Since platinum group metals (PGMs) are a necessary component of catalytic converters, and pretty much every vehicle with a combustion engine needs a catalytic convertor, the correlation between PGM prices and activity in the automobile industry is well-known.
Similarly, a significant amount of silver's global demand comes from electronics manufacturing. But with an industry sector as broad as "electronics," it’s difficult to find correlations between electronics demand and silver prices that have the same consistency and statistical significance as PGM prices and automobile demand (after all, consider how many electronics are installed in your vehicle). However, researchers at the Kent Business School recently discovered that there is indeed a causal relationship between the price of silver and solar energy demand.
With the highest electrical and thermal conductivity of all metals, silver’s physical characteristics make it an important material for making solar panels. In the average solar panel, a grid of interlaced wires lays on top of the solar cells. These wires are necessary for conducting the charge generated by the solar cell, but at the same time, they inhibit the cell’s efficiency by blocking 5-10% of the incoming sunlight. Making the wire from highly conductive silver allows the wire to be as small as possible – minimizing the blocked sunlight and maximizing overall energy efficiency.
In their analysis, the researchers looked at quarterly silver prices from the London Bullion Market, installed solar energy capacity, and gross solar energy production between 1990 and 2016. Using this data, they were able to map clear correlations that showed a rise in silver prices at the same time as increased demand for solar panels.
The researchers note in their findings that the average solar panel uses about 20 grams of silver, and the price of the metal makes up about 6.1% of the total cost of each unit. The Silver Institute predicts that roughly 820 million ounces of silver will be utilized by global solar energy applications through 2030. That’s a lot of solar panels!