects.
If you’re weighing your options, Arka360 can help you design your solar panel system, visualize system performance, and present clear proposals plus also help you with ROI. With solar adoption growing, you should be choosing the best solar design software to plan the system that works best for you.
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