Solar Panels Creating Silver Bulls!!

The Fukushima disaster in Japan led the authorities to think of alternative ways to reduce dependence on nuclear power which meets about 30% of Japans power requirements. In June 12 Japans Industry Minister Yukio Edano set a premium price for solar electricity thats about triple what industrial users now pay for conventional power. This premium is expected to push Japanese utility companies to solar power. Photovoltaic technology (PV) is used for generating solar power and a typical solar panel uses about 20 grams of silver. It may be interesting to note that relatively speaking a laptop uses about 750mg and a cell phone about 250mg of silver. It is estimated that silver used in solar panels has arisen @50% per annum since 2000. The demand was 60 million ounces in 2011 increasing from about 1 million ounce in 2002 (one ounce = 28 grams) constituting about 11% of the total industrial demand (excluding jewelry). Germany is the largest user of solar panels accounting for 27% of the installations. But there have been subsidy cuts which has reduced the solar panel capacity to 7.5 gigawatts but made up by increased usage by China, Italy, France UK, Japan & US. Global analysts had predicted a fall in silver demand for solar panels in 2012 due to this and predicted n oversupply due to excess production in China. However the Japanese announcement seems to have changed the landscape as it means a great thrust for the solar panel industry as the utility companies will pay 42 yen (53 cents) a kilowatt-hour for 20 years to solar power producers, almost twice the rate in Germany. This many in the know of things say is very attractive. Germany plans to offer 0.14 to 0.19, or 17 to 24.6 cents, per kilowatt-hour, depending on size. Italys rate is 0.13 to 0.24. According to Bloomberg New Energy Forecast this may provide at least USD 9.6bn in fresh installation equivalent of 3.2 gigawatts of capacity which is equal to output of three atomic reactors. Only China will exceed Japan in terms of solar capacity growth as it supplants Italy and Germany, which held the top two positions in 2010 and 2011, according to them. According to experts Japan could see 28 gigawatts of solar capacity installed by 2020 and 50 gigawatts by 2030. At the moment there are two main solar panel technologies on the market. The traditional one is "thick film," where silver is the main component. The other one is a less-expensive "thin-film" method which replaces silver with another material, cadmium telluride. The development of thin-film solar panels has picked up due to its lower price, but the technology is less effective. Thick film is more efficient in gathering energy from the sun, and this type of panel still prevails on the market. It is reported that it accounted for roughly 91% of total installations last year, and analysts expect thick-film panels to maintain their dominance for at least the next several years. Further, both panel types use silver outside of the cell for reflectivity and other functions, so the odds of silver being eliminated from solar panels entirely are very low at this time say the experts in the field. The thrust in for greener energy is worldwide and many countries have announced plans for solar power reports say 102 countries have announced programs as against 18 two years ago. However investors should take note that much of the investments in the solar power has happened due to government subsidies in most countries and is therefore subject to change in government priorities and fiscal condition. However silvers industry usage with new technologies has acquired multiple dimensions. Some of the uses as per the above referred experts are:

Solid-state lighting (SSL), which uses semiconductors to produce light with either light-emitting diodes (LED) or organic light-emitting diodes (OLED), rather than the more traditional electrical filaments. SSL is used in traffic lights and some car headlamps. Radio frequency identification (RFID) uses printed silver ink made from silver nitrate. RFID chips have become so ubiquitous; it's hard to find any new product that doesn't have at least one even if that's only in the security tag affixed to the package. Super-capacitors and superconductors, auto-catalysts and new types of more effective batteries. Medical applications like aseptic coverings for surgery, traumatic wounds, antibacterial bandages and fabrics, dental amalgam, and silver salts that help prevent infections in newborns. It's also used as a cure for dermatological problems and certain types of cancer. Water purification systems, washing machines, air conditioners, and refrigeration. NASA used silver to sterilize recycled water aboard the space shuttle. Food packaging and preservation. Manufacturers of commercial ice machines are using silverembedded hoses, clamps, pipe fittings, and other places where gunk can build up and harbor bacteria. Meat processors use silver-embedded tables, grinders, tools, and hooks. Silver is used to keep fruit, vegetables, and cut flowers fresh while in transit. Public hygiene, such as antimicrobial protection of telephone receivers, door handles, bed rails, toilet seats, counter tops, children's toys, socks, underwear, bed linen, towels, etc. Other wide-ranging consumer products used every day: makeup, antibacterial soaps and kitchenware, hand and air sanitizers, and facial creams and masks.

The growing applications of silver in industrial fabrication appear to be bringing in a structural shift in its demand.

For investors, this means silver as an investment in the long term should pay-off well. However it should be noted it will be associated with cyclical vulnerabilities.