Silver in solar panels (the industry's "Super metal")

Commodities are in general priced based on the demand for the commodity in question. Silver is not an exemption of this. Silver is used for a number of industrial products and systems. One of the products that use silver as a component are solar panels. One single solar panel uses about 20g of silver. In comparison to a cell phone, which on average holds 200 to 300 mg of silver, or a computer, which on average holds 1 gram, an average solar panel holds a lot of the commodity.

Silver plays a crucial role in solar panels, particularly in photovoltaic cells, where it serves as a conductor. Its high conductivity ensures efficient electron flow when sunlight strikes the panel, making it essential for maximizing the conversion of light into electricity. The US has the biggest demand for silver in the world, and in 2022, 10% of US silver demand was used for the production of solar panels. This could point to a shift towards renewable energy.

Even though we have seen a shift in the last few years towards green energy in the US, President Donald Trump has just started his second term as president. During his first two weeks in the White House, he had already issued orders to open up more American land and water for the fossil fuel sector. He has also started the process of extracting the US from the Paris agreement, after former President Biden rejoined the agreement on his first day in office in 2021. We think this could put a halt to the production and usage of renewable and green energy, including solar panels. In terms, this could halt the US need for silver, and the price would in that case most likely fall.

The EU has begun gradually increasing its demand for solar panels. By December 31, 2026, all new public and commercial buildings larger than 250 square meters will be required to have solar panels. We believe this shift toward solar energy in the EU will push silver prices up. Then, starting the following year, the same requirement will apply to all existing public buildings over 2000 square meters, and commercial buildings over 500 square meters, which are going through substantial renovations. By December 31 2029, all new houses will also be required to have solar panels. This will in time mean a big increase in the demand for solar panels, and therefore in silver. 

Despite its benefits, silver also has some drawbacks. It is a costly material, and its price tends to rise when demand increases across industries such as electronics and jewelry. As a result, incorporating silver into photovoltaic cells adds to production costs, making it challenging for leading solar panel manufacturers in India and globally to keep prices low and ensure widespread affordability. 

As a consequence of the relatively costly price of silver, the market has started looking for alternatives. One of the competitors of silver is perovskite. This is a material that was discovered in Japan about 10 years ago, with a rapid advancement. This could in time eliminate the use of silver in solar panels. We think that this could possibly make the silver prices drop in time. 

We think that the use of silver in the shift towards green energy could mean an increase in the price, but we also see that there are multiple uncertainties connected to it. It is impossible to predict the future, and we are seeing uncertain times ahead with the Trump administration, so it will be interesting to see how the market responds to this shift.