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(Kitco News)-Although the growth in solar demand is expected to support silver prices, a research company said that the three basic metals will also benefit from the global green energy transition.
In a report released earlier this week, commodity analysts at Wood Mackenzie stated that they expect increased demand for solar energy to push up the prices of copper, aluminum and zinc.
"Base metals are an integral part of the solar power system. A typical solar panel installation requires aluminum as the front frame and a combination of aluminum and galvanized steel (zinc) as structural components. Copper is used for high and low voltage transmission cables and thermal solar collectors. ," said Kamil Wlazly, a senior analyst and author of the report.
As costs drop and efficiency increases, WoodMac expects that the share of solar power in electricity supply will rise and begin to replace other forms of power generation.
In the growing solar market, aluminum and zinc may be the biggest beneficiaries. WoodMac predicts that the industry's demand for these base metals will at least double in the next 20 years.
Wlazly pointed out that the demand for aluminum from solar technology in 2020 is currently about 2.4 million tons; however, in the company's basic scenario, the demand may increase to 4.6 million tons by 2040. In a more optimistic scenario, consumption growth will be between 85,000 and 10 million tons by 2040, analysts said.
"From this perspective, the demand for the solar industry will increase from less than 3% of total aluminum consumption in 2020 to 12.6% in 2040," Wlazly said.
In terms of zinc, the solar energy industry consumes approximately 400,000 tons. Under basic circumstances, WoodMac predicts that consumption will grow to 800,000 tons in the next 20 years. Under their bullish conditions, by 2040, zinc demand may increase by 1.7 million tons to 2.1 million tons, respectively.
"It is estimated that the service life of large solar power plants is at least 30 years, and only zinc coating can provide low-cost corrosion protection for such a long time," Wlazly said.
Copper is also expected to play a greater role in the solar field because it is still the metal of choice for upgrading the power grid. WoodMac predicts that copper demand will increase from 400,000 tons to 700,000 tons by 2040. Under their bullish conditions, demand may increase to around 1.3 million tons and 1.6 million tons, respectively.
Wlazly warned that copper is more precarious than the other two metals. He said that higher copper prices may lead to substitution in the energy market.
"Given the rising copper price, aluminum may also penetrate into wire and cable applications where copper is currently the preferred metal of choice," he said.
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