Changes in solar panel technology are increasing the demand for silver. This could further widen the deficit in the supply of the metal on the market, as only a small additional increase in mining is expected, Bloomberg warned.
Silver in paste form a conductive layer on the front and back of silicon solar cells. More efficient versions of cells are now being produced that use much more silver, which will further increase its increasing consumption.
Although solar cells still make up a relatively small part of the total demand for silver, it is still increasing.Their share of total demand is estimated to rise to 14 percent this year from about five percent in 2014, according to a report by industry association The Silver Institute. Much of this growth is due to China, which could install more panels this year than the total number of panels in the United States.
The solar industry has evolved to be much more efficient using less silver, but now everything is changing, said Gregor Gregersen, a trader at Silver Bullion. At the same time, it is becoming clear that deliveries are tight. Last year, supply remained unchanged, although demand rose by almost a fifth, data from The Silver Institute show.This year, production is expected to increase by two percent, while industrial consumption will rise by four percent.
The problem for silver buyers is that increasing supply is not easy given the rarity of primary mines. Approximately 80 percent of the supply of this metal comes from lead, zinc, copper and gold mining projects, where silver is a by-product.
In an environment in which miners are reluctant to undertake new large projects, silver’s lower margins compared to other precious and industrial metals mean that even positive price signals are not enough to increase its production. And in the case of newly approved projects, mining can begin in ten years.
The solar sector could exhaust 85 to 98 percent of global silver supplies by 2050
A study by the University of New South Wales predicts that the solar sector could exhaust 85 to 98 percent of global silver supplies by 2050. The amount of silver used per cell will increase, and according to study one of the study’s authors, Brett Hallam, it may take five to ten years to return to current levels.
However, Chinese companies are actively exploring the possibility of using cheaper alternatives, such as electroplated copper. But the results so far have been mixed. Zhong Baoshen, head of the world’s largest panel maker Longi Green Energy Technology, said the technology using cheaper metals is advanced enough to be introduced into mass production soon after silver prices rise.
Silver is below USD 23 (CZK 503) per troy ounce (31.1 grams). It has fallen by about five percent this year but is well above where it was before the surge in 2020, when the COVID-19 pandemic boosted demand. Philip Klapwijk, chief executive of consultancy Precious Metals Insights, believes the replacement will be more enjoyable when silver rises to around $30 an ounce. According to him, there will not be a “doomsday scenario” when silver runs out, but the market will restore equilibrium at a higher price.
Source: CTK
