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Solar-driven silver demand set to dim as sector innovates

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A solar rooftop array at the Soleil Lofts apartment complex in Herriman, Utah.
Source: S&P Global Market Intelligence

Silver demand from the solar sector looks set to wane as manufacturers continue to find ways to use less of the highly conductive but relatively expensive metal in their solar cells, according to experts.

"Out to 2024, we see volume drifting lower," said Philip Newman, a founding partner of research group Metals Focus, which produced a silver supply/demand report for the Silver Institute in April.

Likewise, consultancy CRU Group said it expects silver demand from the solar sector to start falling in 2020 after years of relatively uninterrupted growth.

"We forecast a slow decline in silver demand from 2020 to 2023 as [photovoltaic, or PV] capacity added per year dips, while attempts at silver thrifting in PV panels continues at a diminished rate," CRU Group analyst Alex Laugharne wrote in a June report.

Booming solar panel installations on rooftops and at utility-scale power projects over the past couple of decades have been a bright spot for silver. The precious metal is highly conductive and amenable to cost-effective screen-printing processes, making it a key component of solar cells.

Silver is typically laid down on the solar cell in what are called fingers, helping to deliver harvested energy. Amid growing installations of solar power, silver has benefited massively. In the early 2000s, silver demand from the solar sector barely registered, making up less than a percent of silver demand. In 2019, the photovoltaic sector accounted for 10% of total silver demand, comprising 98.7 million ounces within total demand of 991.8 million ounces, according to Metals Focus data.

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The use of silver in photovoltaics is not likely to stop, but analysts expect industry innovation to continue to lower silver content per cell, outstripping demand from new solar installations. CRU Group estimated that each solar cell used an average 111 milligrams of silver per cell in 2019, decreasing from 521 milligrams per cell in 2009.

Innovation in screen-printing processes, in which silver-containing pastes are applied to solar cells in strips, is one of the key areas where manufacturers have squeezed out silver. And the trend has yet to reach a limit, according to industry experts.

Florian Clement, group head of solar cell printing technology at Fraunhofer Institute for Solar Energy Systems ISE, a major German research group, expects the industry to be able to halve its use of silver per cell over the coming decade. "A reduction down to 50 [milligrams] per cell is still expected to be possible within the next 10 years," Clement said.

That reduction and changes to the pace of global solar installations are key drivers in the anticipated drop in silver demand from photovoltaics, analysts with CRU Group and Metals Focus said. However, if a dimmer outlook for silver is on the horizon, demand from the solar industry is expected to stabilize in the coming decade as thrifting wanes.

"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," CRU Group wrote in its June report.

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Newman similarly said that while the silver boom from the solar sector may have peaked for now, the industry will remain a key player. "It's still an incredibly high volume for one application," Newman said.

Meanwhile, Clement noted that silver will be extremely difficult to replace, at least in the types of solar cells that have come to dominate the market. Copper is cheaper and more abundant and might seem like an obvious choice to swap out for silver, but there are technical hurdles to using it cost-effectively in the cell-manufacturing process. Silver is easy to use in screen printing, Clement said, while copper typically requires more costly processes to apply, including different atmospheric conditions and curing methods, among other factors that drive up costs.

"If you look at mass production at the moment, silver is for sure the material you have to use," Clement said.

The trend now in cell manufacturing is to make them with more closely spaced, smaller fingers using less silver that in turn connect to more closely spaced wires on the cell, or busbars, Clement said. A busbar is a metallic strip or bar used to distribute local high-current electricity.

"At the moment, we have maybe nine or 12 wires for the best modules on the market," Clement said. "In the next three to five years, we may reach 15 to 20 wires, and the process is ongoing."