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Residential photovoltaic and energy storage systems for sustainable development: An economic analysis applied to incentive mechanisms

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  • Idiano D'Adamo
  • Alessandro Dell'Aguzzo
  • Marco Pruckner

Abstract

The photovoltaic (PV) system has a very significant growing global trend and its role is essential in combating climate change. However, its intermittent nature requires integration with a battery energy storage system (BES). This work proposes an economic analysis based on net present value (NPV) for an integrated PV + BES system in a mature market (Italy). The analyses are applied to different policy (used for both PV and BES) and market (purchase price, selling price) contexts. Results show that the NPV(PV) ranges from 1061 to 7426 €/kW. The work identifies the conditions under which BES is affordable. The required increase in self‐consumption varies in the 14%–35% range. The purchase price and the percentage of energy‐self‐consumption play a crucial role in the profitability assessment of a PV + BES system. Incentive policies based on subsidized tax deductions and subsidies for energy produced and self‐consumed can enable a more sustainable energy future in the residential sector. This work suggests a mix of policy choices: (i) a subsidized tax deduction larger than 50% and a bonus for energy produced and self‐consumed for PV plants; (ii) subsidized tax deduction also for BESs but at a lower value than for PV plants; and (iii) encouraging a recycling industry.

Suggested Citation

  • Idiano D'Adamo & Alessandro Dell'Aguzzo & Marco Pruckner, 2024. "Residential photovoltaic and energy storage systems for sustainable development: An economic analysis applied to incentive mechanisms," Sustainable Development, John Wiley & Sons, Ltd., vol. 32(1), pages 84-100, February.
    • Handle: RePEc:wly:sustdv:v:32:y:2024:i:1:p:84-100
    DOI: 10.1002/sd.2652
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