Silver prices broke through $44 per ounce this week, reaching a 10-year high. Experts predict they could exceed $50 per ounce next year, putting pressure on photovoltaic module manufacturers to further reduce silver consumption.

Silver prices rose to $44.86 per ounce this week, their highest level in a decade. By comparison, silver prices are expected to average $28.27 per ounce in 2024 and $23.35 per ounce in 2023.

Philip Newman, managing director of Metals Focus, a UK-based market research firm, told pv magazine that many factors are driving silver prices higher, but two are particularly key.

Newman noted that silver prices have risen by more than 30% over the past six months. "The Federal Reserve recently began cutting interest rates, and further cuts are expected this year and next," he said. "This is positive for gold and silver prices because it reduces the cost of holding."

Lower carrying costs make gold and silver more attractive compared to interest-bearing or income-generating assets, thereby boosting investment demand. This, in turn, puts downward pressure on the US dollar, as precious metals are often seen as a hedge against currency devaluation.

"Gold is the primary beneficiary, but silver is also experiencing spillover effects," Newman said. "Furthermore, concerns about stagflation could further boost gold and silver prices. Current geopolitical uncertainty—particularly regarding Sino-US relations and the outlook for the Chinese economy—is also impacting silver prices."

He also noted that silver prices could be more volatile than gold due to its smaller market size.

"Despite volatility, I don't foresee a silver supply shortage in the photovoltaic industry," Newman said. "Currently, industrial silver demand is not strong. While the third quarter is typically peak season for the consumer electronics industry, tariff uncertainty has pushed many orders forward to the second quarter. The photovoltaic market is also relatively subdued, primarily because domestic demand in China was concentrated in the first five months of this year, before subsidies expired."

Newman predicts that macroeconomic and geopolitical factors will continue to drive silver prices higher this year and next.

"It's entirely possible that silver prices could exceed $50 per ounce next year," he said. "This would force photovoltaic manufacturers to further reduce the amount of silver used in their products."

He noted that silver currently accounts for approximately 11% to 13% of module costs. Metals Focus analysis shows that average silver usage in the photovoltaic industry will decline by approximately 20% in 2024, and is expected to fall further this year, potentially by more than 15%. "Silver prices at $40 or higher pose a significant challenge to the industry, but they can also drive rapid innovation among photovoltaic manufacturers," said Newman.

He believes rising silver prices will not directly drive up module prices. "This is highly unlikely, as overcapacity forces manufacturers to continue competing on price and efficiency."

Newman also suggests that this situation could drive the adoption of copper-based materials and create more favorable conditions for heterojunction (HJT) cells, as they rely less on silver.

"HJT already uses silver-plated copper paste on a large scale. We believe that when silver prices exceed $40, HJT's unit manufacturing costs could be lower than those of TOPCon cells," he said. "However, this would also force TOPCon manufacturers to accelerate the adoption of silver reduction and alternative materials to remain competitive."