The optimal utilization of solar energy presents a challenge in meeting round-the-clock hot water demands while accommodating limited space in modern architectural designs. Solar collectors, operating solely during daylight hours and weather-dependent, necessitate efficient energy storage to meet evening and morning peak hot water consumption in households. Current architectural trends, marked by smaller boiler rooms, further compound the challenge of integrating conventional solar tanks, emphasizing the critical need for compact energy storage solutions. Addressing this challenge, this paper proposes a ground-breaking solution: a solar tank infused with phase change material (PCM). This innovative tank design not only boasts smaller dimensions but also significantly higher heat capacity compared to conventional counterparts. Crucially, the PCM solar tank enables solar collectors to operate at lower temperatures, potentially elevating the overall efficiency of the solar collector system. The proposed storage system comprises two synergistic heat-absorbing units: a solar water heater and a PCM-based heat storage unit. While the solar water heater fulfills the daytime hot water supply, the PCM storage unit accumulates and retains heat throughout the day, ensuring continuous hot water availability during night hours and overcast periods. Leveraging small cylinders filled with paraffin, serving as the PCM, integrated with solar collectors maximizes solar energy absorption and storage. This paper meticulously compares the performance of the PCM-based thermal energy storage system with conventional sensible heat storage systems, presenting insightful conclusions derived from the comparative analysis. The findings underscore the remarkable efficiency and efficacy of the PCM-based solution in meeting the challenges posed by solar energy intermittency and limited space constraints, offering a promising avenue for sustainable and efficient solar energy utilization in residential settings.