The Sustainable Future is now: a dynamical model to advance investments in PV and Energy Storage

We examine the relationship among photovoltaic (PV) investments, energy production, and environmental impact using a dynamic optimization model. Our findings show that increasing investment in renewables supports both energy generation and ecological sustainability, with the optimal path depending on policy priorities. Our analysis demonstrates that the economic and technological conditions for a transition to PV energy are already in place, challenging the idea that renewables will only become competitive in the future. We also account for the fact that PV optimality conditions improve over time as storage technology efficiency increases and production costs decrease. In this perspective we find that energy storage may be a more effective policy tool than carbon taxation for cutting emissions, as it faces less political resistance and further strengthens the long-term viability of renewable energy. Policy insights of the paper capture the evolving competitiveness of PV and its role in accelerating the energy transition. They also provide policymakers with strategies to align economic growth with long-term sustainability through renewable energy investments. JEL codes: Q42; Q01; O44; C61.