At a single glance, this year’s 40 per cent jump in the price of silver looks like the work of speculators seeking a safe haven against uncertainty in financial markets.
For example, a recent report for the Silver Institute by Thomson Reuters noted that a multi-year low in silver prices in 2015 triggered a rush of buying, followed by unprecedented supply shortages that prompted rationing by mints including the Royal Canadian Mint.
Behind the speculation, however, there’s an emerging systemic issue that has implications for industrial applications such as solar photovoltaic (PV) cell production.
Global silver production slowed to two per cent last year, according to Thomson Reuters which advises that mine supply of silver peaked in 2015 and “will trend lower in the foreseeable future.” It also stated that “declining total supply is expected to be a key driver of annual deficits in the silver market going forward.”
Needless to say, silver price and supply challenges pose significant problems as the world looks for energy technology opportunities to offset the impacts of climate change. Silver is a primary ingredient in production of most photovoltaic cells used to create solar electricity.
Silver demand for solar applications jumped about 23 percent in 2015 — the largest jump year over year of any industrial silver application. By 2050, PV is expected to be the world’s single-largest generation source, representing 27 per cent of global power capacity.
Rising silver prices could hobble that expansion. It’s a situation that already has some companies looking at alternative materials and methods for the manufacturing of solar cells. One, for example, has developed an aluminum foil cell and is seeking a partner to participate in the manufacture of a product that would generate electricity without the market risk attached to PV.
According to the Canadian Solar Industry Association (CanSIA), solar photovoltaic (PV) electricity is the world’s fastest growing energy generation source and now, thanks to a historic agreement at a North American Leaders’ Summit in June 2016, PV has an unprecedented opportunity to set the pace for other green power sources.
On June 29, Canadian Prime Minister Justin Trudeau, United States President Barack Obama and Mexico President Enrique Peña Nieto announced a historic commitment to work towards 50 per cent green energy generation by 2025. The trio announced their intentions to scale up green power through “aggressive domestic initiatives and policies.” That includes working on integrating higher volumes of renewable power onto the North American electricity grid.
Already, the push for green power is under way. In the US, the size of PV installations grew 20 per cent in 2015 compared to the previous year—and the sector is creating jobs at 12 times overall pace of employment growth in the US. The International Renewable Energy Agency reports a similar story in China, India, Japan and Bangladesh — all have more direct and indirect jobs in solar PV generation compared to any other green energy sector.
The United States commissioned 1,665 megawatts of PV electricity production in the first quarter of 2016 and now possesses enough solar generating capacity to power 5.76 million homes.
There is momentum in Canada as well, with Ontario representing one of the world’s top 20 jurisdictions for solar generating capacity.
One of the challenges for the solar industry is that although the cost of its technology has been falling rapidly, it is still more expensive than other green or fossil fuel-powered sources.
That challenge is creating room for high tech companies such as Natcore Technology Inc. (TSX.V: NXT) (OTCQB: NTCXF), which has developed a technology that slashes the cost of solar cells by replacing silver with inexpensive aluminum in order to make solar electricity generation more competitive with conventional power sources.
According to Natcore President and CEO Chuck Provini, silver has been the metal of choice for electrical contact to solar cells, largely because of its high conductivity.
Silver accounts for about half the cost of metallization in a solar cell, or 11 per cent of total raw material costs. Aluminum, by contrast, is about 99 per cent cheaper than silver.
The company’s scientists use proprietary laser technology that enables them to substitute aluminum for silver to make a laminated aluminum foil PV cell. In scientific terms, their Natcore Foil Cell™ is the first laser-processed, all-low-temperature solar cell using an aluminum foil laminate to realize an all-back-contact system. In doing so, they’ve replaced high-cost silver with low-cost aluminum to create solar cells that are simpler and less expensive than conventional solar cells.
“The key driver of solar electricity is cost,” explained physicist Dr. David Carlson, a member of the Natcore science advisory board. “The technology has been dropping in price for the last few decades and it’s now becoming cost competitive with fossil fuels in many areas of the world. But it still needs to be driven down further to be widely used.”
“A lot of the costs of materials, such as silicon, have been driven down. Silver is still one of the major components and that is what Natcore is getting rid of. We would be using an entirely new manufacturing process, replacing silver with aluminum and simplifying the manufacturing process.”
Natcore’s Director of Research and Technology, Dr. David Levy, said “Some of the more standard cell structures are reaching their maximum potential so we are working on a technology that accesses higher efficiency at lower costs. People are starting to be very interested in high efficiency cells.”
“Our technology is not an incremental change to the current manufacturing environment. We can make a more efficient cell, keeping the costs about the same as they are now with traditional cells. The next step for Natcore is finding a manufacturing partner to investigate large-scale manufacturing opportunities,” Levy added.
“What Natcore brings to the equation is the technology, the intellectual property.
We have a small research team developing this technology. We are looking for a partner capable of bringing our technology to a worldwide stage.” Natcore’s Research and Development Center is located at Eastman Business Park in Rochester NY.
Provini said Natcore gets inquiries “from a lot of different countries and companies who want to get into the solar business, want to build solar farms and so on. About 80% of these inquiries come from outside the United States, outside North America. They’re from the Middle East, from Eastern Europe and Western Europe.”
“Energy is so inexpensive here in the United States that, until now, it hasn’t sparked the same intensity of interest.”
Provini said Natcore has talked with large-scale aluminum producers but also has an interest in discussing project opportunities with smaller companies that are themselves buyers of aluminum foil, but who use it to make their own value-added products.
“If we joint venture with a solar cell manufacturer, we’ve got one partner. If we joint venture with an aluminum foil manufacturer or a company that converts it into other products, then we can retain our ability to sell to the whole universe of solar cell manufacturers.”
CanSIA echoes the importance of pursuing cost savings in PV manufacture, saying one of the industry’s priorities is being a competitive green energy source without direct subsidies.
So-called ‘soft’ costs associated with regulations, taxes and permitting for a solar power installation account for 52%% of the cost of a commercial-scale solar electricity generation facility — and those costs are proving tough to pare down.
By contrast, solar electricity ‘hardware’ is falling drastically according to the International Energy Agency — about 75 per cent lower since 2010 — and has ample room to fall further as refinements to generating technology and economies of scale are brought to bear. Solar PV, the IEA concludes, is “no longer a costly outlier.”
“Green power is more than just a government priority,” Provini said. “It’s also a priority for big-spending high tech giants with a social conscience such as Facebook, Google and Apple.” He pointed to a 2015 announcement by Facebook that its new $1 billion data centre in Fort Worth, Texas, will be entirely powered by green energy — it’s buying power from a nearby 200-megawatt wind farm.
“It’s abundantly clear that the future belongs to green energy technology, and we’re confident that Natcore can make a significant contribution in the not-too-distant future,” Provini said.