COSTLY SILVER, COSTLY SUN

Silver Surge Makes ‘Headwind’ for Solar/Fossil Fuel Rivalry
Ehren Goosens, June 23, 2011 (Bloomberg News)

"Soaring silver prices are hampering the solar industry’s ability to compete with fossil fuels…Panel makers consume about 11 percent of the world’s supply of silver, the material in solar cells that conducts electricity. The metal has appreciated 74 percent to $35.30 a troy ounce on average so far this year from $20.24 last year.

"Prices for solar cells have dropped about 27 percent this year and would be even lower if each panel didn’t require about 20 grams of silver…[It is slowing the delivery of] solar power at prices that are competitive with traditional energy…"

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"Prices for photovoltaic solar panels were $1.49 a watt in June, compared with about $1.80 in January…as manufacturers especially in China raised production and incentives were trimmed in Europe…The price of the silver paste…[for solar cell circuits] more than tripled in the past year…[adding] 3 cents to 4 cents a watt, or 2 percent, to the [one company’s] cost…[G]ross margins narrowed to about 15 percent in the first quarter from 17 percent in the prior quarter as the price of cells fell faster than the cost of production…"

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"A typical solar cell uses 0.10 grams of silver for each watt of generating capacity. That amounts to about 20 grams in a 200-watt panel, adding $23.52 to the cost of each panel…The cost for metal in each panel totals about 11 cents a watt, up from 5 cents a year ago…[It is accounting] for around half of cell makers’ processing costs…[and at this year’s high] will account for 13 percent to 15 percent of the cost of producing each panel…

"Solar companies and their suppliers are looking for ways to reduce the amount of silver used in cells [like using] thinner wiring…[They are upping their R&D on silver]…High silver prices may provide a competitive advantage to companies that make thin-film solar products… made with cadmium-telluride rather than the polysilicon…[They] do not use any silver…"