The rising price of silver was given a rocket-thrust largely as a knock-on effect from the 2008 to 2009 financial crisis, as investors sought to plough their money into precious metals for safety. As many financial markets seem to be teetering on the edge of a double-dip recession, this commonly acknowledged investment in times of crisis seems to be an ongoing trend.
With silver seen as a less volatile option than gold, the price of silver is currently reaching record highs, forming a worrying new norm.
As cited by the eminent analyst Peter Guest in an article for CNBC.com, analysis by RBC Capital markets states that "investment demand as a component of total silver usage has been increasing over the past five years … in 2008, investors represented five percent of the total market for silver. In 2010, that had grown to 17 percent … "
A report by market analysts NanoMarkets published August 17, 2011 speaks of "persistently high commodity price of silver that will not likely decline any time soon."
A key material in forming contact grids, photovoltaic panel manufacturers consume roughly 11 percent of the worlds silver supply, according to Bloomberg online, with its cost appreciating 74 percent $35.30 a troy ounce so far in 2011, up from $20.24 in 2010.
Shawn Qu, chief executive of Canadian Solar Inc. told the news source earlier this year that he estimates that this adds around three to four cents (or two percent) per watt to the cost of a panel, or as predicted by New Energy Finance, a total of $23.52 to the cost of each panel overall.
Most economists seem to conclude that while the rising price of silver is unprecedented and thus potentially unsustainable, the end-point for this surge in cost doesnt appear to be in sight.
The new trend is thus dividing the photovoltaic manufacturing industry along financial lines, as only larger companies are able to afford the extensive research and development needed to find a replacement substance that can conduct electricity as efficiently in polysilicon cells as the white metal.
Investing in a shining future
Industry leaders DuPont are unsurprisingly at the forefront of this research.
Although they declined to disclose how much they are now spending on extra R&D in an effort to find a suitable replacement material as fast as possible, spokeswoman Ellen G Pressley told pv magazine that "DuPoint is working aggressively to reduce our customers reliance on silver as a basic conductive material, to reduce cell and module costs today and enable a more stable cost structure in the future."
DuPonts great white hope comes in the form of a material called Solamet (PV17A), a photovoltaic metallization paste, which was launched in February 2011, and is expected to be made more commercially available in lower-silver forms later this year.
According to Pressley, this "substantially reduces the amount of paste needed to produce a solar cell, and were continuing to put our science to work by lowering the silver content in the paste itself."
Preliminary MCM evaluations have suggested that first generation Solamet products will contain 10 percent less silver than currently available products, with subsequent generations reaching for around the 20 percent mark.
But even DuPont admits that such extensive R&D isnt being conducted with the intention to reduce its reliance on silver altogether, just to lessen the blow of current costs.
Pressley explains that while the aim of finding a new material is to keep costs down along the photovoltaic manufacturing chain, it could be equally restrictive to rely solely on one material.
Furthermore, "even with very high silver prices, it may be found that a small amount of silver was an enabling metal for other cell configurations, so would still be included in cell designs in the future," meaning that the silver problem looks to be ongoing for larger polysilicon module manufacturers.
But what of the companies which cant afford such high R&D costs? As another DuPont representative, Walt Cheng, told Delaware Online, smaller panel makers look to lose out as others find alternative solutions to silver, further increasing the gap between larger and smaller photovoltaic module producers.
"Customers that are second- and third-tier have a harder time with higher silver prices. The strong module makers will get stronger, he said.
Hoping for a silver lining
While it would seem that rising costs for silicon-based modules could present an opportunity for thin film manufacturers to steal a little more market share, Finlay Colville, a senior analyst at Solarbuzz told pv magazine that he thinks polysilicon manufacturers are already one step ahead.
"Silicon-based cell and module manufacturers have known for years that the next stage is to implement new methods that make panels more efficient, but at the same time use less silver," he said.
"So far this year, polysilicon module makers successfully accelerated cost reduction across the entire supply chain, which currently more than balances out any of the increased costs in one element such as silver. Declining polysilicon raw material costs coupled with wafer processing cost reduction techniques – have represented the gating factors in declining panel prices for tier 1 vertically-integrated silicon manufacturers in 2011."
Colville says that most manufacturers would consider researching replacement materials as a longer term option, but that a trend within the industry has been to research how to reduce the amount of silver on each panel, such as by giving each grid "finer features"; slimming down the strips of silver used on each panel.
"Manufacturers have known for some time that usage of silver paste needed to go down but efficiency needs to go up in order that polysilicon modules maintain their market share by virtue of incremental declines in cost per Watt metrics," he explained.
So while silicon-based manufacturers may see no reason to panic just yet, it remains a challenge to all thin film manufacturers to see if they can reduce their costs further to be market-competitive regardless of short-term price increases for silver paste.
As the markets continue to fluctuate and the cost of silicon-based modules continues to fall, it clearly pays to look to the future if manufacturers want to keep their sparkle to retain their market share.