Compact salinity gradient solar ponds are gaining recognition as a source of heat storage medium in densely populated areas and small residences around the globe. However, their efficiency is limited because of the small capacity of saline water and lower potential. In this study, a compact salinity gradient solar pond was developed to enhance heat storage efficiency. This experimental study investigates the effect of incorporating a novel phase change medium composed of paraffin wax infused with dragon fruit extract-coated magnesium oxide powder to enhance the heat storage capability of the compact salinity gradient solar pond. The dragon fruit extract is utilised as a natural additive to enhance the thermal properties of the magnesium oxide powder. This improves the heat storage capability of the phase change medium and provides eco-friendliness to the system. The experiment allowed heat addition and rejection from the saline water through natural convection mode. After coating the MgO nanopowders, the peak temperature in the lower convective zone of the compact salinity gradient solar pond was 51.2 ℃ on the seventh day. The efficiency of the solar pond increased when the previous day exhibited a drop in solar intensity. It showed a maximum efficiency of 35 %. An optimisation study revealed that the solar pond efficiency can be 28.16%. It is concluded that the heat stored in the compact salinity gradient solar pond increases because of the periodic heating of the saline water and the presence of the heat storage medium.