Costs reduced by 5%, IRR drops by 1%—Document No. 136 forces central state-owned enterprises to overhaul their investment decision-making models.

Six months after Document No. 136 was issued, although mechanism-based electricity pricing systems in various provinces have yet to be fully launched, expectations of declining power prices have already prompted central state-owned enterprises to begin a comprehensive contraction in PV investments. Meanwhile, approval criteria for projects are becoming increasingly stringent. Notably, the State Energy Group even halted construction on a 1.5 GW PV project after it had already begun, demanding that the project’s financial returns be recalculated from scratch.

 

Despite the challenging industry landscape, according to the second-half 2025 work conferences held by major central state-owned enterprises, investment and development in new energy remain the primary focus for investors. While the overall direction remains unchanged, improving quality and boosting efficiency have almost become the top priorities for these companies. At the heart of this shift is the expansion of investment decision-making criteria to encompass multiple dimensions, including construction costs, IRR, electricity prices, and trading dynamics—driving significant changes in equipment selection within the photovoltaic sector.

 

 

Reduce construction costs, lower IRR

 

After the issuance of Document No. 136, which spurred the full-scale entry of new energy into the market, state-owned and centrally managed enterprises saw a sudden drop in enthusiasm for photovoltaic investments. Many investors have widely reported that uncertain electricity prices have made it challenging to accurately estimate project returns. Against this backdrop, companies like Datang, China Energy Investment Corporation, and China Huaneng have optimized their investment decision-making criteria and set specific targets aimed at reducing costs and improving efficiency—adjusting factors such as capital expenditure, internal rate of return (IRR), and overall project costs—to ensure the continued advancement of certain projects.

Recently, Longyuan Power, a subsidiary of China Energy Group, clearly outlined its investment control requirements at the meeting on improving quality and boosting efficiency. The company aims to reduce the average construction cost of investment evaluation projects by approximately 5% compared to the previous year, further enhancing the economic viability of new energy projects such as wind and photovoltaic power. To achieve this goal, Longyuan Power proposed improvement measures and practical recommendations covering areas like elevating the quality of resource assessments, strengthening design scheme comparisons, rigorously managing design redundancies, establishing standardized review processes, and leveraging diversified evaluation methods to enhance accuracy.

Another central state-owned enterprise has lowered both the cost standards for photovoltaic projects and the required IRR benchmarks. According to its benchmark cost indicators for photovoltaic power generation projects implemented in 2025, the leading cost range for 50MW-scale projects has dropped from RMB 3.02–3.25 per watt in 2024 to RMB 2.67–2.89 per watt in 2025, representing an average reduction of about 11%.

 

Additionally, in its newly released "Dynamic Management Plan for New Energy Project Returns," the photovoltaic projects are set to achieve IRRs of 6%, 6.5%, and 7% for resource zones classified as Category 1, Category 2, and Category 3, respectively. Compared to the previous return requirements of 7% to 7.5%, this represents a reduction of between 0.5% and 1%.

Measures such as cost compression and IRR reduction are all aimed at adjusting the investment decision model, with the core focus on robust cost control and redundancy in managing electricity price risks. Earlier, relevant personnel from Datang Group stated that the new energy projects currently being advanced employ a three-stage screening process: first, comparing and selecting projects with the lowest levelized cost of electricity; then, working backward to assess the associated electricity price risks; and finally, benchmarking against project construction costs.

Regarding the changes in the cost benchmarking mechanism, relevant personnel from China Huaneng Group also pointed out at the 2025 First-Half Development Review and Outlook Conference hosted by the China Photovoltaic Industry Association that investment costs and levelized cost of electricity should not only be compared internally but also among peer organizations. This approach will enable companies to gain greater initiative during the bidding phase.

Document No. 136 has prompted a series of adjustments in the investment models of central and state-owned enterprises. Behind these multifaceted changes—from cost estimation and IRR calculations to benchmarking against actual costs—lies the growing need for photovoltaic power plants to adapt their equipment selection strategies accordingly.

 

Raise electricity prices, increase profits

Uncertain market-based electricity prices are a direct factor influencing the adjustment of investment decision-making models for central state-owned enterprises and private investors. Under the prevailing trend of broadly declining electricity prices, how to secure a relatively higher tariff in the power market has become a critical consideration when selecting photovoltaic equipment.

As the installed capacity of photovoltaic power continues to grow and the spot market keeps advancing, 22 provinces and cities have already designated midday as a period of low electricity prices. Increasing generation during peak morning and evening hours—when electricity prices are higher—effectively locks in a relatively high overall electricity tariff. Consequently, the selection criteria for photovoltaic power plants have shifted to a dual metric: energy output multiplied by electricity price, with cost-effectiveness now serving as the ultimate goal in technical decision-making.

THG's product solutions, centered around its Supreme TOPCon 2.0 modules and tracking brackets, were developed based on the logic of market-oriented power trading. Zhang Yingbin, Global Head of Products, Strategy, and Market at THG, emphasized that achieving a more competitive LCOE hinges on reducing the system's initial investment while simultaneously boosting both the overall power generation capacity and the output during periods of high electricity prices.

It is understood that, in the Shaguo Desert project site in Golmud, Qinghai—where the surface reflectance is 25-30%—thanks to the high bifaciality and favorable low-irradiance conditions, Trina Solar's Vertex TOPCon 2.0 735W modules have demonstrated a back-side power generation gain of 0.0411 yuan/W and an overall irradiance benefit of 0.0554 yuan/W when installed on fixed支架 systems, compared to TBC modules. As a result, the levelized cost of electricity (LCOE) has been reduced by 2.31%.

After installing the tracking bracket system, it can increase power generation by 10% to 15% compared to fixed brackets. Meanwhile, LONGi Solar’s SuperTrack intelligent algorithm—powered by AI and big data, combined with a self-developed bifacial irradiance model and shading optimization model—enables an additional 2-3% boost in power output on top of industry-standard tracking systems. Notably, this extra generation is even more pronounced during peak electricity price periods in the early morning and late evening.

 

 

According to reports, the combination of LONGi Solar's "Hi-MO 5 TOPCon 2.0 735W modules paired with a tracking bracket system" can reduce the Levelized Cost of Energy (LCOE) by 11% compared to the TOPCon 1.0 625W modules combined with fixed brackets. For a 100MW power plant, this setup boosts annual power generation revenue by 8.82 million yuan and increases the Internal Rate of Return (IRR) by 3.16%. In contrast, when paired with TBC modules and fixed brackets, the LCOE drops by 11.83%, resulting in an additional 9.54 million yuan in power generation revenue for the same 100MW plant, while the IRR rises by 3.31%.

LONGi Solar's Supreme TOPCon 2.0 modules leverage their superior performance under low irradiance conditions and deliver high overall efficiency, combined with advanced tracking-station optimization algorithms, to maximize power generation during peak-price periods and boost total energy output over the module’s lifetime—ultimately translating into lower levelized cost of electricity. And this reduced cost per kilowatt-hour not only translates into greater profitability but also gives state-owned and central enterprise investors greater flexibility in pricing strategies amid competitive mechanism-based electricity tariffs.

 

Document No. 136 is driving the full-scale entry of photovoltaics into the market, pushing quality improvement and efficiency gains to unprecedented heights. Meanwhile, the comprehensive adjustment of investment decision-making models is further reshaping the rules and methodologies for equipment selection. Lower electricity generation costs and higher power prices are not only key metrics for investors but also serve as innovative directions for PV companies navigating the industry’s evolving logic and strategies.