Premier eFinance: Surging silver price hampers solar industry in fight against fossil fuels.

Silver’s soaring price is impeding the solar industry’s ability to compete with cheaper fossil fuels.
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June 23, 2011 - PRLog -- Solar panel producers consume around 11% of the world’s supply of silver, the material in solar cells that conducts electricity. The metal’s price has seen a 74% increase to $35.30 a troy ounce on average so far this year from $20.24 last year, Premier eFinance data shows.

Prices for solar cells have fallen around 27% this year and would be even lower if each panel didn’t require about 20 grams of silver, according to recent media reports. This is delaying the date when companies such as Solarworld AG and LDK Solar Co. can deliver solar power at prices which can rival those from traditional energy sources.

“Global silver prices have gone up a lot, and solar cells use silver paste as the front-side contact material,” Shawn Qu, chief executive of Canadian Solar Inc. informed Premier eFinance. “The increase of the silver costs will give us a challenge in efforts to reduce solar cell costs.”

“Some companies are implementing measures to reduce silver consumption, but we believe rising silver prices could still act as a headwind,” Barclays Capital said in a recent note to clients.

The price of the silver paste that Canadian Solar uses to print circuits on the front of its solar cells more than tripled in the past year, according to Qu. That adds around $0.03 to $0.04 4 a watt, or 2%, to the cost of the panels.
The firm’s gross margins narrowed to around 15% in the first quarter from 17% in the prior quarter as the price of cells dropped quicker than the cost of production, the company based in Suzhou New District, China, said in a May report.

According to research by Barclays Capital, available to Premier eFinance, strengthening silver price is pressuring margins for most solar companies. Silver prices reached a record high of $48.44/oz on April 28, and if it returns to that level it will account for 13% to 15% of the cost of producing each panel, the report said.

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