Solar energy, promised as the cheapest and most abundant source of electricity in history, has hit a geological and financial roadblock of critical proportions. The photovoltaic industry is suffering what the Financial Times has baptized like a Silver Squeeze (silver strangulation), a suffocating pressure derived from the dizzying rise in the price of this metal. Manufacturers, who have been fighting for years against slim margins, are now “feeling the heat” of a raw material that has become unaffordable, forcing them into a frenetic technological race to eliminate it from their products.
This is not a simple market rally. What we are witnessing is a “perfect storm” where real physical scarcity threatens to slow down the energy transition. According to Bloombergthe rise in silver has hit some solar panel manufacturers that were already burdened by losses after years of brutal competition. After five consecutive years of deficit, silver is no longer just a safe haven asset to become the bottleneck of the green economy.
The figures are dizzying. According to the Financial Timesthe price of silver has risen 300% in the last year, breaking the psychological barrier of $100 and currently standing at $112 per ounce. This increase is fueled by three fires: geopolitical fear of possible US military intervention, the voracity of the industry and the massive entry of retail investors, for whom silver is “the poor man’s gold.” This speculative appetite has skyrocketed prices by 60% since the beginning of 2026 alone.
The magnitude of the increase in prices is such that from investment portals such as Investing News have reported record prices of $93.77 in mid-January, but market reality has exceeded forecasts in just weeks. But there are geopolitical actors pulling the strings behind this scenario. China, the largest global refiner, has imposed strict controls to export by 2026-2027, shielding its strategic resources for its own renewable energy and Artificial Intelligence industry. Added to this is that India and Russia are aggressively buying physical silver, draining inventories in London and Asia and causing real shortages in Western markets.
Financial drain and existential threat
The impact on the cost structure of a solar panel has been devastating. According to data from BloombergNEFsilver has gone from representing 3.4% of the cost of a module in 2023, to 14% last year, to an unsustainable 29% today. Silver has dethroned polysilicon and become the most expensive component in manufacturing.
For the giants of the sector, this is raining in the wet. Titans like JinkoSolar, Longi and Trina Solar They are posting quarterly losses consecutive in the midst of a “vicious price war.” Factories operate at just 50% of their capacity and, in many cases, sell modules below production cost. Jenny Chase analyst cited by Financial Timessummarizes the situation without hot towels: “It is very painful for solar module manufacturers, who are already having a terrible time and are expected to report losses by 2025.”
The problem is that companies have their hands tied in passing on these costs. As explained in PV Magazinedue to excess capacity and weak demand, it is “almost impossible” to pass on the entire increase in the price of silver to the end customer. Although Chinese manufacturers have recently tried to raise prices between 1.4% and 3.8%, these increases are minuscule compared to the 180% or 300% increase in raw material prices. The long-term consequence is what experts call “demand destruction.” If prices remain at these levels, silver use in the PV industry could fall by 20% this year, not only due to efficiency, but because the industry simply cannot afford it.
The great substitution
Faced with financial asphyxiation, the industry has accelerated what they call “thrifting”, a race against time to replace silver with cheaper metals. The favorite candidate is copper. According to Investing Newscopper is trading 22,000% cheaper than silver and is much more abundant, making it the great hope for saving profit margins.
Faced with suffocation, the industry has accelerated the thrifting (material savings) to replace silver with copper, which is 22,000% cheaper. The large Chinese manufacturers already they have made a move. Longi Green Energy will begin mass production of cells using base metals (such as copper and aluminum) in the second quarter of this year. Trina Solar is developing copper contacts to reduce its dependence, and Aiko Solar has already begun producing completely silver-free cells. The Chinese industry, which is more intensive in the use of silver than the European one, lead this forced transition.
However, the change is not easy. As they warn in PV Magazine warns that not all solar technologies are equally suited: while heterojunction (HJT) and back contact (BC) cells facilitate the use of copper, the current dominant technology (TOPCon) requires high temperature processes that make copper vulnerable to oxidation.
Here lies the greatest risk of this flight forward. Copper oxidizes and degrades faster than silver. Bloomberg alert about danger of launching copper panels on the market without sufficient longevity tests. Customers demand 20-year warranties; If new panels fail within 10 years due to copper corrosion, manufacturers could face massive liabilities that would put them out of business. As one precious metals expert points out: “Going too far too fast can be risky.”
A future of scarcity and recycling
The pressure on silver doesn’t just come from the sun. At this point we introduce in the equation Artificial Intelligence. The data centers necessary for AI consume enormous amounts of energy, which triggers demand for solar installations and, therefore, money. It is a vicious circle where technology devours physical resources. Furthermore, the electric vehicle (EV) enters like another big predator: An electric car consumes up to 50 grams of silver, almost twice as much as a combustion car. It is estimated that demand from the automotive sector could triple by 2030.
In this context of shortages, some companies are taking desperate measures. He Financial Times reveals that Samsung Construction and Trading has skipped the middlemen and signed a two-year direct agreement with a mining company to secure its supply. Meanwhile, mining companies like Sierra Madre Gold & Silver They try to reactivate old deposits in Mexico, but starting up new production is slow and expensive.
A glimmer of hope lies in recycling. Italian researchers have developed a technology capable of recovering 99% of the silver from discarded solar panels through an electrochemical process. Given that open pit mining has a high environmental and social impact, and that raw materials are increasingly scarce, “urban mining” of old panels is emerging as an absolute necessity.
In short, the solar industry is at a historic crossroads. The sector is expected to reduce its silver consumption by 17% this year due to forced substitution and the drop in demand for facilities, according to data collected by Bloomberg. But the underlying question remains: will this affect the quality and durability of renewable energy?
Beyond corporate balance sheets, in a world moving towards total electrification, silver has become a geological bottleneck without perfect direct substitutes and without global strategic reserves. The question is no longer how much the price will rise, but whether there will be enough physical material to build the green future that has been promised. So if Chinese manufacturers they manage to master panel technology “without money” and consolidate their monopoly, they could exert political pressure on the West similar to that of OPEC. Energy dependency could simply be changing hands, shifting from oil to critical metals and photovoltaic technology.
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