We have paneling in our family room that was grooved in squares, not just boards like yours. My husband took spackeling and carefully filled in all the grooves, sanded it, and we primed and painted it just like our regular walls, with regular semi-gloss Behr paint. We honestly cannot tell the difference.
That was a few years ago in a room with drafts and old windows, it gets hot and cold and it looks just fine. And believe me I am picky about stuff looking cheap. I’ve shown it to visitors and no one has been able to tell that it is paneling under there.
We are thinking about doing the same thing in our paneled basement since it worked so well. Really you don’t have anything to lose by trying it - it is really easy.