China PV Association Releases Cost Standard; Over 20 Firms Post 15B Yuan Half-Year Pre-Losses

The general cost accounting model standard for the photovoltaic industry has been officially released, providing a unified benchmark for defining "below-cost sales." This group standard, developed under the guidance of the State Administration for Market Regulation and the Ministry of Industry and Information Technology and led by the China Photovoltaic Industry Association, aims to establish a cost accounting framework covering the entire supply chain — polysilicon, wafers, cells, and modules. It unifies the scope, coefficients, and models of cost calculation to resolve the issue of inconsistent cost measurement practices within the industry.

Companies generally face challenges such as declining product sales and revenue, low capacity utilization, and compressed gross margins. Against this backdrop, the introduction of the cost accounting standard is seen as a key measure to address the shortcomings in the industry's cost measurement rules.

The standard is based on corporate accounting standards. By unifying the cost calculation approach, it forms a cost accounting system that runs through the entire industry chain, providing a unified reference for industry research, enterprise benchmarking, and internal operational analysis. Previously, different photovoltaic companies had varying interpretations of cost measurement, making costs incomparable between integrated and specialized firms, with significant differences in depreciation and expense accrual rules.

In the bidding process, the standard can be cited by government agencies, state-owned enterprises, and various photovoltaic project owners as a reference benchmark for cost reasonableness during bid evaluation. When a bid price is significantly lower than the industry reference cost calculated under the standard and the bidding company cannot provide a reasonable explanation, the bid evaluation committee may reject the bid in accordance with the law. This move aims to break the vicious cycle of "winning orders at low prices, supplying at a loss, and dragging down competitors," bringing price competition back to a reasonable range.