As working temperature plays a critical role in influencing solar PV’s electrical output and efficacy, it is necessary to examine possible way for maintaining the appropriate temperature for solar panels. This research is aiming to investigate practical effects of solar PV surface temperature on output performance, in particular efficiency. Experimental works were carried out under different radiation condition for exploring the variation of the output voltage, current, output power and efficiency. After that, the cooling test was conducted to find how much efficiency improvement can be achieved with the cooling condition. As test results show the efficiency of solar PV can have an increasing rate of 47% with the cooled condition, a cooling system is proposed for possible system setup of residential solar PV application. The system performance and life cycle assessment suggest that the annual PV electric output efficiencies can increase up to 35%, and the annual total system energy efficiency including electric output and hot water energy output can increase up to 107%. The cost payback time can be reduced to 12.1 years, compared to 15 years of the baseline of a similar system without cooling sub-system.