Silver Crucial for Solar; Mexico Must Take Opportunity

The Silver Institute has released a report authored by London-based CRU Consulting exploring silver’s centrality to photovoltaic (PV) cells in the next decade. The report argues that the PV sector will remain an important and consistent source of industrial demand for silver over the next 10 years.

CRU reports that silver’s unmatched thermal and electrical conductivity make it essential in PV cells, the building blocks of solar panels. Technological innovations have resulted in power generation from PV currently being competitive against electricity from fossil fuels. The cost of electricity generation from PV has rapidly declined over the past decade and, in many instances, it is close to or below the cost of power generated by burning fossil fuels. Solar power generation is expected to nearly double by 2025. Therefore, the PV sector will underscore silver’s role as a green metal, CRU explains.

The report examines trends in solar power generation and provides regional perspectives on future demand for solar installations. Growth in solar power capacity over the next decade is expected to be led by China, followed by Europe, North America, developed Asian countries and India. The report argues that in the US, one key policy that has significantly helped to drive growth in the solar sector is the Solar Investment Tax Credit, which allows for 30 percent of the cost of purchasing and installing residential or commercial solar panels to be deducted from federal taxes. The incentive will phase out starting this year, but will be offset by solar energy’s improving costs, CRU expects.

CRU highlights that continued reduction in costs and technological improvement have opened up the path for PV to become a competitive option for power generation at industrial sites, particularly in remote locations with favorable conditions. One immediately thinks of Sonora, whose far-flung mines crowned it as Mexico’s top gold and copper producer in 2019. The offsetting of carbon generated during industrial processes is only likely to grow in importance as more regions look at increasing the cost of carbon emissions and solar is one technology that is likely to benefit from this trend, the report notes.

The report underscores that silver possesses the lowest electrical resistance among all metals at standard temperatures. Thus, potential substitute metals cannot match silver in terms of energy output per solar panel. In addition, due to technical hurdles, non-silver PVs tend to be less reliable and have shorter lifespans, presenting serious issues for their widespread commercial development, CRU notes.

CRU expects silver demand in PV to remain at elevated levels over the next decade. From 2020 through 2030, the PV sector is expected to consume a cumulative 888Moz of silver — an average of 81Moz per year. That is a massive opportunity for Mexico. The country finds itself in a privileged position to leverage its silver production and climb up the value chain, not only strengthening its position as the world’s top producer but also becoming a competitive PV manufacturer.