How record silver and copper prices are impacting solar PV manufacturers

India has an ambitious target of generating 500 Gigawatt (GW) power from non-fossil fuels by 2030. That it is taking the target seriously is apparent from the 30% increase in allocation for renewable energy in the recently tabled Union Budget 2026-27 compared to FY26 revised estimates. But like most great stories, this one is also fraught with obstacles; this time, it’s the volatility in metal prices.

Some metals—notably silver, but also copper—are key inputs in photovoltaic (PV) cells, used to generate solar power. This is how it works: silver is converted into a paste and then loaded on a silicon wafer. When light strikes the silicon, it liberates electrons, and silver carries the generated electricity for immediate use or storage.

Alongside silver, metals such as copper and aluminium are used in wiring, busbars, connectors, and module frames. Utility scale solar manufacturing requires around three tonnes copper per MW capacity while onshore wind generation needs four tonnes per MW.

However, the sharp rise in silver and copper prices over the last few quarters are creating cost and supply headwinds for solar photovoltaic (PV) cell and module manufacturers. Silver has seen a record rally of 200% in the past 12 months. It has risen from around Rs 60,000 to nearly Rs 4,00,000 per kg. Copper has seen more than 45% jump in prices in the domestic market. The current raw material environment has reinforced the solar industry’s focus on operational efficiency, disciplined sourcing, and technology-led optimisation, rather than reactive pricing adjustments.

Demand Dynamics

Photovoltaics account for over 30% of global silver demand, making the sector sensitive to price movements in the white metal. Copper has wider use in solar module manufacturing and wind energy with solar accounting for 51% demand in FY25 compared to 30% in FY23, according to the International Copper Association India. Even though prices of both these metals have dropped this month, the mood of the industry is sombre.

“Silver paste typically represents 10-15% of photovoltaic cell manufacturing costs, and sustained increases can place pressure on margins and near-term project economics across the value chain,” Gagan Chanana, Joint MD & CEO of solar panel manufacturer Jakson Solar Modules and Cells, tells Business Today.

Solar is set to be the largest contributor to India’s 500GW non-fossil fuel energy target by 2030 with a total capacity of 300GW compared to 135 GW at present. Wind energy is set to double by 2030 from 54GW at present.

Union Budget 2026-27 boosted solar energy schemes with an allocation of Rs 30,539.36 crore—a 32% increase over FY26. A major highlight of the Budget is the continued expansion of the PM Surya Ghar: Muft Bijli Yojana with an allocation of Rs 22,000 crore for rooftop solar.

According to the World Silver Survey 2025, solar photovoltaics remain one of the largest and most structurally important sources of industrial silver demand, accounting for a substantial share of electrical and electronics consumption. Silver is pivotal in solar cell production due to its conductivity.

Experts say the demand for silver is set to rise in India with several industrial houses announcing big investments in solar photovoltaic cell manufacturing to reduce dependence on China. Reliance Industries is setting up a mammoth 10 GW annual solar manufacturing facility in Gujarat. Tata Power has commenced commercial production of 2GW solar cells at its facility in Tirunelveli, Tamil Nadu. Adani, Jackson, Waare Energies, GREW Solar, and Saatvik Greens are also expanding capacity. "In the short term, cost volatility increases working-capital needs and can slow procurement decisions for large projects, making it harder for manufacturers to commit to rapid capacity expansion. This added financial uncertainty can also impact smaller players more acutely, potentially leading to consolidation in the sector. In the medium term, TOPCon process improvements and lower-silver designs will help offset part of the pressure, stabilizing costs and enabling more predictable scaling," said Dr. Avishek Kumar, Founder, Sunkonnect.  

Metallic Challenge

Not just silver. Rising copper and aluminium prices are also bothering renewable energy sector players. Domestic copper demand grew 9.3% year-on-year in FY25.

With India targeting near doubling of the installed solar capacity, the focus will be on ramping up solar photovoltaic module manufacturing capacity, adding to rise in demand for these metals. India’s photovoltaic manufacturing capacity stands at 100 GW, but the country is still largely dependent on China for solar cells and modules.

Large amounts of copper is used in module manufacturing while solar cells use silver is large quantities. Vinay Thadani, Director & CEO of GREW Solar, another solar photovoltaic moule manufacturer, says silver is a critical input in solar photovoltaic cell metallisation, and its sharp price appreciation has added measurable pressure.

“From an industry perspective, the increase in silver prices alone can add Rs 4,00,000-5,00,000 per MW to solar photovoltaic manufacturing costs, depending on cell technology and silver intensity. While this tightens margins in the near term, manufacturers are increasingly offsetting a part of this impact through efficiency improvements and material optimisation rather than passing costs directly to customers,” Thadani tells BT.

To add wind to the fire, silver licensing by China from January 1, 2026, post the ban on export of critical minerals earlier, has further increased the price of the white metal. However, Kumar from Sunkonnect says the situation places significant pressure on financial planning and can affect quarterly earnings for solar manufacturers. "The industry is experiencing heightened scrutiny from stakeholders and investors, as companies navigate the challenge of protecting margins while maintaining market share. The coming quarters will be crucial in determining how quickly manufacturers can adapt their contract structures to pass through these cost increases and restore profitability," he said.  

Aditya Pyasi, Chief Executive Officer, Indian Wind Turbine Manufacturers Association (IWTMA), says India’s copper refining capability has weakened over the past decade, primarily after the 2018 closure of the 400,000 tonne per year Tuticorin smelter, which alone accounted for about 35-40% of national refined copper capacity and had previously helped make the country a net exporter of copper cathodes.

“Its high time we take decisive steps for self-reliance in raw materials,” he says.

Companies, meanwhile, have cut down on use of silver as they ramp up solar capacity to meet the growing domestic demand. Emmvee, a solar energy company, said during the Q3FY26 investor call that silver paste now accounts for a far smaller share of total cell costs than in previous years, following sustained reductions in consumption through process innovation and R&D.

“Silver consumption has already come down by more than 50-60% over the last three to four months, and we are targeting another 40% reduction going forward,” the management said, adding that silver paste currently costs about two cents per watt or roughly 13% of the cell price.

Technological advances such as silver-coated copper powders and zero-busbar designs are reducing the amount of silver required per solar cell but these efficiency gains are being offset by scale. Adoption of highly-efficient solar cells, such as Tunnel Oxide Passivated Contact and Heterojunction technologies, is also acting as a counter-force by increasing the demand for silver.

The Next Strategy

As metallic headwinds for the solar industry tighten margins in the near term, manufacturers are increasingly offsetting a part of this impact through efficiency improvements and material optimisation rather than passing costs directly to customers.

Prashant Mathur, CEO, Saatvik Green Energy Ltd, says they are mitigating the volatility through deeper vertical integration, tighter procurement controls, and technology optimisation.

India is also marching ahead on solar installations. Besides utility scale projects, the rooftop solar scheme is targeting four million households by March 2026, and 10 million by 2027, to make clean energy a part of everyday life while reducing the dependence on conventional power. The scheme links solar adoption to household savings and offers graded rooftop-solar subsidies and easy, collateral-free loans facilitated through a national digital portal.

Chanana of Jackson Solar says ongoing advances in cell design and metallisation techniques, including finer line printing, multi-busbar designs, and gradual adoption of alternative metallisation approaches, have demonstrated the potential to reduce silver usage by 20–40% over time as these technoloies are validated and scaled.

The world is moving towards cleaner energy sources and is hence scaling up solar power generation. Even as technology advancement is reducing silver usage, it is outweighed by the scale at which solar manufacturing is rising globally.

“Sustained elevation in metal prices does put pressure on the pace and economics of scaling up domestic manufacturing, particularly for new capacity additions. While cost-escalation clauses provide partial protection, pass-through is neither immediate nor complete, resulting in short-term margin compression,” says Mathur.

According to GREW Solar, its integrated manufacturing approach and scale-driven efficiencies allow them to absorb short-term fluctuations while maintaining high quality, performance reliability, and timely deliveries.

“These measures help us navigate commodity cycles responsibly while continuing to support customers and project developers with dependable solutions,” says Thadani.

Way Forward

The next chapter in India’s clean energy narrative begs another question: How will companies pivot to sustainable production methods to mitigate the risks of fluctuating commodity cycles?

Built-in cost escalation clauses are expected to shield them. Solar industry players remain hopeful and say the high prices are only a short-term challenge. Instead, they are accelerating innovation, material efficiency, and process optimisation.

Manufacturers are increasingly focused on reducing dependency on expensive inputs through technology improvements, alternative designs, and enhanced recycling initiatives. At the same time, strong domestic demand, supportive policy frameworks, and long-term competitiveness of solar energy continue to underpin capacity expansion plans.

Some industry players with integrated operations say these cycles act as catalysts for building resilient, future-ready manufacturing ecosystems. “We remain confident that as supply chains stabilise and efficiencies deepen, the industry will continue to scale up sustainably while maintaining stable pricing and strong growth fundamentals,” says Thadani.

Analysts, however, believe renewable players should be able to offset the rise in metal prices owing to the cost escalation clause. There is some headroom as far as margins are concerned, they say.

Copper prices have also shown variability, reinforcing the importance of diversified sourcing and prudent procurement strategies. In response, manufacturers are increasingly focusing on supplier diversification, longer-term procurement arrangements, and greater process flexibility to manage material cost exposure.

“For India, as solar manufacturing capacity continues to expand, the emphasis must remain on long-term resilience rather than short-term cost absorption. Continued investment in technology, supply-chain partnerships, and selective upstream integration will be important to manage commodity volatility and strengthening competitiveness in the global solar manufacturing ecosystem,” says Jackson’s Chanana.

Clean energy led by solar remains firmly at the centre of India’s growth and energy transition strategy, which means high demand for key metals despite technology advancements. Companies have already factored in these requirements and are on track to absorb the metal rally risk.

@richajourno