Abstract Hybrid photovoltaic thermal systems consisting of solar panels and solar thermal absorbers are generally used for improving the electrical and thermal efficiency of the photovoltaic panel by cooling. Thus, thermal energy produced can be used for other applications. Depending on solar insolation and location, building integrated photovoltaic (BIPV) systems are designed and developed to fulfill energy needs. This paper reviews the detailed study on the effect of the front surface, back surface and combined front and back surface cooling on the water-based photovoltaic systems. This paper also discusses different designs of solar thermal absorber collectors. The front surface cooling resolves two problems. Firstly, it significantly reduces the PV panel temperature by 22–27 °C depending on the cooling phenomena used and secondly, it cleans the PV panel, thereby increasing the optical efficiency. The PV panel temperature reduction (5–6 °C) in the water spraying cooling system is more than water flowing over the front surface. The photovoltaic thermal absorber collector system is the most economically viable system from the electrical and thermal energy generation perspectives. The evaporative cooling on the backside of PV panels using clay and cotton wick structure could be an effective solution for a standalone PV system. It is observed that dual cooling is suitable for PV panels cooling in a hot arid region but needs further investigation. Finally, the environmental impact and economic feasibility of water-based photovoltaic cooling systems are discussed.