Spot silver prices surged to a record above US$93 an ounce this week, more than tripling over the past year. That means the trace amount of the metal used in solar cells now accounts for 29% of the total cost of a panel, up from just 3.4% in 2023 and 14% last year, according to BloombergNEF.
Panel makers are responding by raising prices and accelerating their plans to substitute silver with cheaper materials like copper. The added costs are coming as losses continue to mount throughout the industry, which is suffering from massive overcapacity after a frenzied factory buildout in the early part of the decade.
“Soaring commodity prices impose irresistible cost pressure on solar manufacturers,” said BNEF analyst Yali Jiang. “This may drive up solar module prices, as manufacturers have little room to absorb additional costs after enduring two years of depressed market prices.”
In the world’s biggest market, Chinese module makers hiked prices to more than 0.8 yuan per watt this week, an increase of between 1.4% and 3.8% from last week, to reflect increased silver costs, according to InfoLink Consulting. That would put the price of a typical 500-watt panel at about 400 yuan (US$57).
Several major solar companies, including Trina Solar Co and Jinko Solar Co, warned this week they expect to post another year of net losses in 2025.
The guidance suggests the sector’s downturn has yet to bottom out, despite a year of industry self-discipline measures and a government-led campaign to curb excess capacity and halt price wars.
The white metal traded near US$90 an ounce on Friday, and has gained for nine straight months – the longest streak in records going back to 1950.
Silver paste
Silver in paste form is a key material in solar panels, used to make electrical contacts to carry power generated by cells. Manufacturers have constantly sought to reduce the amount of the material as part of broader efforts to reduce costs, averaging 8.96 milligrams per watt in 2025, compared to 11.2 milligrams in 2024, according to BNEF.
Those efforts are now accelerating. Longi Green Energy Technology Co last week announced it will soon begin substituting base metals for silver in its cells, joining others including Jinko Solar and Shanghai Aiko Solar Energy Co in making the switch.
There are a number of methods engineers can use to substitute cheaper copper for some or all of the silver in cells, but going too far too fast can be risky for manufacturers.
Customers usually require warranties for 20 years or longer, and increasing substitution raises the risk of a shorter lifespan because there’s been less time to test the new material.
“If panels fail after a decade but the warranty is twenty years, the manufacturer could face huge liabilities that could lead to bankruptcy,” said Gregor Gregersen, founder of Silver Bullion Group, a precious metals dealer.
Still, even limited substitution efforts, along with an expected slowdown in global panel installations, means the sector will likely reduce silver use by about 17% this year, from annual demand of about 6,000 tons in 2025, Shanghai Metals Market said in a research note this week.
The solar sector accounted for about 17% of total silver demand last year, more than double its share from a decade ago and on par with what’s used to make jewelry, according to data from the Silver Institute.
A substantial slowdown in consumption could threaten the long-term continuity of the white metal’s blistering rally, much of which has been driven by increased speculative interest and a broader rotation into commodities.
“At silver’s price levels today, a lot more substitution can happen,” said Nikos Kavalis, managing director at consultancy Metals Focus. “I don’t think this will affect price in the near term, given how strong investment demand remains, but it does mean less silver will be consumed by the industry going forward.”