In 1977, the cost of solar cell power generation in China reached as high as 200 yuan/kWh; In the 1980s, China's photovoltaic industry began to take off, with the cost of solar cell power generation dropping from 40 yuan/kilowatt hour to 45 yuan/kilowatt hour; By the end of 2000, the power generation cost of monocrystalline silicon solar cells in China ranged from 42 yuan/kilowatt hour to 47 yuan/kilowatt hour, while the power generation cost of amorphous silicon solar cells ranged from 23 yuan/kilowatt hour to 25 yuan/kilowatt hour. In 2008, the cost of solar cells in China ranged from 10 yuan/kilowatt hour to 75 yuan/kilowatt hour. By 2010, the power generation cost of solar photovoltaic cells in China will decrease to around 1 yuan/kWh, reaching or approaching the price of conventional power generation costs.

The online electricity prices of several solar photovoltaic and wind power projects, including the largest megawatt level solar photovoltaic power station in China - the Shanghai Chongming Qianwei Village solar photovoltaic power station, were approved by the National Development and Reform Commission in mid August 2008. The approved grid electricity price for the 205 kilowatt solar photovoltaic power station of Inner Mongolia Ordos Yitai Group and the Shanghai Chongming Qianwei Village solar photovoltaic power station is 4 yuan per kilowatt hour (including tax). It is said that the annual online electricity consumption of the megawatt level solar photovoltaic power station in Qianwei Village, Chongming County is calculated based on the annual electricity consumption of 1500 kilowatt hours for a family of three, which can provide about 715 households with one year of use. However, price remains a bottleneck in the popularization of solar power generation. In 2007, Shanghai Electric Power Company stated that the cost of solar power generation was about 7 yuan per kilowatt hour, which is 10 times that of ordinary electricity. However, with the improvement of domestic photovoltaic cell technology and the decrease in costs, solar power generation is expected to gradually be promoted in the suburbs of Shanghai and the Yangtze River Delta region. The online electricity price approved by the National Development and Reform Commission for this project is 4 yuan per kilowatt hour, indicating that the power generation cost of the project is also gradually decreasing. The National Development and Reform Commission has also issued the "Reply on Verifying the Grid Electricity Prices of Wind Power Projects in Ma'anshan, Heilongjiang, Fuxin, Liaoning, and other regions". In accordance with relevant regulations and the average investment cost and wind resource status of wind power projects in various regions, Ma'anshan, Liaoning Fuxin Phase I, Dagangzi Phase I, Jilin, Manjing Phase III, Zuoyun Wulu Mountain, Shanxi, Jiugongshan Phase I, Hubei, and Chifeng Keqi Dali Phase IV, Inner Mongolia have been approved and announced The grid electricity prices of wind power projects such as Fangcheng in Nanyang, Henan, Caitang in Baiyin, Gansu, Changdao in Shandong, and Changjiang Ao Phase II in Pingtan, Fujian. The minimum grid electricity price level for the above projects is 0.51 yuan per kilowatt hour, and the maximum is 0.61 yuan per kilowatt hour. Obviously, wind power projects are still significantly lower than photovoltaic projects, indicating the enormous cost pressure on the latter.

Since the start of China's photovoltaic industry in the 1980s, the cost of solar cells has continued to decline. By 2010, the cost of solar photovoltaic power generation in China is expected to decrease to around 1 yuan/kilowatt hour (KWh), reaching or approaching the cost of conventional power generation. With the rapid development of electronic technology in the world, the production of solar cells is increasing year by year.

Wuxi Shangde Company, the earliest solar energy company listed overseas in China, announced in July 2008 that it plans to reduce the cost of solar power generation to 1 yuan/kWh within 5 years. Currently, Suntech has stated that the photoelectric conversion efficiency of its "Pluto" technology has increased to over 18%, which has also increased the overall level of the photovoltaic industry by more than 1 percentage point. From the current development situation, wind power has developed the fastest and become the main force in the development of renewable energy. However, solar energy is difficult to promote due to the high cost of power generation. At present, the cost of solar power generation in China is around 2-3 yuan, while the online electricity price for thermal power generation is only a few cents. Therefore, analysts point out that if Wuxi Shangde Energy reduces the cost of solar power generation to 1 yuan, it will break the current pattern of high solar power generation costs and accelerate the development of the solar power generation industry.

The subsidy standard for solar photovoltaic building application demonstration by the Ministry of Finance in 2009 was determined to be 20 yuan/watt, accounting for nearly 50% of the current system cost. After subsidies, the power generation cost is reduced to 1 yuan/kWh, greatly enhancing the competitiveness of optoelectronics. In principle, the subsidy standard for 2009 is set at 20 yuan/watt, and the specific standard will be determined based on factors such as the degree of integration with buildings and the advanced level of optoelectronic product technology. The subsidy standards for future years will be adjusted appropriately based on the development status of the industry. The focus of policy support is on the integrated application of solar photovoltaic buildings, and photovoltaic power stations and other forms of photovoltaic utilization that are not combined with buildings are not within the scope of policy support.

The cost of solar photovoltaic building application systems mainly includes two parts, one is the cost of solar cell components. In recent years, with the technological progress and industrial expansion of domestic optoelectronic enterprises, the cost of solar cells has rapidly decreased, currently falling to less than 20 yuan/watt; The second is the cost of installation and application, including design and construction, balance system, power grid connection, etc. According to the degree of integration and utilization with buildings, there is a significant difference in actual installation and application costs. Installation and application costs with a higher degree of integration are also higher. Currently, the average installation and application cost is around 20 yuan/watt.

According to the prediction of the Energy Research Institute of the National Development and Reform Commission, the most promising growth rate and total capacity of grid connected photovoltaic power generation in China in the next 20 years is photovoltaic building grid connected power generation, which accounts for less than 10% of the cumulative installed capacity of photovoltaic power in the domestic market and has increased from less than 10% to over 60% by 2020, with huge growth potential.

On April 15, 2009, Nantong Johnson&Johnson Optoelectronics Technology Co., Ltd., headquartered in Shanghai, released six global cutting-edge technologies and achievements in thin-film solar cell modules and photovoltaic power generation. Industry experts analyze that these technologies will bring the cost of solar power generation close to the cost of thermal power within 3 years, thereby breaking its high cost bottleneck, and are expected to commercialize solar photovoltaic power generation in China. Experts point out that the main reason why the domestic market for solar photovoltaic products has not yet started is due to the high cost of photovoltaic power generation. At present, the price of photovoltaic power is 5-6 yuan per kilowatt hour, which is more than ten times higher than that of ordinary thermal power, and the domestic market cannot afford it yet. The cost of Johnson&Johnson photovoltaic thin film batteries is only 25% of that of similar imported equipment. The production cost of its components is expected to decrease to $0.5 per watt within two years, which will bring the grid electricity price of photovoltaic power generation to RMB 0.65 per kWh. It is reported that there are only a few companies and production factories internationally capable of manufacturing fifth generation thin film battery equipment. Johnson&Johnson Optoelectronics has collaborated with the third largest vacuum equipment manufacturing company in the United States to jointly develop, improve, and manufacture core equipment for thin-film batteries with new technologies. The entire production line is at the forefront of the world, and the fifth generation large-area thin-film batteries have been mass-produced in Johnson&Johnson Optoelectronics. At the same time, the conversion efficiency of thin film batteries produced by Johnson&Johnson Optoelectronics also exceeded 6.5% in one go. At present, Johnson&Johnson Optoelectronics has made two major technological breakthroughs, which can improve the conversion efficiency of solar energy by 0.4%~0.5%, and is expected to increase the conversion efficiency of Johnson&Johnson Optoelectronics modules from the current 6.5% to the level of 7%~7.5%. At present, China's cumulative solar photovoltaic power generation is only 100 megawatts, and Johnson&Johnson's production capacity is expected to reach 500 megawatts by the end of 2010. At present, its second factory in Wujiang, Suzhou plans to build 6 production lines in 2009 and 9 more in 2010, making Johnson&Johnson the largest production base for amorphous silicon thin film batteries in China.

Driven by the sharp drop in raw material prices and technological progress, as of May 2009, China's photovoltaic industry has the ability to reduce the cost of electricity generation to 1.5 yuan/kWh. In addition, there is still significant room for a decrease in the cost of grid electricity prices for photovoltaic power generation in China, which is likely to exceed 1 yuan/kWh within two to three years. And 1 yuan/kWh is precisely the critical point that most industry insiders believe is the large-scale start-up of the domestic photovoltaic power generation market. In the Dunhuang 10 MW Photovoltaic Power Station Concession Bidding Project, 13 shortlisted bidders quoted a second lowest price of 1.09 yuan/kWh, and the highest price was only 1.67 yuan/kWh. The bidding statistics of Dunhuang Photovoltaic Power Station show that the average quotation is less than 1.5 yuan/kWh.

The bidding results of the Dunhuang photovoltaic power generation project have shown that the current cost of photovoltaic power generation is completely different from when the German government formulated the subsidy policy for photovoltaic grid electricity prices five years ago. At present, China's photovoltaic industry has formed initial scale processing and manufacturing capabilities through the markets of Germany, Japan, and the United States. Manufacturing equipment and polycrystalline silicon, which have long relied on imports, have also begun to flourish with the support of the government and investors.

On March 26, 2009, the Ministry of Finance issued the "Interim Measures for the Management of Financial Subsidy Funds for Solar Photovoltaic Building Applications", which decided to conditionally provide subsidies of up to 20 yuan per watt for some photovoltaic buildings. This policy has caused strong reactions within the industry, marking the beginning of the Chinese government's subsidies for the photovoltaic industry.

The cost composition of ground photovoltaic power stations can be roughly divided into several parts: photovoltaic modules, inverter and transmission and distribution, power station construction and installation, and land price. In May 2009, the price of photovoltaic modules had dropped from around 35 yuan per watt in 2008 to 15 to 18 yuan per watt. As a leading enterprise in photovoltaic modules, Suzhou ATES has reduced its production cost to about 10 yuan per watt. The prices of inverter and power transmission and distribution have decreased from around 12 yuan per watt in 2008 to 4 to 6 yuan per watt. The construction and installation (including civil engineering, brackets, and wiring) of a megawatt level ground photovoltaic power station, as well as the land price, are approximately 7 yuan per watt. If a sun tracking system is added, there will be an additional cost of about 2 yuan per watt. It can be seen that the total cost of a megawatt level ground photovoltaic power station should be around 26 to 33 yuan per watt. However, this cost does not include the cost of roads and transmission lines outside the station. For rooftop power plants, the price of photovoltaic modules is also 15 to 18 yuan per watt. As the roof can directly fix the modules, the infrastructure and support costs can be reduced to 2 to 3 yuan per watt, and the land cost can also be saved. However, due to the usually small scale of rooftop power plants, the cost of the inverter grid connection section has increased, ranging from approximately 5 to 8 yuan per watt. In this way, the cost of rooftop photovoltaic should be between 22 yuan and 29 yuan per watt. For investors planning to invest in photovoltaic power plants, in addition to the aforementioned costs, they must also consider grid connection costs (external line costs), road costs, financial costs, and operating expenses. For ground photovoltaic power plants above the megawatt level, it is sufficient to allocate 1% to 2% of the investment amount as the annual operating cost. Suzhou Ates Company can control the construction cost of megawatt level ground photovoltaic power stations at around 26 yuan per watt. As for the reasonable grid electricity price, it also depends on the charging period for power generation and grid connection. Different investment payback periods such as 10 years, 20 years, and 30 years will result in different grid electricity prices. Assuming a loan interest rate of 4% to 5% and an annual inflation rate of 3%, the payback period for the 1.5 yuan/kWh grid electricity price of a megawatt level ground photovoltaic power station should be within 20 years.

At present, although China's photovoltaic industry has the world's largest manufacturing capacity for photovoltaic cells, due to its short development time, the supporting system for the photovoltaic industry has not yet been fully established. If the domestic photovoltaic market can be launched on a large scale, there is still significant room for the cost of photovoltaic power generation to decrease. The production process of photovoltaic cell modules consists of polycrystalline silicon, silicon wafers, battery cells, battery modules, etc. Before 2009, the manufacturing cost of photovoltaic cell modules was mainly constrained by the cost of polycrystalline silicon. Before October 2008, the spot price of polycrystalline silicon reached over $400 per kilogram. Before October 2008, polycrystalline silicon accounted for about 70% of the cost of photovoltaic cells. But in early April 2009, the price of polycrystalline silicon had dropped below $100 per kilogram, and its proportion in the cost of photovoltaic cells had dropped to below 40%. Industry insiders analyze that the price of polycrystalline silicon is expected to further decrease significantly, after all, the production cost of domestic manufacturers is about $50/kg, and there is already overcapacity. Therefore, polycrystalline silicon will no longer become a bottleneck in the development of solar cells. In the inverter and transmission and distribution sectors, due to the lack of large-scale start-up in the domestic photovoltaic market in the past, this is the weakest link in China's photovoltaic industry and the most promising link for price decline.

It is reported that the vast majority of grid connected inverters for domestic photovoltaic power stations are purchased from Germany, and the product prices are higher than those of German companies in their own countries. Due to the technological connectivity between photovoltaic inverters and conventional backup power sources and electrical drive frequency converters, domestic manufacturers of the latter have already established a considerable scale. As long as the domestic photovoltaic market is launched on a large scale, many original electrical equipment manufacturers will enter this field on a large scale, and the prices of inverter and transmission and distribution equipment will be significantly reduced.

The online electricity price has always been a bottleneck restricting the development of the entire new energy industry, and it is expected to solve this problem with a unified reference price in the future. In early June 2009, the Renewable Energy Department of the National Energy Administration stated that China is planning to adopt a preferential grid electricity price of 1.09 yuan per kilowatt hour (or kWh) for solar power generation. At present, solar power generation is still 5-10 times higher than the industry average price of 0.3 yuan/kWh in thermal power generation. The introduction of the grid electricity price is aimed at promoting competition between power plants using solar power and those using traditional fuels such as coal.

It has been decided to approve the price of 1.09 yuan per kilowatt hour as the grid electricity price for the Dunhuang solar power generation project. If more projects are launched in the near future, similar prices may be adopted. At the end of March 2009, the largest photovoltaic power station project in China, the Gansu Dunhuang 10 MW Power Plant Project, was officially tendered. The project cost is estimated to be 500 million yuan, with an initial power generation capacity of 10 MW per year, far exceeding the average 50 kW power generation capacity of conventional integrated solar energy projects. Some power companies and solar cell suppliers have jointly quoted a super low price of 0.69 yuan/kWh. At the end of 2008, the breakeven price for solar power generation must be above 3 yuan/kWh. Industry insiders say that the cost of new energy power generation will decrease every year, but the grid electricity price must reach at least 1 yuan per kilowatt hour in order for solar power generation to be profitable. The grid electricity price of 1.09 yuan per kilowatt hour is the second lowest price quoted by the last shortlisted bidder.

On April 28, 2009, at the 2009 China (Luoyang) Solar Photovoltaic Industry Annual Conference, the top 13 companies in the industry, including Wuxi Shangde, Tianwei Yingli, Jingao Solar, and Saiwei LDK, issued the "Luoyang Declaration", reaffirming the goal of achieving a grid price of 1 yuan/kWh for photovoltaic power generation by 2012. As is well known, although photovoltaic power generation has the advantages of green and environmental protection, the cost of electricity is significantly higher than traditional hydropower, coal-fired power, and even nuclear power. Therefore, in recent years, countries such as Germany, Spain, and Japan that have vigorously developed photovoltaic power generation have implemented government subsidy policies. For a long time, photovoltaic power generation has not been recognized and developed in China, mainly because its high electricity price is not in line with China's national conditions.

Given cheaper raw materials and innovative photovoltaic technology, the estimated cost of solar power generation in China decreased by 50% from 2006 to 2008, making solar power an important energy competitor.

According to data from Guangdong China Merchants Securities Co., Ltd., the cost of polycrystalline silicon photovoltaic systems in China decreased to 31 yuan per W in December 2008, a 50% decrease from October 2006. This is due to the cheaper price of polycrystalline silicon, better processing, and higher battery efficiency. According to a 2008 report by China Merchants Securities, it is estimated that the cost of domestic solar photovoltaic power generation has decreased by 43%, from approximately 4 yuan/KWh (0.593 US dollars) in 2006 to 2.28 yuan/KWh (0.33 US dollars) in 2009, partly due to the availability of cheaper photovoltaic systems. The northwest region of China, which is abundant in solar energy, has an annual sunshine of 1560 hours, and the cost can even reach 1.93 yuan/KWh, surpassing the government's goal of reducing the cost of solar power generation in China: reaching 3 yuan/KWh by 2010. It is expected that this trend will lead to a decrease in costs due to continued increase in production scale and better infrastructure.