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The low efficiency of PV panels paved the way for new research fields that have been conducted to propose different techniques to improve their efficiency. The objective of this research is to understand more about the theory of operation of PV panels and to develop a novel technique for improving the efficiency of Photovoltaic (PV) panels. This is done by coating the front surface of the PV panel by a fine layer of oil in order to improve the absorbance of the panel, and consequently its efficiency. Different types of oils are examined and an experimental setup has been developed to examine the performance of the PV panels as a function of operating conditions, i.e.: temperature, solar irradiance and oil coatings. It has been found that coating the PV panel with a fine layer of Labovac oil improves the efficiency of the PV panel by more than 20%, and this is due to the high absorbance of the Labovac oil compared to other oils. On the other hand, Labovac oil has a drawback which is overheating of the panel due to its high absorbance.Consequently, coating of PV panels with a fine layer of Labovac oil should be done only in cold regions, in order to avoid the heating effect.