Solar Grid Parity in Italy where do we stand: A dynamic stochastic model

Tentative Abstract: This thesis explores the timing and viability of solar photovoltaic (PV) investments in Italy under uncertainty, using a real options analysis (ROA) framework. Grid parity—when self-generated solar electricity becomes cost-competitive with grid prices—is examined through stochastic electricity price modeling (GBM, Ornstein-Uhlenbeck, ARIMA-GARCH), Levelized Cost of Electricity (LCOE) analysis, and investment simulations. Italy's high solar potential, policy support, and reliance on energy imports make it an ideal case study. Results reveal that while grid parity is technically feasible, uncertainty in electricity prices and policy conditions often make it optimal to delay investment, especially for utility-scale projects. The study offers a dynamic, uncertainty-aware model that informs investment timing, enhances policy design, and supports Italy’s transition to a low-carbon energy system.