Market Report

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  • No. 14 | 15th April 2024

Solar silver demand growth to moderate this year but still hit a new record

Silver’s recent demand expansion comes from spectacular growth in solar installations. Global demand for silver used in photovoltaic (PV) cells is estimated to have reached a record 190 moz last year, up from 100 moz in 2020, and now represents ~30% of industrial silver demand. In 2024, solar silver demand could exceed 200 moz. This growth has been mostly driven by very rapid expansion in both PV manufacturing capacity and PV installations in China. China represents ~85% of global manufacturing capacity, and in 2023 installed nearly as much new solar domestically as the whole world did in 2022.

Power grids could be a bottleneck for new solar installations. This year, the rate of new installation growth in China is forecast to slow from 217 GW to ~190 GW (source: China Photovoltaic Industry Association (CPIA). Development of solar manufacturing and demand has been much more rapid than upgrades to the electricity grid in China. New Chinese installations are split ~50:50 between industrial scale and residential/ rooftop scale. Different grid connections are needed for each side. In some places, the ability to transmit and store renewable power lags behind new installations, which may begin to curb these new solar installations. Chinese solar power integration with the grid is far ahead of that in Europe and the US, therefore this could also become an issue elsewhere.

Idling some installed capacity could allow more installations and maintain silver demand growth. China maintains a floor on capacity utilisation of 95% for solar power stations. Where generation outstrips transmission capacity this cannot be maintained, thus possibly disincentivising new solar installations. A recent report suggests that the government may relax this limit, which should allow growth in both solar installations and silver demand to continue as additions can run at lower utilisation with the same scale and silver demand. Nevertheless, official forecasts for new Chinese installations this year tend towards slower growth.

Higher silver technology could offset demand losses from a slower growth rate. There is a major shift in the type of solar cells being produced. PERCtype cells made up 75% of all solar energy produced last year, but this year this proportion is forecast to fall to 55% (source: CPIA). This is due to a rapid expansion of TopCon-type production capacity. TopCon cells typically contain ~28% more silver per watt than PERC cells. Consequently, a possible slowdown in new installations is not expected to curb solar silver demand this year. Thanks to ongoing efforts to reduce silver usage, per-cell solar silver demand growth should lag behind growth in production and installations worldwide.

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