A distributed and sustainable model for future cities: A profitability analysis of integrated photovoltaic systems with storage under different incentive policies

In recent decades, photovoltaic (PV) energy has experienced significant global growth. In this context, Italy has long been recognised as a pioneering country – a position it maintains despite a recent slowdown in installed capacity. The residential sector is essential for fostering sustainable development, with prosumers exemplifying citizen-driven contributions to the ecological transition. The present study undertook a strategic analysis to propose a suitable incentive policy to support residential PV adoption. A predominant recommendation among scholars and experts was the implementation of a 70 % tax deduction over a 10-year period. An economic analysis was conducted for individual PV systems and systems integrated with battery energy storage (BES), assessing both current and prospective policy environments. The results showed that net present value increased by approximately 330 €/kW, representing the potential economic benefit to prosumers. Installation profitability was strongly influenced by the percentage of self-consumption and the avoided cost of electricity, with policy incentives serving as catalysts for new investments. The analysis identified the minimum increase in self-consumption needed for integrated PV + BES systems to surpass the profitability of standalone PV systems: 15–34 % in the current policy scenario and 11–28 % in the proposed alternative scenario. Consequently, the integration of PV + BES systems appears essential for the development of sustainable cities, with prosumers playing a crucial role in advancing the green transition towards SDG 7. • Incentive policies support the development of PV + BES plants. • This work introduces a 70 % tax deduction for the development of PV + BES systems. • NPV varies between 1205 and 6373 €/kW with a 50 % tax deduction. • NPV varies between 1535 and 6703 €/kW with a 70 % tax deduction. • Increasing self-consumption is essential for assessing the profitability of BES.