EDITOR: | June 3rd, 2016 | 4 Comments

Silver’s cleantech appeal burnished by solar power boom

| June 03, 2016 | 4 Comments
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If you think about silver these days, you have to build into that thinking the metal’s growing role as a cleantech metal – and that’s mainly due to the solar industry, which stands out in a slackening global economy as one of the more exciting metal growth stories.

A few months ago the gold:silver price ratio was at 1:85, historically on the high side (it was once 1:16). Now it is 1:76. So gold is 76 times more valuable per ounce than silver yet there are only nine ounces of silver mined for every one ounce of gold pulled out of the ground. And with silver’s growing industrial uses, that production equation must at some stage begin to affect the price ratio – although few would go so far as to predict $140/oz by 2019 (compared to $16 as I write this), as one Canadian mining CEO did last week.

Keith Neumeyer of First Majestic Silver Corp, in making that prediction, did present an interesting argument: the planet is being electrified (electric cars, solar panels) and silver is the most electrically conductive material on the planet other than gold – and gold is too expensive to use in circuit boards and car batteries.

But is it solar panels that have got some investors excited about silver. Silver is a precious metal, and an industrial metal, a technology metal – and, now, a cleantech metal.

As the Washington-based Silver Institute explains, “silver is a primary ingredient in the photovoltaic cells that catch the sun’s rays and transform them into energy. Ninety per cent of crystalline silicon photovoltaic cells (the most common cell) use silver paste and close to 70 million ounces of silver are projected for use by solar energy by 2016”.

In fact, demand for silver in the solar industry reached 78 million ounces in 2015, up an astounding 23% over 2014. The solar sector off-take now represents 17% of the silver used in industrial applications, up from 2% two years ago. China installed an additional 7.1 gigawatts in solar capacity in the first quarter of 2016.

Simona Gambarini of London-based Capital Economist reckons that the strong growth in the number of solar installations in China and the U.S. should see silver demand from the sector up another 20% in 2016. This will more than compensate for the overall fall of silver use in other industrial applications that has occurred over the past three years.

The International Energy Agency estimates that global solar capacity increased by about 40 gigawatts in 2014. Over the past 10 years, global PV capacity has increased at an average annual growth rate of 51%, rising from 4.2GW in 2005 to 226GW in 2015.

China’s National Energy Administration has said that country plans to add up to 20GW of capacity a year, for five years. As Gambarini notes, the U.S. solar industry will continue to benefit from the Investment Tax Credit, a 30% tax credit for solar systems on residential and commercial installations, which has been extended to 2022. There is also the potential implementation of the Clean Power Plan.

She also makes the point that thrifting is not a concern: as silver paste accounts for only about 5% of total cost of PV panels, there is no great urge to reduce the proportion of silver.

And there is potential for growth that could affect the silver demand/supply situation. First Majestic’s Neumeyer said last week his company had just been approached by a Japanese electronics maker that wanted to lock in future silver supply, which he sees as a sign of supply concerns.


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Comments

  • Graeme

    Robin, battery makers are targeting Australia as a test bed economy for battery staorage of electricity from PV solar panels.

    Storage sunrise: Solar battery makers eye take-off as prices fall
    Thu Jun 2, 2016 11:09pm EDT
    —-Energy giants such as Panasonic, Tesla and Samsung SDI are targeting Australia as a test ground for battery storage, betting that more consumers in the country with the world’s high-est rate of rooftop solar panels will rush to batteries as prices fall from current levels around A$10,000 ($7,200) for an average home.
    “(Australia) has very high residential solar penetration, plenty of sunshine, relatively high en-ergy prices and … governments are not subsidizing to the extent they used to,” said Panasonic Australia Managing Director Paul Reid.
    “It creates an environment that we think is very much conducive to the take-up of battery storage, perhaps more than any other country in the world right now.”
    Solar is expected to become the leading source of renewable power by 2040, according to the International Energy Association (IEA). By 2050, it is expected to account for about half of the global renewables market, or 16 percent of total global energy supply. This would be split evenly between rooftops and industrial scale parks.
    Australia is seen as an ideal opportunity, with around 1.5 million, or 15 percent, of households already equipped with rooftop solar.
    Morgan Stanley estimated in a 2015 report that battery installations in Australia could soar to a million by 2020. Industry sources estimate there are less than 1,000 modern battery systems currently in place.
    http://www.reuters.com/article/us-australia-solar-batteries-idUSKCN0YP09J

    $140 per troy ounce might be needed to match supply to demand if the 21st century turns into the solar power century.

    June 3, 2016 - 3:36 AM

  • hackenzac

    On the matter of thrifting with Ag being just 5% of the total cost of a PV cell, it must be a higher percentage of the material costs and in any event, 5% in a world of tight margins is still nothing to sneeze at so I’d venture to assume that there are efforts to thrift it similarly to what we’re seeing in magnetics and dysprosium.

    June 3, 2016 - 10:50 AM

  • jeff stufsky

    If “thrifting” means using less silver per energy unit, this is likely to be expected as company’s develop more efficient manufacturing processes. The concern would be whether there was a real substitution risk. Silver’s chemical properties seem to make such replacement a challenge, and at only 5% of the manufacturing cost it likely dulls the impetus to search for an alternative. Of course, if silver were to – say – triple in price or more, then all bets off. A higher silver price would markedly increase production since there is no shortage of deposits and no technology challenges, so that a runaway price, sustainable or otherwise, would seem to require a perfect storm .

    June 6, 2016 - 8:54 AM

  • hackenzac

    Here’s a development that replaces Ag with aluminum. Natcore says that silver represents 48% of the metalization costs of a solar cell, 11% of the raw material costs and that it takes 1.5 million troy ounces of silver per giga-watt of solar power so I guess the debate over “only 5%” being worth the effort of substitution depends on how you slice it. Silver isn’t likely to stay as cheap as it has been. 30 an ounce or more is entirely possible and with gold bugs like Graeme calling for 150 per ounce, silver substitution which is already achievable, becomes likely.
    http://www.natcoresolar.com/news/natcore-technology-develops-solar-cell-that-eliminates-use-of-silver/

    June 6, 2016 - 10:59 AM

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