Abstract: The digitization of power system represents one of the main instruments to achieve the target set by the European Union 2030 climate and energy Agenda of affordable energy transition. During the last years, such innovation process has been associated with the Smart Grid (SG) term. In this context, efficiency and flexibility of power systems are expected to increase and energy consumers to be active also on the production side, thus becoming prosumers (agents that both produce and consume energy). Understanding the dynamics and main drivers of prosumers' investment decisions should be considered a key element for policymakers to fasten the achievement of a low carbon European economy. In this paper we develop a model in a SG framework using a real options approach (RO) to identify the optimal size of the photovoltaic plant that a cost minimizing prosumer should buy-. The main assumptions are: (i) the energy produced by the photovoltaic plant can be self consumed, sold (bought) directly to (from) the national grid or to (from) another prosumer, (ii) the dynamics of the price paid for the energy sold to the national grid by the Transmission System Operator (TSO) to the prosumer is stochastic, and (iii) energy storage is not allowed. The model is calibrated on the Italian energy market data.