Although investments in renewable energy, particularly solar photovoltaic (PV) systems, have increased over the past decade, the energy transition still faces dilemmas related to several socio-technical and environmental aspects. To clarify the benefits, challenges, and trade-offs of distributed urban solar PV, this article conducts a multidimensional literature review and develops an integrated trade-off framework that considers technical, economic, social, regulatory, and environmental perspectives. The review highlights the controversial aspects that support and challenge the potential of on-grid urban solar systems to enhance energy security, improve efficiency, and support community engagement through technological innovation and novel social practices. Several concerns arise, including investment risks, social equity, energy security, environmental impact, maintenance, and aesthetics, all of which require strategic mitigation. Integrating solar PV into smart urban environments also presents constraints related to energy storage, consumer adaptability, business model innovation (BMI), stakeholder engagement, and potential health hazards. Addressing these issues requires balancing socio-technical and environmental aspects. Based on a systematic assessment of European case studies—including Amsterdam's solar-EV ecosystem, Spain's post-2018 regulatory reforms, and France's inclusive financing models—we find that successful pathways combine modernized interconnection standards, streamlined permitting, collective self-consumption frameworks, performance-based regulation, and targeted financial instruments for low-income households. BMI and policy reforms are essential drivers for the successful diffusion of solar PV systems. Achieving a sustainable energy future in urban areas requires stakeholder collaboration, public-private partnerships (PPPs), innovative solutions, and careful balancing of multiple trade-offs. This article sheds light on the current state of the art on distributed solar PV and emphasizes the need for informed decision-making to address the complexities of on-grid urban solar systems, aiming for a sustainable, resilient, efficient, and inclusive urban energy future.

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• Earth and related Environmental Sciences - Natural Sciences
• Other Social Sciences - Social Sciences