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Albert Sung is the author of Correlation Economics, monitoring breaking economic news on a day to day basis. He started investing in 2008 because of the economic crisis and holds a masters degree in chemical engineering. Previously, he worked several years as a process engineer at Ashland, a... More
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  • The Effect Of India Solar Plant Project On Silver Price 11 comments
    Feb 8, 2014 2:02 PM | about stocks: SLV

    We had some big news from India last week. India is about to build the largest solar plant in the world.

    Now what effect will this have on silver, because silver is the largest component of a solar panel.

    Let's talk about the numbers first. The project is said to produce energy at a rate of 4 gigawatt. The project is done in 7 years. After the first year of construction it will produce 1 gigawatt.

    Now, how much silver goes in a typical solar panel? Normally 2/3 ounce per solar panel or 20 grams of silver. A normal solar panel produces 80 watts at 15% efficiency if there is direct sun. So we have 2/3 ounces of silver per 80 watts of energy or 0.008333333 ounces/W.

    Let's convert that to gigawatt. Giga is 9 zeroes.

    If we use these numbers, then we would need 8333333 ounces of silver per gigawatt (if there is direct sun). Then over the course of the entire project we would need 4 gigawatt or 33 million ounces of silver in 7 years (if there is direct sun).

    Now we only have 6 hours of sun a day, so we need to multiply this number by 4 to have 24 hours. That gives 33 x 4 = 132 million ounces in 7 years or about 20 million ounces a year.

    Answer 20 million ounces of silver per annum. That is our silver demand from this India solar panel project.

    Now let's see what this means. Annual silver demand from photovoltaic cells is about 50 million ounces per annum. So a 20 million ounce increase per annum would have a significant effect on the chart below. But in the supply and demand picture in the overall silver market, this isn't very significant as silver supply from mines is about 800 million ounces per annum.

    (click to enlarge)

    Conclusion: Nothing special here, move along ...

    Stocks: SLV
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Comments (11)
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  • i believe the panels lose efficiency over time as well.
    might want to factor that into you calculations.

     

    coal is as close as we can get...and ever will get...to an "energy solution." we've just screwed it up and used it to produce electricity...something we really don't need all that much of actually.

     

    "it's not for lack of trying." new lightbulbs, hydro, hydro-thermal...humankind has come up with all sorts of solutions.
    the problem is as always "demand at any price."
    8 Feb, 04:25 PM Reply Like
  • With the extreme corruption in India, we will see if the solar plant gets built in the first place. And if it does, we will see if it collapses after a month because of the use of shoddy construction materials.
    8 Feb, 04:45 PM Reply Like
  • All these calculations but I fail to grasp how much silver they will use at the end of the day. I mean: 132 million ounces in 7 years or about 20 million ounces a year.
    So it means, that the content of all the panels that they will install, will be 132 million ounces. It is a fixed number at the end of the day:
    (4.0GW) = (number of panels installed) x (Oz in each panel)
    This would be 132 million ounces??? Can someone confirm this part of the calculation : how much silver goes in a typical solar panel? Normally 2/3 ounce per solar panel or 20 grams of silver.
    A normal solar panel produces 80 watts?
    Another assumption about the 6h of of light. I mean direct light ok, but here we speack about rajastan, so I will say @ least 8h non?
    11 Feb, 02:19 PM Reply Like
  • Author’s reply » The main goal is to show that it's insignificant to the price of silver.

     

    If it is 8 hours, then it's even less significant and if the efficiency is higher with thermo, efficient panels and all of that, then it's even less significant to the price of silver.
    11 Feb, 03:09 PM Reply Like
  • You can't be serious.

     

    4GW at 250W panels is 16 million panels. 2/3rds of an ounce per panel is 10.6M ounces.

     

    World PV installation for 2014 is forecast to be 42GW, which is 112M ounces. That's roughly 10% of total demand up from 7% in 2013
    16 Feb, 11:05 AM Reply Like
  • You can't be serious.

     

    4GW is 12million panels at 250W, 2/3rds of an ounce per panel is 10.6M ounces.

     

    More importantly is world PV installations estimated to be 42GW in 2014 to give 112M ounces, which is about 10% of total demand, up from about 7% of total demand in 2013
    16 Feb, 11:05 AM Reply Like
  • Author’s reply » If 2014 silver demand is 112M ounces, how come the graph I show is only 50M ounces in 2013? Does that mean silver demand for photovoltaic cells doubles from 2013 to 2014?
    16 Feb, 02:10 PM Reply Like
  • It's that little word forecast.

     

    If you take your 20M ounces for 1GW, multiply that by the 31GWp installed in 2012, where does that put you on your graph?
    16 Feb, 08:49 PM Reply Like
  • Author’s reply » Is there a 31 GW plant?

     

    If you are correct, that means the efficiency of solar panels for power generation is much higher than normal panels. Then this whole calculation is wrong.
    17 Feb, 02:45 AM Reply Like
  • 31GWp was the worldwide installation in 2012.

     

    Yes your whole calculation is wrong. I suspect mine is out by a bit (maybe 20-30%) as the amount of silver per panel has reduced, but that information is too hard to find, and some panels are thin film which use much less silver.

     

    A 250W solar panel produces 250W at 25 degrees C at 1000W/m2; instead of stating "the nominal power of the module is 1 kW", it is stated "the module has 1 kWp" (kilowatt-peak). The terms Watt-peak (Wp), kilowatts-peak and megawatt-peak are also used.

     

    So if you have a solar installation you simply divide by 250W to get the number of panels and then multiply by the silver per panel. I'm an engineer and i didn't even follow your calculation.

     

    The efficiency of the panel has little to do with the calculation. Over the years as efficiencies have gone up, from 150W per panel to 270W currently, but more typically 250, the amount of silver per watt has gone down, and we'd expect that to continue, also manufacturing techniques play a part in this too. Sunpower, the second biggest US manufacturer of panels claim to have reduced manufacturing costs by 20% per year for the last three years. You can bet that some of that has come through reduced silver usage.
    17 Feb, 05:49 AM Reply Like
  • Author’s reply » Thanks for the info!
    17 Feb, 07:15 AM Reply Like
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