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Silver’s spike is squeezing solar makers already deep in the red
A record run in silver prices is turning a small input into a major cost line for solar-panel producers — just as the industry tries to climb out of a two-year losses streak amid brutal overcapacity.
Silver’s surge has sharply increased its share of module costs.
Panel makers are lifting prices, especially in China, to offset the hit.
Manufacturers are accelerating efforts to replace silver with copper and other base metals.
Faster substitution carries reliability and warranty risks — but the incentive is now hard to ignore.
A “trace” metal that no longer feels trace
Silver is used in paste form to create electrical contacts inside solar cells. It’s a small quantity per panel — but price changes don’t care about quantities, they care about invoices.
With spot silver vaulting to record territory this week, silver now represents about 29% of the total cost of a solar panel, up from 3.4% in 2023 and 14% last year. For an industry operating on razor-thin margins — and often negative ones — that’s not a nuisance. It’s a threat.
Overcapacity meets a new cost shock
The timing is brutal. Solar manufacturers are still dealing with the aftermath of a factory buildout that left the sector with massive overcapacity and intense price competition. Many producers have endured more than two years of losses, and guidance from major players suggests the downturn hasn’t fully cleared.
That’s why the silver move matters: manufacturers have limited room left to absorb higher input costs without raising selling prices — and price wars have made that difficult.
Prices start to move, led by China
In China, the world’s largest solar market, module prices were raised to above 0.8 yuan per watt this week to reflect higher silver costs, according to InfoLink Consulting — implying a typical 500-watt module around 400 yuan (about $57).
Those increases are modest in percentage terms, but they’re a signal that producers are trying to reintroduce pricing discipline — not because demand suddenly strengthened, but because costs forced the issue.
The pivot: copper substitution goes from “plan” to “priority”
Solar companies have long tried to reduce silver usage. Average silver intensity fell to 8.96 milligrams per watt in 2025, from 11.2 milligrams per watt in 2024, as manufacturers refined cell designs and cut paste consumption.
Now that effort is accelerating. Producers including Longi have flagged near-term plans to substitute base metals for silver, joining other large names already moving in that direction. Copper is the obvious candidate: cheaper, more abundant, and technologically viable — with tradeoffs.
The hidden risk: warranties don’t care about your input bill
The constraint isn’t engineering ambition — it’s liability.
Solar panels are typically sold with warranties of 20 years or more, and aggressive substitution increases the risk that manufacturers are scaling materials that haven’t been tested long enough in the field. If failure rates rise years later, warranty costs can become existential — especially for companies already bleeding cash.
That’s why substitution tends to happen gradually. The problem is that silver prices are no longer behaving gradually.
Demand implications: solar may start “self-rationing” silver
Even partial substitution, combined with expectations for slower installation growth, could meaningfully cool the solar sector’s silver appetite. Shanghai Metals Market expects solar to reduce silver use by about 17% this year, from annual demand of roughly 6,000 tons in 2025.
Solar has become a major pillar of the silver demand story — accounting for about 17% of total demand last year, according to the Silver Institute — roughly on par with jewelry. If that share starts to fall, it changes the medium-term demand mix, even if near-term prices remain dominated by investment flows.
