This data-file is a very simple demand outlook for silver amidst the energy transition, including the potential for substitution. (A more complex model could be built, but would likely run the risk of compounding uncertainty upon uncertainty, as the market is relatively opaque, prone to data revisions and the future is uncertain).
Today’s silver market is 30kTpa, of which two-thirds is used in industry, and one-third is used in jewellery, silver and stores of financial/investment value. 12kTpa is used in electrical equipment and electronics, of which 3.5kTpa is in the solar industry.
Hence our base case forecast without any substitution would see silver demand rising 2.5x to 85kTpa in 2050, including a 10x aspirational increase in annual additions of solar modules and a 20%/decade increase in electrification.
In practice, however, we think silver will rise to a point where it becomes economical to displace the silver contacts in solar cells with copper contacts, which have 99% lower metals costs, but 3-7x higher manufacturing costs, compared to the easy screen-printing methods used in today’s silver front contacts.
The result may be a sharp spike to >$50/Oz silver prices by mid-late in the 2020s, followed by a switch in solar manufacturing, helping to moderate or even reverse price rises.