Abstract Integration of solar photovoltaic (PV) and battery storage systems is an upward trend for residential sector to achieve major targets like minimizing the electricity bill, grid dependency, emission and so forth. In recent years, there has been a rapid deployment of PV and battery installation in residential sector. In this regard, optimal planning of PV-battery systems is a critical issue for the designers, consumers, and network operators due to high number of parameters that can affect the optimization problem. This paper aims to present a comprehensive and critical review on the effective parameters in optimal planning process of solar PV and battery storage system for grid-connected residential sector. The key parameters in process of optimal planning for PV-battery system are recognized and explained. These parameters are economic and technical data, objective functions, energy management systems, design constraints, optimization algorithms, and electricity pricing programs. A timely review on the state-of-the-art studies in PV-battery optimal planning is presented. The challenges, trends and latest developments in the topic are discussed. At the end, scopes for future studies are developed. It is found that new guidelines should be provided for the customers based on various electricity rates and demand response programs. Also, several design considerations like grid dependency and resiliency need further investigation in the optimal planning of PV-battery systems.