Silver demand is expected to surge with the need for renewable energy — Global leaders are now tasked with the challenge of transitioning from clean energy sources to alternative clean energy sources. According to Bloomberg NEF, this substantial undertaking can cost up to $173 trillion in supply and infrastructure spending over the next three decades. The shift away from fossil fuels will cause a spending surge that will benefit businesses directly involved in renewable energy. Commodities such as silver, critical to clean energy technology, will see an uptick in demand, opening several new investment opportunities.
Silver has the highest electrical conductivity among all metals, making it an excellent metal for use in solar cells and electric vehicles (EV) components. Over the last decade, the solar photovoltaic and electric vehicle sectors have been a consistent source of silver demand. Experts predict the market demand will increase in the coming years as these industries expand globally, particularly in developing countries.
Solar Energy — Silver as a Photovoltaic Material:
According to S&P Global, global silver demand reached 114 million oz in 2021, growing 13% as a category and contributing to a new record high for global silver demand. Despite the supply-chain constraints that have plagued global manufacturing since COVID’s inception, this rebound reflects the significant green-energy investment currently underway. Solar photovoltaic (PV) cells contain silver paste to aid in the conductivity of electricity. When light strikes a photovoltaic cell, the conductors absorb the energy and electrons are released. Silver’s conductivity efficiently transports and stores free electrons, maximizing the energy output of a solar cell.
Silver is an essential material in the automotive industry, which drives the demand for over 55 million ounces of metal each year. Silver is applied to the electrical contacts in powered seats and windows, and other automotive electronics to improve conductivity. Automakers increasingly use silver to enable the vast technological advances incorporated into modern vehicles — this has resulted in another robust demand centre for silver, with the automotive industry expected to account for nearly 90 million ounces (Moz) of silver demand annually by 2025. With the rise of electric vehicles (EV), we can expect demand from this sector to surge even further by the end of the decade.
To better understand silver’s important role in the automotive sector, the Silver Institute today released “Silver’s Growing Role in the Automotive Industry,” which was produced on its behalf by Metals Focus, a leading independent precious metals consultancy. The report investigates automotive production trends, such as the evolution of hybrid and battery electric vehicles. It also addresses transportation policies in some of the world’s most important vehicle markets that favour vehicle electrification. The report examines silver automotive demand in a variety of vehicles and the growing importance of ancillary automotive services to silver demand. The report concludes with a snapshot of the current and projected silver demand in automobiles through 2025.
The following are some of the report’s key takeaways:
The widespread use of silver in cars reflects its superior conductive properties, oxidation resistance, and overall durability under extreme operating conditions.
Silver is widely used in vehicle electrical control units to manage a wide range of engine and main cabin functions, including infotainment systems, navigation systems, electric power steering, and critical safety features, including airbag deployment systems and automatic security and driver alertness systems.
Over the last few decades, average vehicle silver loadings have increased to 15-28 grams (g) per internal combustion engine (ICE) light vehicle. Silver consumption in hybrid vehicles is higher, at around 18-34g per light vehicle, whereas (battery) electric vehicles (EVs) consume upwards of 25-50g of silver per vehicle.
Further, the transition to autonomous driving should dramatically increase vehicle complexity, necessitating even more silver consumption. Ancillary services requiring silver, such as charging stations and charging points for electric vehicles, are also growing, which will create steady silver demand. The growing adoption of EVs on a global scale is accelerating the need to implement federal policies that support EV production.
Each stage of the transition, from silver in Internal Combustion Engines to hybrid vehicles and Electric Vehicles, and even to autonomous driving, will result in a net positive for silver demand.