Coal-fired power plays an important role in China’s power supply, even though the photovoltaic (PV) power has developed rapidly in recent years. Carbon capture and storage (CCS) technology is essential for achieving anticipated long-term climate change mitigation targets. However, China’s government subsidy policies tend to support PV, while incentives for CCS are few. Given this situation, a trinomial tree modeling-based real options approach was developed to evaluate CCS retrofitting investment in coal-fired power plants versus PV power investment. This model includes setting different policy scenarios by considering electricity tariff subsidies and Chinese emission trading scheme (CN-ETS). The results showed that coal-fired power with CCS has a cost advantage over PV power in most provinces in China, if the electricity tariff and other subsidy policies remain the same; however, PV power will be cheaper than coal-fired power with CCS in Yunnan, Tianjin, Hebei, Shanghai and Shanxi provinces in the above cases. Incorporating CCS into CN-ETS could cut the former’s application cost, but the incentive effect of CN-ETS is not obvious, because the carbon price in China is currently too cheap, and the incentive effect of a power tariff subsidy (subsidy at the PV power tariff level) is much better for PV than for CN-ETS. Increasing the load factor is an important way to reduce the CCS application cost for power plants. The results of this study provide reference and guidance for the collaborative development of CCS and PV.