While the outlook for solar power generation in future continues to be positive, as many countries move away from coal power generation, the use of expensive silver as a conductor in solar panel manufacture faces the threat of being substituted with cheaper base metal alternatives such as copper or nickel, a report released this week by Citi Research investigates.

In the solar-power photovoltaics (PV) industry, the use of silver is key in the production of metallisation pastes, representing about 80% of the paste’s price.

Silver is also used as a key element in the formation of contact grids. Each solar cell uses about 250 mg of silver and PV manufacturers use more than 12% of the world’s silver supply.

With silver moving from $6/oz in 2004 to above $40/oz in 2011, the solar panel manufacturing industry placed a big focus on substituting silver in the process with base metals. It must be noted that research and development (R&D) departments had not paid much attention to substitution at all prior to silver’s huge run but the silver bull market kick-started significant R&D expenditure to either thrift silver or replace it entirely.

Growth in Solar Power Use

The use of solar panels has been rising sharply and the International Energy Agency (IEA) has noted that that since 2010, the world has added more solar PV capacity than in the previous four decades.

The growth in solar PV use was also given official impetus by European governments focusing on cleaner and cheaper energy, while the use of solar PV also expanded rapidly in emerging markets – which tend to have high rates of sunshine.

The IEA envisions PV’s share of global electricity reaching 16% by 2050, a significant increase from the 11% goal previously forecast for 2050 by the IEA, a forecast made in 2010.

The IEA expects that rooftop solar will account for one-half of the world’s solar PV installations by 2020 because the technology is simple and the power is generated at the location where it is needed. The expectation is that half the 2050 PV deployment will take place on buildings or over parking lots, with more than half of this on commercial buildings rather than residential.

The Fall in Energy Prices

According to the Citi report, the cost of providing electricity from solar power plants has fallen so sharply over the last five years that in some markets it had become cheaper than coal or natural gas prior to the recent falls in those commodity prices. If manufacturing costs keep falling, solar could become increasingly competitive.

While solar is not directly threatened by the fall in the oil price, it is directly threatened by the fall in natural gas prices. This led to an incentivisation trend to produce solar energy – a clear function of competing energy sources.

However, costs of installing PV capacity have been falling as well and, as a key incentive is ‘clean energy’, the key motivation for using PV energy remains and it will likely take greater shifts in gas prices to impact PV demand significantly over the medium-term, the report highlights.

Threat: Substitution

Using copper instead of silver to create the electrical contact lines on solar panels is one of the more recent developments in the industry. The copper idea has been around for decades but the high silver price of 2007-11 generated a step-up in R&D into the use of copper.

Screen printing has been the conventional method of creating the electrical contact lines. With copper, factory tool-makers have rolled out plating equipment, which can create thinner lines faster and at lower temperatures.

One manufacturer is developing a new tool that uses nickel in busbar metallisation for electrical contacting of solar cells. The new system, named Helia, does not completely eliminate silver but promises that silver savings between 50% and 70% can be achieved, thereby reducing overall production costs of solar cells. The Helia system coats the solar cells with nickel in a shortened system configuration to form the front and rear busbars via a sputtering process.

Such new technologies, including copper metallisation, nickel phosphide and noncontact printing techniques, which can replace silver, could reduce costs by up to 50%.

However with the replacement with copper, the PV panel production steps get more complex. The standard metallisation steps cannot be utilised with copper and so extra process steps may be required. Investment costs could be high because of the need to invest in new R&D and, subsequently, new equipment to accommodate copper as the substitute material.

The attraction is that the manufacturer might save significant amounts over the medium term if the relative prices of copper and silver remain around recent levels.

A system known as Copper Indium Gallium Diselenide (CIGS) could emerge as the key technology threatening silver.

It is part of a suite of solutions within the ‘thin film’ alternatives within the solar PV industry and it offers potential advantages on weight, cost and flexibility. Despite this, he challenge is that thin film technologies have low efficiency levels and their cost effectiveness could limit their future expansion unless further technological advancement is forthcoming.

Mass producing panels using CIGS solar cell technology has proven to be extremely difficult and CIGS firms have had to undergo constant re-evaluation of processes and technological approaches. The result is that few have been able to take laboratory success on to commercial success.

As a result of the findings, the report concludes: Because silver is the best conductor, solar panel manufacturers have little choice but to rely on the metal, which suggests long-term demand will likely remain resilient. A return to higher silver prices,however, could result in intense further R&D investment into alternatives and represent a threat to silver.

 For more information on this report and others compiled by Citi Research, visit www.citivelocity.com

 

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