To achieve the goals of carbon peak and carbon neutrality, Xinjiang, as an autonomous region in China with large energy reserves, should adjust its energy development and vigorously develop new energy sources, such as photovoltaic (PV) power. This study utilized data spatiotemporal variation in solar radiation from 1984 to 2016 to verify that Xinjiang is suitable for the development of PV power generation. Then, the averages of the solar radiation, sunshine duration, and other data in the period after 2000 were used to assess the suitability of Xinjiang, based on spatial principal component analysis (SPCA). Finally, the theoretical power generation potential, fossil fuel reduction, and CO2 emissions reduction were estimated. The results are as follows: (1) In terms of temporal variation, the solar radiation in Xinjiang decreased (1984–2002), increased (2002–2009), and decreased again (2009–2016), but the fluctuations were not statistically significant. In terms of spatial distribution, the Kunlun Mountains in southern Xinjiang had the highest solar radiation during the span of the study period. Hami and Turpan, in eastern Xinjiang, had sufficiently high and stable solar radiation. (2) The area in Xinjiang classed as highly suitable for solar PV power generation is about 87,837 km2, which is mainly concentrated in eastern Xinjiang. (3) In the situation where the construction of PV power plants in Xinjiang is fully developed, the theoretical potential of annual solar PV power generation in Xinjiang is approximately 8.57 × 106 GWh. This is equivalent to 2.59 × 109 tce of coal. Furthermore, 6.58 × 109 t of CO2 emissions can be reduced. PV power generation potential is approximately 27 times the energy consumption of Xinjiang in 2020. Through the suitability assessment and calculations, we found that Xinjiang has significant potential for PV systems.