Cost-benefit Analysis of PV Self-Consumption in Residential Sector in Italy

For nearly ten years, residential photovoltaic (PV) system installation has increased dramatically, driven by national initiatives like Feed-in Tariffs and Net Metering. With the focus on maximizing system earnings, consumers are increasingly turning to enhancing self-consumption. Despite the exploration of various facets, there are still challenges impeding the full achievement of the utilization of these technologies. The substantial initial cost of purchasing a PV system includes expenses for solar panels, installations, inverters, and associated equipment. The research aims to evaluate the financial feasibility of household photovoltaic self-consumption for reducing consumers' electricity bills. the study evaluates different solar panel capacities, ranging from 1 kWp to 4 kWp in Rome and Milan. To achieve this goal, the study compares a representative Italian home solely dependent on the electricity grid with a hypothetical scenario in which the residence engages in a PV self-production project to cover all or part of its energy needs. The assessment includes the hourly pricing of potential surplus energy sold to the grid, using a simplified compensation system for a period of one year starting January 1, 2023. The results show the profitability of PV self-consumption installations: Rome, a 1 kWp PV system demonstrates commendable results (PI=3.336), (IRR = 21%), boasting the quickest payback time in four and half years and DPP in more than five years, also the highest NPV ((sic)5126.786). Milan, a 1 kWp PV system achieves an impressive score (PI = 3.147), (IRR = 20%), accompanied by a short payback period of five years and DPP in five and half years, also the greatest NPV ((sic)4712.598).