The solar photovoltaic sector is projected to consume 120-125 million ounces of silver in 2026, a 14% increase year-on-year, driven by a record 665 GW of new solar installations globally. China accounts for over 50% of new solar capacity, followed by the United States, India, and the European Union.
Each solar cell requires 10-20 milligrams of silver per watt for front-side metallization contacts. With silver paste accounting for roughly 10% of the cell production cost, manufacturers have been reducing silver loading through multi-busbar designs and alternative metallization, but absolute consumption continues to rise as installation volumes grow.
The solar sector now accounts for 16% of total global silver demand, up from 8% in 2020. At a 16% compound annual growth rate, the Silver Institute projects solar demand could reach 500 Moz by 2030, representing over 30% of total demand, fundamentally reshaping the demand profile of the metal.
Electric vehicles add another 30 Moz of silver demand in 2026, with each vehicle containing 25-50 grams of silver in electrical contacts, connectors, and battery management systems. Combined, solar and EV demand accounts for nearly 25% of total silver offtake.
Mine supply growth, by contrast, is constrained at roughly 1-2% annually, with output from Mexico and Peru facing headwinds from declining ore grades, water scarcity, and regulatory challenges. The result is a deepening structural deficit that provides a fundamental price floor.
Silver's demand profile is shifting from investment-driven to industrial-driven. Solar and EV manufacturing procurement teams should consider fixed-price silver supply agreements rather than spot-indexed pricing, as the structural deficit will provide long-term price support above $60/oz.