Demand for solar panels continues to increase worldwide, which has led to higher silver prices since this metal is heavily used in solar panel manufacture.

What Are Solar Panels?

Solar panels, also known as photo voltaic modules, are cells which are mounted in frameworks and installed on various objects, including buildings, vehicles and even space craft. Their main purpose is to utilize sunlight as an energy source which can produce electricity. A group of these modules is referred to as a panel, and a collection of panels is called an array. Solar panels are considered by many experts to be an excellent alternative to fossil fuels, since they can generate energy without harming the atmosphere or environment, and a growing number of individuals and groups are using them for agriculture and other crucial fields.

Why Is Silver Used In Solar Panels?

Silver is a precious metal which is known for its grayish/white color. It has the greatest thermal and electrical conductivity of any metal, even gold, and is prized in a world which is increasingly depending on technology to solve complex problems. The energy demands for mankind will only continue to increase in the future, so figuring out a way to harness the energy of the sun is critical, and solar panels and the silver they are comprised of will play an essential role in this process.

Researchers working at Kent Business School wanted to find out precisely how increased demand for solar panels to produce renewable energy has affected silver prices. What they found is that about 20g per silver is used in each panel which contributes to approximately 6 percent of the full price of constructing each unit. Data was taken from quarterly prices for silver which was measured via the Bullion Market of London, based on solar energy capacity and gross solar generation from 1990 until 2016. This allowed correlations in costs and demand to be mapped.

The data indicated a clear increase in silver prices during that time as demand for solar panels continued to grow around the world. During the global recession of 2008, a causal relationship was discovered between both variables. Additionally, prices rose significantly in 2011 when many around the world were concerned about oil prices rising too rapidly which increased demand for energy sources that could be renewed.

How Will Rising Prices Affect Geopolitics?

Governments around the world take energy security seriously. As such, should silver prices continue to rise; the production and prices of solar panel will increase correspondingly, which might ultimately result in governmental intervention in the form of either waivers for sales tax or energy credits. This would make the transition from fossil fuels to renewable sources of energy more efficient and cost effective. Additionally, it might also lead to the creation of solar panels that use alternative materials to silver. However, achieving this type of breakthrough with copper or aluminum will take time and even if achieved will be inferior to silver’s capabilities.