China Introduces PV Cost Accounting Standard to Strengthen Market Governance
The China Photovoltaic Industry Association or CPIA has released a standard establishing a unified cost accounting framework across the crystalline silicon photovoltaic manufacturing chain, covering polysilicon, wafers, cells and modules.
Released on Monday, the General Principles for the Cost Accounting Model of the Photovoltaic Industry standardized cost calculation scopes, coefficients and methodologies. In doing so, it aims to eliminate inconsistencies in cost accounting practices and establish a common basis for benchmarking production costs, according to CPIA.
The standard was developed with the guidance of the State Administration for Market Regulation or SAMR and the Ministry of Industry and Information Technology.
The association said it will promote the standard’s implementation through industry training and support, while improving the collection of cost and pricing data to help maintain fair market competition.
Background, Framework and Implementation
According to CPIA, all four major manufacturing segments of China’s crystalline silicon PV supply chain—polysilicon, wafers, cells and modules—have come under severe profitability pressure over the past two years. Thus, a unified, comparable and verifiable cost accounting methodology is needed to support benchmarking, capacity analysis and macro-level policymaking.
Differences in accounting practices—particularly between vertically integrated manufacturers and specialized producers—as well as varying depreciation and expense allocation methods have made meaningful cost comparisons difficult. To address these inconsistencies, the standard establishes a unified accounting methodology based on China’s Accounting Standards for Business Enterprises, creating a common reference for industry research, benchmarking and corporate operational analysis.
CPIA said the framework also provides an objective and verifiable basis for companies to conduct internal cost reviews, assess price compliance risks and support regulatory scrutiny of potential below-cost selling practices in the PV industry.
The standard classifies manufacturing costs into three categories:
*Cash cost, representing a company’s minimum cash operating burden, including direct materials, electricity and other utilities, labor, and other cash manufacturing expenses.
*Production cost, comprising cash cost plus depreciation.
*Full cost, consisting of production cost plus administrative, selling and financing expenses.
One key provision addresses internal transfer pricing among vertically integrated manufacturers. According to CPIA, some companies transfer products between production stages at prices below full production cost, understating downstream manufacturing costs. The new framework requires such transfers to be recorded at the preceding stage’s full production cost, improving cost comparability across the value chain.
The standard also accommodates multiple technology routes across the PV industry, including Siemens-process and fluidized bed reactor or FBR granular polysilicon production, as well as Tunnel Oxide Passivated Contact or TOPCon, heterojunction or HJT and back contact or BC cell and module technologies.
As these technologies differ significantly in material consumption, equipment depreciation and production yields, the standard includes technology-specific guidance on cost items. CPIA said it will publish separate industry reference values for different technology routes to facilitate more meaningful benchmarking.
The standard specifies the cost items to be included in cost calculations for each manufacturing segment.
For polysilicon, cost components include metal silicon, steam, silicon seed rods, electricity, labor, other production costs, dedicated depreciation, allocated depreciation of shared production assets, directly incurred operating expenses and allocated corporate overheads.
For wafers, cost components include polysilicon, quartz crucibles, graphite hot zones and auxiliary materials, diamond wire, electricity, labor, other production costs, dedicated and allocated depreciation, and direct and allocated operating expenses.
For solar cells, the model includes wafer costs, silver paste, printing screens, electricity, labor, other production costs, depreciation and operating expenses.
For modules, cost calculations include solar cells, glass, frames, labor, other production costs, depreciation and operating expenses.
To support implementation, CPIA said it will organize training programs for major manufacturers and establish a regular mechanism for collecting and publishing industry reference values, while encouraging leading companies to voluntarily provide sample cost data.
Industry Implications
CPIA Executive Secretary Liu Yiyang said the unified cost accounting model could help curb excessive price competition by enabling market prices to better reflect actual production costs, product quality and technological competitiveness, allowing technologically advanced and quality-focused manufacturers to earn reasonable returns.
He added that when prices no longer reflect actual resource consumption and operating costs, it becomes difficult to distinguish genuine cost reductions driven by technological advances from pricing strategies that rely on sustained losses to gain market share. Such practices distort market competition and, if extended to overseas markets, could heighten trade frictions and undermine the global competitiveness of China’s PV industry.
Song Zhiping, chairman of the China Association for Public Companies, said that routine price monitoring, alerts on abnormally low prices, and targeted industrial policy all depend on unified, reliable and comparable cost data. This makes the standard an important framework for government price monitoring, capacity analysis and macroeconomic decision-making.
Yan Dazhou, director of the National Engineering Research Center for Silicon-based Materials Preparation Technology, highlighted the standard’s potential application in public procurement. He said government agencies, state-owned enterprises and project owners could reference industry benchmark costs derived from the standard when evaluating bids. Bids priced significantly below the benchmark without reasonable justification could be rejected, helping curb loss-making price competition.
Gao Jifan, chairman of integrated solar manufacturer Trina Solar, said the new framework could accelerate the phase-out of inefficient capacity by improving cost transparency and helping prices return to more sustainable levels. He said healthier industry profitability would allow manufacturers to invest more in product quality, including higher-quality raw materials, stricter quality control, digital traceability systems and professional operation and maintenance capabilities. By establishing a transparent cost baseline, the framework could also discourage excessive cost-cutting improving overall product quality while benefiting end users.
An industry source told OPIS that the standard’s effectiveness will ultimately depend on how it is applied in day-to-day operations, commercial negotiations and pricing practices, as well as the extent to which cost information is disclosed in practice.
Market sources expect SAMR’s price supervision authorities to convene a PV industry price compliance guidance meeting in the near term to facilitate the new standard’s implementation, although no official announcement has been made.
—Reporting by Summer Zhang, szhang@opisnet.com; Editing by Mei-Hwen Wong, mwong@opisnet.com