A new solar-hybrid fuel-fired distributed energy system incorporating thermochemical reaction driven by mid and low-temperature solar heat and exhaust heat is proposed, for increased solar energy utilization and exhaust heat recovery efficiency. Solar energy is upgraded to syngas (H-2 and CO) chemical energy via the solar thermochemical process of the methanol decomposition reaction, and the syngas drives the internal combustion engine to output power. Some of the exhaust heat is stored and drives the methanol decomposition reaction to supplement the syngas via the chemical recuperation process, enhancing the exergy efficiency of the exhaust heat recovery. The overall energy efficiency and net efficiency of solar energy to electricity conversion are improved by integrating solar thermochemistry and chemical recuperation, and excellent off-design thermodynamic performance under varying user loads and solar irradiation levels is achieved. The overall energy efficiency, exergy efficiency, and net solar-energy-to-electricity efficiency reach 80.55%, 42.18% and 24.66%, respectively. These research findings indicate that the proposed system embodies an efficient and stable approach towards utilization of solar energy and clean fuel in distributed energy systems.