This case study focused on the design of an economic and sustainable solar-biodiesel thermal system to meet the growing heating and cooling energy demand in Cypriot residential buildings. While the application of solar thermal systems in the residential sector has been one of the most efficient solutions to energy shortage issues experienced globally, auxiliary systems are often neglected. Therefore, this study addresses intermittency issues of solar and wind energy by exploring biodiesel as an auxiliary energy source. Biodiesel as an auxiliary fuel eliminates the use of expensive energy storage systems such as solar PV batteries and PCMs in solar thermal applications The proposed system which integrates evacuated tube solar collectors, thermal energy storage tank, Lithium-Bromide absorption chiller and a biodiesel boiler is modelled using TRNSYS. Different from most studies this study implements a user-centered method in determining residential space conditioning energy demand through a survey. TMY data is used to represent the available solar energy resources in Cyprus. The 10.5kW proposed system demonstrated a performance capability by satisfying 37800kJ/h of space conditioning energy demand. Thermal energy from solar managed to meet 100% and 87.7% of the cooling and heating energy demand respectively. The cost analysis reflected a payback period of 7.3 years and total savings of $37,200 over 20 years, highlighting the energy and cost effectiveness of renewable energy thermal systems in residential buildings.