More to the point, the opportunities available for suppliers of silver and silver products into the PV space are highly dependent on policy considerations, which should be judged a significant risk factor in view of the current worldwide financial problems. In summary, silver materials suppliers are not going to have it especially easy in the near future, even though the end of subsidies could be good news in the long run, since it encourages market-oriented PV technologies (even if the near-term effects are certainly chilling).
Finally, as noted above, c-Si PV is losing market share to TFPV technologies. This shift will occur gradually, rather than sharply, but it will happen nonetheless, and it will have a measurable, and negative, impact on the consumption of silver in PV. Optimistically, we think that these internal technology transitions in the PV industry will yield new opportunities for some firms that know where to look for them. So, for example, while suppliers of conventional silver printing pastes will feel the pinch, suppliers of new nanosilver-based transparent conductors may grow. And, in NanoMarkets' opinion, the opportunities can only get better over time, since with subsidies removed, firms are more likely to come up with innovative new types of solar panels with even more uncertain requirements.
The Effect of the High Price of Silver on Its Consumption in the PV Market
Cost has always been important in PV applications; a central thesis, after all, is that PV can be a more eco-friendly alternative to carbon-based fuels. And PV technology has a way to go to meet its goal of cost parity with conventional energy generation technologies for on-grid applications. Note, for example, that the U.S. Department of Energy (DOE) claims that solar production costs must be under $50 per square meter, or less than 5 cents per watt, to be cost-effective in distributed power and the utility-scale production of electricity.
This inherent cost sensitivity in PV presents a problem for silver suppliers. Silver has always been an expensive metal and probably always will be. But the most obvious change in the silver inks/pastes market since our last report is the seemingly persistent high price of silver, with no relief in sight. Silver commodity prices have been pushed upward because of the uncertain global economic environment in which investors have shifted increasingly toward “hard” assets. Silver exchange-traded funds (ETFs) have accumulated large stores of silver in order to handle the increased demand for precious metal investments.
At the time of this writing, silver prices have somewhat stabilized, but they have done so at a level nearly twice that of just two years ago (in inflation-adjusted dollars). And there are no good reasons to believe that the situation will change very much over the next five years or so. This development is not particularly good news for the silver materials suppliers, since their costs are largely determined by the price of silver, which is outside of their direct control.
Among these negatives, however, there is at least one reason for optimism on the part of suppliers of silver materials to the PV industry. Silver’s conductivity is unrivaled; this performance ensures that there is often no suitable substitute, which means that the demand for silver is quite price-inelastic. In fact, the high price of silver is now a fact of life for many electronics applications, including many PV-related ones.
However, suppliers should not be complacent. High silver prices will induce PV firms to look for silver substitutes, and sustained high silver prices—over more than just a few months or few quarters—will give these substitutes a chance to take hold. Indeed, there are already important subsectors of the PV market where cheap non-silver alternatives are taking market share away from silver, namely backside electrodes/reflectors and tabbing pastes, just to name a few. Clearly, at least in some cases, there are alternatives to the use of pure silver that might not be as good as silver, but are good enough performance-wise, and much better than silver cost-wise.