Silver and Solar Power

 

Silver is a key component used in solar panels and may also emerge as an important catalyst for new and improved long life batteries. Solar power generation systems need long life batteries to store energy for use when the sun isn't shining. Clearly there is plenty of reason to believe that demand for silver for use in solar power systems will be strong in the coming years.

In this article we will review offer up some excellent articles and resources on this topic. We'll start with this Barron's article on the potential impact on silver from the growing use o solar panels. here is an excerpt:

"Goldman Sach’s Mikhail Sprogis explained in a note last month that silver is a key component in the solar industry, which is poised for big growth. Solar investments account for 18% of silver industrial demand and about 10% of overall demand for the metal. Sprogis has a $30 price target on it."

. . . . . 

"Goldman estimates solar installation will jump 50% from 2019 to 2023. Installations are also expected to increase overseas, especially in China."

Read the full article on Barron's here

Next we have a deep dive report from The Silver Institute on Silver's Important Role in Solar Power. Here are a couple of excerpts from this in depth report. The first talks about the concern that cheaper substitutes for silver may be tested in solar panels, but concludes that is not likely to be a major factor any time soon:

"As in other applications, there is also a modest risk that silver may be substituted with less expensive materials, such as copper. However, substitute materials have had difficulty competing. Silver has the lowest electrical resistance among all metals at standard temperatures, meaning its substitutes cannot match it in terms of energy output per panel; the savings made in substitution may therefore be offset by the increased number of panels needed to match capacity. Moreover, due to technical hurdles, such as the reduced adhesiveness of front pastes containing high amounts of copper or aluminum, non-silver PVs tend to be less reliable and have shorter lifespans, meaning they remain some way off in terms of commercial development. CRU believes that copper or aluminum are therefore unlikely to gain significant market share between now and 2030 as the broader market heads toward more compact and efficient solar panel equipment."

In this excerpt the report looks at projected potential demand for silver for solar panels:

"We forecast a slow decline in silver demand from 2020 to 2023 as PV capacity added per year dips, while attempts at silver thrifting in PV panels continues at a diminished rate.

Looking to the longer term, CRU expects silver demand to fluctuate between 70 to 80 Moz per year between 2024 and 2030, as the rate of silver thrifting slows further, and PV capacity additions slightly increase. While this amount is a small decline from the 2019 peak, it would be higher than any consumption level prior to 2016, and demonstrates that the PV sector will remain an important and consistent source of industrial demand for silver."

It should be noted this forecast assumes no major increase in the annual use of solar panels so it could be viewed as a reasonable and conservative forecast suggesting continued strong silver demand over the next ten years.

Saxo Bank was more optimistic in these recent comments in the video below. They specifically list silver demand for solar panels as a key to their "outrageous prediction" for future silver prices.

Conclusion

Virtually all forecasts predict continued strong demand for silver in solar panels for years to come. Meanwhile, the supply of silver from mining may be peaking at the same time, based on information currently available (see page 14). Silver is a versatile metal that is only likely to grow in industrial uses in the next several years. While solar panels may improve a bit more in efficiency requiring less silver per panel, the increase in the use of solar panels overall may well offset that. Regardless, the forecast cited above (which is reasonable and conservative) predicts 70-80 million ounces a year in silver demand for solar panels. Optimistic forecasts see numbers higher than these.

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