Find out more about the increasing industrial demand for silver in this article.
One important component in the demand for silver is industrial use. Silver has hundreds of industrial and medical applications. Being the best conductor of electricity it’s used in switches, medicine, batteries, plastics solar cells, water purification, computers, cars etc. There is furthermore a continuous growth in the many applications for silver.
Recently, the demand for solar cells has seen an important shift. In the wake of the Fukushima disaster several nations, primarily Japan and Germany, have experienced an increased political pressure to move away from nuclear power. In Germany, there is furthermore a plan of replacing fossil fuels with renewable energy.
Even though the willingness and possibility of completely following through on the initial statements can be debated there is nevertheless an increased focus on greener sources of energy. This is proving to be very positive for silver.
The base of the solar industry is photovoltaic technology, which is used to generate electrical power by converting solar radiation into direct-current electricity through the use of semiconductors. A typical solar panel uses the same amount of silver as in 80 cellphones or 20 laptops, which is roughly 20 grams.
In 2012, the solar technology demand only represented 5.6% of total industrial use of silver – but since 2000 the amount of silver used for solar panels has risen by 50% per year.
Previously, Germany has been one of the biggest users of solar panels but other countries are increasingly looking at this source of energy. The future of the solar panel market isn’t Europe, but India, China and Japan, all of which plan to increase their solar output significantly going forward. By 2020 the worldwide solar power generating capacity is expected to be 20-40 times the amount of current capacity.
Recently, Chinas State Council increased their target for solar generating capacity by 67% compared to previous numbers – an output of 35 gigawatts. The installed capacity in 2012 was only about 7 gigawatts, which means that the increase is projected to be 400% in just a few years. This translates into a global increase of 27%.
Japan is also increasing their demand for solar panels, and is expected to overtake Germany as the world’s largest user of solar panels. An estimated 5.3 gigawatts in generation capacity is projected to be added this year.
This will have a significant impact on the demand for silver. Up to 11% of global mine supply could be consumed just by China and Japan over the coming three years. This amount is two times the current worldwide demand from the photovoltaic industry.
As we’ve talked about before there are several reasons for why the future mine supply of silver could decrease, and with an ever increasing demand for silver for industrial use as well as for investments there is much that point to a higher silver price.
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