Performance of photovoltaic panels depend not only on the materials, but also on other conditions such as ambient temperature, cell temperature, and build-up of matter such as dust, dirt, snow, or water on the panel surface. In this study, retention criteria for water droplets on photovoltaic panel surfaces along with the heat transfer effects are investigated. As surface temperature plays an important role in panel efficiency, understanding the heat transfer phenomena between the droplet and the panel is pivotal. Temperature variation around the droplet-panel interface was studied both theoretically and numerically. Different cases were studied considering droplet volume, number of droplets, and distance between the droplets. This research concludes that droplet retention on PV panel surface after a rain or an irrigation event is detected when the drag force dominates the body forces. Amount of heat transfer increases with increasing droplet volume and contact area. Therefore, more heat transfer is observed over hydrophilic surfaces than hydrophobic surfaces. As the number of droplets over the photovoltaic panel surface increase, cell temperature decreases, yielding enhanced panel efficiency. It was also found out that as the distance between the droplets increases, cooling effect reduces. This lessening in the cooling effect gets higher as the droplets get further away from each other.