This research is a novel experimental work on cooling solar panels using hydrogel beads saturated with Al2O3 water based nanofluid. Nanofluid of concentrations 0.1, 0.25, and 0.5% wt. were used and compared to the water only cooled and the uncooled PV panels. A passive cooling system was created with three layers of the nanofluid saturated hydrogels and attached to the back surface of the exposed PV panels, with fixed radiation intensities of 800 and 1000 W/m2. Using 0.5%wt. Al2O3 water based nanofluid saturated hydrogels, the temperature of the panel was reduced by approximately 17.9 °C and 17.1 °C for radiation intensities of 800 and 1000 W/m2 respectively, compared to the uncooled one. From a performance point of view, 0.5% wt. gave the optimum performance; however, due to the price on the nano materials, 0.25% wt. concentration is the optimum economical selection. The economic analysis showed that the payback period, using 0.25% wt. nanofluid concentration, was 12 years for 1000 W/m2. The annual power generated showed improvement of approximately 10.1% at both tested intensities compared with the uncooled panel. The environmental analysis showed that using the proposed system and the optimised nanofluid concentration can reduce the annual CO2 emission by 7.95 tonnes and 9.76 tonnes for a solar farm of 100 square meter area at radiation intensities of 800 and 1000 W/m2.