This thesis aims to increase photovoltaic (PV) panel power efficiency by employing a cooling system based on water circulation, which represents an improved version of water flow based active cooling systems. Theoretical calculations involved finding the heat produced by the PV panel and the circulation water flow required to remove this heat. A data logger and a cooling system for a test panel of 20W was designed and employed to study the relationship between the PV panel surface temperature and its output power. This logging and cooling system includes an Arduino microcontroller extended with a data logging shield, temperature sensing probes, current sensors, and a DC water pump. Real-time measurements were logged every minute for one or two day periods under various irradiance and air temperature conditions. For these experiments, a load resistance was chosen to operate the test panel at its maximum power point. Results indicate that the cooling system can yield an improvement of 10% in power production. Based on the observations from the test panel experiments, a cooling system was devised for a PV panel array of 640 W equipped with a commercial charge controller. The test data logger was repurposed for this larger system. An identical PV array was left uncooled and monitored simultaneously to compare the effect of cooling, demonstrating that the cooled array provided up to an extra 132W or 20% of maximum power for sunny weather conditions. Future expansion possibilities of the project include automated water level monitoring system and water filtration systems.