A hybrid photovoltaic/thermal (PV/T) system is having the capability to convert solar energy to both electricity and thermal energy simultaneously and these systems can use to accomplish the energy demand of buildings. Performance analysis of such systems becomes essential to design PV/T systems matching with the operating conditions. It is essential to extend the energy flow analysis used in this regard considering economic limitations especially for urban applications. In this study a practical method to accomplish the energy demand of a building from a PV/T system is proposed and evaluated through a thermo-economic model. The performance of the PV/T collector is analyzed under different operating conditions in Sri Lanka. The responses of energy storage and local grid according to demand variations of the building are evaluated considering the economic aspects. Life cycle cost of the PV/T system is computed to assess the economic viability of harnessing energy from solar energy. Furthermore, the capability of deploying PVT technique and the potential to harvest solar energy in Sri Lanka is evaluated through conducting case studies for different locations.