Solar water heating is the most promising way to effectively use solar energy among all other solar energy applications. In this study, an innovative way of incorporatingphase change material (PCM) between the annulusspace of the heat pipe and the evacuated tubes for solar water heaters (SWHs) is used. The proposed system can deliver hot water when demand is high/solar radiation is insufficient by using palmitic acid as PCM. The energetic and exergetic analysis of the developed systemintegrated with PCM is studied on both clear and cloudy days. The results revealed that the maximum daily collected useful energyfor the clear and cloudy days was10.65 MJ & 8.52MJ respectively, whereas the maximum storage tank temperature was found to be 46.2°C and 41.4°C for the corresponding days. The daily average energetic and exergetic efficiencies of the proposed system were found to be 76.57% and 79.64%, and 2.37% and 1.38%, respectively at a fixed mass flow ratefor clear and cloudy days conditions.The results reveal that the designed system eliminates the problem of overheating heat pipes and can supply hot water even under cloudy conditions.