In the past year, solar energy significantly boosted its contribution to the U.S. electricity grid, effectively addressing a large part of the increased demand. This surge highlights solar's growing importance in the nation's power infrastructure. However, this promising trajectory faces a looming challenge: the recent escalation in silver prices. Silver is an indispensable material in solar panel production, and its rising cost could impede the swift expansion of solar technology, potentially affecting the industry's future growth and affordability.
A recent analysis from Ember, a global energy think tank, revealed that solar power was responsible for most of the growth in U.S. electricity demand last year. The country's electricity demand saw a 3.1% increase, totaling 135 terawatt-hours (TWh) in 2025, marking one of the largest rises in a decade. Concurrently, solar generation surged by 27% from 2024, adding 83 TWh. This substantial increase meant that solar energy fulfilled 61% of all new electricity demand, outperforming other energy sources.
Dave Jones, Ember's chief analyst, emphasized solar's crucial role in meeting the nation's escalating electricity needs. He highlighted that solar power is being generated precisely where it's required, and with advancements in battery storage, it's increasingly available when needed, effectively extending its utility beyond direct sunlight hours.
Geographically, the Southern United States emerged as a key driver of this trend. Texas, in particular, demonstrated the largest absolute growth in solar output, thanks to both robust demand and the rapid establishment of large-scale solar projects. Both Texas and the Midwest saw solar energy cover 81% of their electricity demand growth, while the Mid-Atlantic region met about a third of its increased demand through solar. Notable installations in 2025 included the 153-megawatt Felina Project in El Paso, Texas, the 150-MW Ratts 1 Solar Project in Indiana, and the 145-MW Axial Basin Solar Project in Colorado. Favorable conditions such as high solar irradiance, streamlined permitting, and ample land contributed to the profitability of these locations.
The timing of solar generation also proved advantageous. Ember's findings indicate that the rise in solar output fully satisfied the increase in U.S. electricity demand during daytime hours, specifically from 10 a.m. to 6 p.m. Eastern. The rapid expansion of battery storage systems further enabled solar power to meet a portion of evening demand by storing excess energy generated during peak sunlight hours for later use.
Looking ahead, the U.S. Energy Information Administration (EIA) projects continued growth in electricity generation over the next two years, with solar expected to remain the fastest-expanding source. Utility-scale solar generation is anticipated to rise from approximately 290 billion kilowatt-hours in 2025 to 424 billion kilowatt-hours by 2027, driven by nearly 70 gigawatts of new capacity. Texas, particularly within the ERCOT market, is expected to nearly double its solar generation during this period.
Despite this optimistic outlook, a significant challenge arises from the escalating price of silver, a critical component in solar panels. Recent months have witnessed a sharp increase in spot silver prices, reaching an unprecedented high of $99.36 today. This surge threatens the pace of solar expansion, as it directly impacts manufacturing costs.
Yali Jiang, an analyst at BloombergNEF, noted that these rising commodity prices are exerting immense cost pressures on solar manufacturers. She warned that increased silver costs would likely lead to higher module prices, reversing a trend of declining costs that the sector has enjoyed for years. The cost of silver in solar cells has dramatically increased, now accounting for over 29% of a panel's total cost, up from 3.4% in 2023 and about 14% in 2025.
Manufacturers have diligently worked to minimize silver usage, reducing the average from approximately 11 milligrams per watt in 2024 to about 9 milligrams per watt in 2025. However, aggressively substituting silver carries both technical and financial risks. Gregor Gregersen, founder of Silver Bullion Group, explained that manufacturers must consider long-term warranties; a panel failure after ten years with a twenty-year warranty could result in substantial liabilities. This underscores why the reduction in silver usage has been a gradual rather than an abrupt process.
In summary, while solar energy is a burgeoning force in the American power landscape, its continued rapid expansion hinges on managing the economic pressures introduced by volatile commodity markets. The industry must navigate the delicate balance between cost-efficiency, technological innovation, and sustainable growth to maintain its competitive edge and meet future energy demands.