Many regions' photovoltaic projects breach the profitability bottom line, and development models are facing a comprehensive restructuring.

Recently, provinces such as Shandong and Shanxi have issued notices to adjust or abolish certain wind and photovoltaic power generation projects, involving multiple central state-owned enterprises adjusting their related photovoltaic investment layouts.

Industry insiders point out that behind this change are multiple adjustments in policy direction, market environment, and corporate strategy, which also reflect that China’s new energy industry has reached a critical turning point for “high-quality development,” with the industry’s structure, technological pathways, and development models undergoing all-round reconstruction.

Multiple regions’ photovoltaic projects breach profit bottom line

At the beginning of this year, the Shandong Provincial Energy Bureau issued a notice that further heightened industry attention on photovoltaic investment. The notice titled “Notice on Adjusting the List of Grid-connected Concentrated Photovoltaic Power Generation Projects” clearly indicated that 63 centralized photovoltaic projects with a total capacity of 5.84 GW were removed from the market-oriented grid connection list, with the project owners including 35 central power enterprises such as State Power Investment Corporation, China Huaneng Group, and China General Nuclear Power Group.

On March 12, the Shanxi Provincial Energy Bureau released a list regarding the first batch of wind and photovoltaic power generation projects proposed for abolition by 2026, planning to abolish 22 projects with a total installed capacity of 1.472 million kilowatts. Among the proposed projects for abolition are several central enterprises and provincial state-owned enterprises, including Datang, China Resources, China Power Construction, China CNR Corporation, Jinneng Holding, and Beijing Energy Group.

The Shanxi Provincial Energy Bureau stated that this project cleanup is an important measure for Shanxi to deepen supply-side structural reforms in the new energy sector and promote the efficient utilization of energy resources. It will further reactivate existing resources, free up development space for high-quality new energy projects, and assist the province’s green and low-carbon transition in its energy structure and high-quality development of new energy.

According to incomplete statistics, since the second half of 2025, provinces such as Guizhou, Shaanxi, Hebei, and Shanxi have been intensively taking action to abolish or adjust various wind and solar project indicators. As of now, over 140 wind and solar projects have been cleaned up nationwide, with a total scale exceeding 10 GW, including multiple central and state-owned enterprise projects.

Driven by the “dual carbon” goals and supported by policy dividends, photovoltaic investment was once very hot.

According to a head of a state-owned new energy company, four years ago, central state-owned enterprises accounted for over 70% of the domestic photovoltaic investment market. However, this situation saw a turning point in February 2025, when relevant policies proposed “cancelling the guaranteed purchase policy for new energy power and fully promoting the marketization of new energy electricity prices,” marking the end of the “quantity and price guarantee” era for the photovoltaic power generation industry.

Industry insiders pointed out that marketization of electricity prices has directly squeezed the profit space of projects. According to publicly available data from the Shandong Provincial Energy Bureau, the photovoltaic mechanism electricity price in Shandong in 2025 is only 0.225 yuan/kWh, a 43% decline compared to the local coal-fired benchmark electricity price (0.395 yuan/kWh). During peak photovoltaic output periods, electricity prices even fell below 0.05 yuan/kWh, far lower than the comprehensive cost of photovoltaic projects at 0.3-0.35 yuan/kWh. Meanwhile, the issue of absorption has become increasingly prominent, with data from the National Energy Administration indicating that the nationwide photovoltaic utilization rate dropped to 94.8% from January to November 2025, with some photovoltaic stations in Xinjiang and Heilongjiang facing power limitations exceeding 30%. The dilemma of “producing but unable to send out, and selling at low prices” has breached the profit bottom line of projects.

Zhou Lisha, a researcher at the China Enterprise Reform and Development Research Association, stated that for central state-owned enterprises, investment in new energy projects is not “cost-free,” but rather has a clear profit bottom line. Generally, the internal rate of return on capital for new energy projects should not be lower than 6.5%, with some enterprises having even stricter internal requirements. Thus, this indicator compels central state-owned enterprises to comprehensively sort out existing projects and strictly control new investments. Currently, the profitability of photovoltaic and wind power projects generally faces downward pressure, making it difficult to meet the investment red lines of central state-owned enterprises.

Photovoltaic industry enters a critical stage of transformation

Data from the National Energy Administration’s national electricity statistics show that by the end of 2024, the installed capacity of photovoltaic power generation nationwide is expected to reach 886 million kilowatts, a year-on-year increase of 45%; by the end of 2025, the installed capacity of solar power generation will reach 1.2 billion kilowatts, a year-on-year increase of 35.4%.

A relevant person from the National Energy Administration stated that in 2026, energy work will solidly promote the green and low-carbon transformation of energy, continuously increase the proportion of new energy supply, and add more than 200 million kilowatts of new wind and solar power generation capacity throughout the year, orderly advance major hydropower projects, actively and safely develop nuclear power, and enhance the clean and efficient utilization of fossil energy.

It has been reported that the construction of several large-scale wind and photovoltaic bases in “Shagehuan” is still ongoing. For example, on February 28 of this year, the second batch of “Shagehuan” large wind and photovoltaic bases, the largest single coal mining subsidence area photovoltaic project in the country, was put into operation at the State Energy Group’s 4 million kilowatt new energy base in Lingwu, Ningxia. Meanwhile, major energy central enterprises are intensifying their layout strength in “Shagehuan” large bases: for instance, Huadian Group is investing 80 billion yuan to construct the Qinghai Qaidam Golmud East Desert Base, with a total scale of 19.24 million kilowatts, of which new energy accounts for 85%; the State Power Investment Corporation is leading an investment of nearly 73 billion yuan to build the Qinghai Hainan Clean Energy Export Base, with a total scale of 19.44 million kilowatts, of which new energy accounts for 86.4%, covering 9.6 million kilowatts of photovoltaics…

“By 2035, China’s wind and solar installed capacity aims to reach 3.6 billion kilowatts, which presents many development opportunities for the industry,” said Zheng Nanfeng, an academician of the Chinese Academy of Sciences and head of the School of Energy at Xiamen University, on the 26th. The situation of rich coal, scarce oil, and little gas in our country has always existed, which has been a reason for the considerable development of the wind and solar industry over the past few years and is also an important foundation for continuously promoting the green and clean transition in the future.

Most institutions analyze that, from a long-term perspective, as the high growth trend comes to an end, the global installed capacity growth rate of photovoltaic power faces a risk of slowdown in the future. Industry organization InfoLink Consulting has released research views indicating that the overall market demand remains weak. The execution volume of ground project orders in the domestic market is gradually declining, and new contract order visibility is limited; the overseas market’s demand rhythm is being affected by the export tax rebate, with expectations that shipments in the first quarter will primarily come from the overseas market.

Multiple industry insiders believe that with the expectation of slowed growth, the domestic photovoltaic industry is entering a critical phase of transformation from scale expansion to quality and efficiency. The localized adjustment of photovoltaic investments by central state-owned enterprises is an inevitable result of the industry’s transition from “scale expansion” to “quality improvement,” marking a new stage of strategic restructuring, structural optimization, and technological upgrading in China’s new energy industry.

Short-term adjustments do not change the long-term positive trend

In fact, as the industry transformation progresses, the new energy development model is shifting from a single power generation approach to comprehensive energy services, with central state-owned enterprises gradually breaking free from the path dependence of “heavy assets and heavy scale,” focusing on new models such as “wind-solar-storage hydrogen ammonia” integration, green hydrogen production, and coordinated source-grid-load-storage. For instance, the State Power Investment Corporation has shifted its strategic focus to “large bases + green hydrogen production,” laying out green hydrogen production projects in the “Shagehuan” regions such as Qinghai and Inner Mongolia, converting surplus green electricity into hydrogen energy to enhance energy utilization efficiency and value.

It is noteworthy that in the capital market, since the beginning of this year, the green electricity sector has seen multiple bull stocks emerge. In terms of funding, data shows that since March, dozens of green electricity concept stocks have received net purchases of financing.

Institutions believe that with the advent of the AI era, anticipated power consumption for computing will significantly increase, providing strong support for the demand for green electricity. China’s green electricity industry is expected to usher in a new round of golden development period. For example, Huachuang Securities’ research report points out that with the explosive growth of AI-driven computing demand, the proportion of electricity costs in the total operating expenses of data centers may continue to rise, and the low electricity price advantage displayed by green electricity provides an effective way to reduce costs for data centers.

Zhang Yuzhuo, director of the State-owned Assets Supervision and Administration Commission, recently stated that for central enterprises developing strategic emerging industries, efforts will continue to be strengthened in three aspects. Particularly in the new energy field, while foreign countries encounter bottlenecks in electricity supply for artificial intelligence development, China not only has sufficient electricity but also utilizes green electricity. The next step is to continuously establish advantages internationally.

Industry insiders believe that in the short term, industry adjustments are still ongoing. However, in the long term, as the construction of UHV transmission channels accelerates, the electricity grid absorption mechanism continues to improve, and photovoltaic technology costs keep decreasing, the industry will accumulate momentum during the adjustments. China’s new energy industry is shifting from “policy-driven” to “market-led,” from “scale expansion” to “quality improvement,” and from “single layout” to “integrated development,” gradually building core advantages in global new energy competition.

(Source: Xinhua Finance)