The Global Solar Power Boom Is Driving a Surge in Silver Demand

A booming solar-power industry is driving a surge in the demand for silver, which is needed in large quantities to make photovoltaic panels.

Silver is integral to the production of solar photovoltaic—or solar PV—panels because of its high electrical conductivity, thermal efficiency and optical reflectivity, and mining companies are aiming to boost output as prices for the precious metal have climbed to decade highs.

Global investment in solar PV manufacturing more than doubled last year to around $80 billion, accounting for around 40% of global investment in clean-technology manufacturing, according to a report out Monday from the International Energy Agency. China more than doubled its investment in solar photovoltaic manufacturing between 2022 and 2023.

Last year, global renewable capacity increased by 50% to nearly 510 gigawatts—the fastest growth rate in three decades—of which three-quarters came from solar photovoltaic energy, the agency said in a report in January.

Demand for silver from the makers of solar PV panels, particularly those in China, is forecast to increase by almost 170% by 2030, to roughly 273 million ounces—or about one-fifth of total silver demand—based on current trend projections, according to investment manager Sprott, which specializes in precious metals.

“Industrial demand is soaring, driven by photovoltaic and other electrification end uses, while supply is flat to declining,” said Mitchell J. Krebs, chief executive of Chicago-based Coeur Mining.

Spot prices for solar PV panels plummeted almost 50% last year, according to the IEA. This is largely a result of Chinese supply flooding the market.

Last year, the country commissioned as much solar photovoltaic as did the entire world in 2022, according to the IEA. It is expected to maintain a 80% to 95% market share of global supply chains and to double its manufacturing capacity again by the end of 2024, significantly swelling the supply glut, the agency said.

“China’s soaring installations are expected to continue being a key driver for demand growth,” Coeur Mining’s Krebs said.

The Chicago-based miner is hoping to capitalize on the increasing demand for silver. It recently completed a large expansion of a mine in Nevada, set to become the largest source of domestically produced silver in the U.S., the CEO said.

Hochschild Mining, based in London, is also looking to expand its silver operations. Later this year, it hopes to secure permits for a silver project in southern Peru, scheduled to start production in 2027, adding 50 million of predominantly silver ounces to its annual output.

“Given the underlying industrial demand dynamics and existing supply constraints, we may be seeing the start of a silver bull market,” Chief Executive Eduardo Landin said.

The boom in demand has contributed to skyrocketing silver prices over the past months. Last month, it hit $28.84 an ounce, the highest closing price in more than a decade. It currently sits at around $27.50.

Not surprisingly, this has bolstered the share prices of silver miners. London-listed Fresnillo has jumped 17% since the price of the commodity started moving up, helping the world’s largest silver producer claw back a drop of 25% over the last 12 months. Shares in Hochschild Mining have soared 61% since late February, while shares in Coeur Mining have almost doubled in value.

If the price of silver continues to rise, manufacturers of solar photovoltaic panels could be forced to raise their own prices in the latter part of the year, said Hamlet Tunyan, chief executive of France-based solar panel maker Recom Technologies.

“However, higher module prices will not affect the demand for them, as we are currently experiencing relatively low price levels,” Tunyan said.

Paul Wong, a Sprott market strategist, believes silver could see a rise similar to that of gold, which hit eight straight sessions of record-highs in April, he said in a recent report. Despite lagging behind gold’s popularity with central banks and sovereign institutions, silver hasn’t broken its correlation with the yellow metal, he said.

“Similar to how gold bullion has soared due to a new wave of major purchasers among central banks and sovereign entities, silver has and will likely see even more substantial buying from the photovoltaic industry,” Wong said.