Among renewable resources, solar energy is abundant and cost effective. However, the efficiency and performance of photovoltaic panels (PVs) are adversely affected by the rise in the surface temperature of solar cells. This paper analyzes the idea of utilizing thermoelectric modules (TEMs) to enhance the efficiency and performance of PV panels. The proposed hybrid solar thermoelectric generation (HSTEG) system employs TEMs as thermoelectric coolers (TECs) to enhance panel efficiency and as thermoelectric generators (TEGs) to convert excess heat into additional electricity. This study includes an extensive evaluation of the proposed idea using MATLAB Simulink and experimental validation in indoor as well as outdoor environments. The use of TECs for the active cooling of the PV system leads to an increase in its efficiency by 9.54%. Similarly, the passive cooling by TECs along with the additional power generated by the TEGs from the excessive heat led to an increase in the efficiency of the PV system of 15.50%. The results demonstrate the HSTEG system’s potential to significantly improve PV panel efficiency and energy generation, offering a promising avenue for advancing solar energy technology.