AbstractWith PV Thermal panels sunlight is converted into electricity and heat simultaneously. Per unit area the total efficiency of a PVT panel is higher than the sum of the efficiencies of separate PV panels and solar thermal collectors. During the last 20 years research into PVT techniques and concepts has been widespread, but rather scattered. This reflects the number of possible PVT concepts and the accompanying research and development problems, for which it is the general goal to optimise both electrical and thermal efficiency of a device simultaneously. The aspects that can be optimised are, amongst others, the spectral characteristics of the PV cell, its solar absorption and the internal heat transfer between cells and heat‐collecting system. Another important level of optimisation is for the PVT device geometry and the integration into a system. The electricity and heat demand and the temperature level of the heat determine the choice for a certain system set‐up. With an optimal design, PVT systems can supply buildings with 100% renewable electricity and heat in a more cost‐effective manner than separate PV and solar thermal systems and thus contribute to the long‐term international targets on implementation of renewable energy in the built environment. Copyright © 2004 John Wiley & Sons, Ltd.