Silver: The Overlooked Metal of the Energy Transition

When people talk about the raw materials behind the energy transition, lithium, cobalt and copper usually come up first. Silver rarely makes the list. Yet few industrial metals are as deeply embedded in decarbonization infrastructure. The Sprott Silver Report puts that blind spot front and center, laying out the numbers behind silver's shift from monetary metal to critical industrial input.

Photovoltaics as the Demand Driver

The report traces how sharply silver's demand structure has shifted over the past decade. Industrial applications accounted for 55% of total silver demand — a record 654 million ounces within a 1.2-billion-ounce market. Photovoltaics alone consumed about 142 million ounces in 2023, or 13.8% of global silver demand, up from just under 5% in 2014. 

Electric vehicles add a second structural driver. Battery electric vehicles use between 25 and 50 grams of silver, according to the report, versus 15 to 28 grams for conventional combustion vehicles — a gap that widens with every point of EV market share gained. The automotive sector as a whole already consumes roughly 80 million ounces of silver annually (2024).

A Supply Side That Isn't Keeping Pace

The more interesting part of this story isn't the demand side. That shift was foreseeable. It's the supply side, which structurally isn't keeping up. Global mine production has been essentially flat for roughly a decade and actually declined slightly in 2023; 2024 output is forecast at 823 million ounces, the lowest level since the pandemic-disrupted year of 2020. One key reason: only 28.3% of silver-producing mines are primary silver mines. The rest recover silver as a byproduct of lead, zinc, copper or gold mining, which means a rising silver price alone does little to mobilize new supply quickly. The production decision typically hinges on the primary metal.

As a result, the market has now posted a structural deficit for three consecutive years (up to 2024), according to Sprott. The report's own conclusion is blunt: "We believe the global energy transition will be highly positive for silver, leading to much higher prices for silver bullion and equities." That view comes from a firm that itself offers physical silver products, so it's worth weighing that framing separately from the underlying supply-demand data.

What This Means for the Market

Physical precious metals dealers have particular reason to watch this dynamic closely. A market that serves simultaneously as a hedge against monetary uncertainty and as a critical input for the energy transition has a different demand base than a purely monetary metal like gold. Whether the structural deficit actually translates into significantly higher prices, though, depends on a few open questions: how quickly recycling supply responds to higher prices; whether further reductions in silver loading per solar cell outpaces capacity growth; and how much the current overcapacity across the solar supply chain dampens near-term demand. Anyone tracking the silver market should keep these offsetting forces in view.

This article draws on research/reporting published by Sprott, written by Maria Smirnova, "Silver's Critical Role in the Clean Energy Transition", Sprott, May 29, 2024 URL: https://sprott.com/insights/silver-s-critical-role-in-the-clean-energy-transition/