Both internal encapsulation and external added nanoparticles have been employed in this study to enhance thermal conductivity and explore the corresponding heat transfer characteristics. Specifically, the correlation between thermal conductivity and capsule, nanoparticle content, as well as the enhanced heat transfer/thermal energy storage performance facilitated by internal encapsulation are demonstrated through numerical and experimental study. Furthermore, it compares key parameters like heat transfer and pressure drop, providing quantifiable evidence that the addition of nanoparticles, whether internally or externally, leads to an increase of thermal conductivity by 6.63 %/2.75 % (5 wt%) and 5.92 %/4.26 % (10 wt%), respectively. Internal encapsulation was observed to yield a more substantial enhancement in heat transfer. Moreover, higher capsule concentrations tend to induce an inverted concentration profile near the heat exchange wall, particularly at higher flow rates. Furthermore, encapsulating nanoparticles within these capsules enhances heat transfer performance, with the level of enhancement scaling with the nanoparticle quantity. Increasing the flow rate of emulsion from 0.4 m·s−1 to 0.6 m·s−1 in a horizontal tube resulted in a 26.67 % increase in heat transfer and a 41.55 % increase in pressure drop. As a result of the disturbed heating, thermal fluctuations of external addition showed more pronounced thermal fluctuations due to disrupted heating, while a internal encapsulation exhibited a more stable temperature distribution and superior heat storage performance.