Over the years, improving the conversion efficiencies of photovoltaic-thermal (PV-T) collector systems has been demanding as electrical and thermal performance influence it. Additional complexity arises due to hybridization (i.e., PV-T collector-based water heaters). Apart from these, frost formation over evaporator coils calls for further investigations. Hence, an experimental investigation has been performed to check the viability of adopting dual cooling and devising a heat recovery mechanism. Dual cooling comprises simultaneous cooling using refrigerant and air. The R-32 refrigerant in the evaporator coil cools the PV module as a single cooling mode, and with integrated forced airflow over the refrigerant tubes, it becomes the dual cooling mode. The recovered energy from the single cooling is reused for domestic water heating, while the hot air from the second stage is redirected for space heating requirements. A grid-connected variable frequency drive (VFD) compressor is controlled and works based on the evaporator output load. This feedback mechanism makes the overall approach energy efficient. The developed dual cooling system has reduced the panel temperature 5 °C to a single mode and reported an increase of 3.8%, 3%, and 8% in the performance parameters like average PV instantaneous efficiency, average thermal efficiency, and COP value, respectively. Also, the dual cooling delayed the frost generation for 30 min. Since the increments are not much significant, upon considering the economy part, dual cooling using forced air is not recommended unless there is a hot air requirement for the space heating application.