ABSTRACTSolar energy's abundant availability in India makes it a potential solution to meet increasing energy needs without harming environment. Solar water heating (SWH) systems are effective in converting solar radiation into heat for domestic and industrial applications. However, their inability to provide hot water during nighttime or off‐sunshine hours due to the intermittent nature of solar energy presents a challenge. Thermal energy storage, particularly using phase change materials (PCMs), has emerged as a solution. In this study, spherical ball‐type encapsulated PCM, specifically RT60, was incorporated into a solar water heater tank under variable atmospheric conditions. The PCM stores excess energy during daylight and releases it when the water temperature drops below the PCM's melting point. The results reveal a significant reduction in the temperature drop of water from 4.5°C to 1.4°C when utilizing PCM compared to conventional storage water tanks without PCM. Additionally, energy storage capacity is enhanced by 5.13% with PCM incorporation. Furthermore, modifying the encapsulation geometry to a rectangular shape enhances heat transfer and reduces temperature drop even further to 0.9°C, making it a promising approach to improving SWH system performance. This study highlights the possibility of enhancing encapsulation shape and applying PCM to enhance SWH system performance. The results highlight the possibility of increasing solar thermal systems' energy efficiency and usefulness, which will support sustainable energy sources.