Longi Green Energy Technology Co. is preparing a major shift in how it makes solar cells, moving away from heavy reliance on silver and toward lower-cost base metals as the industry grapples with rising material prices and shrinking margins, according to Bloomberg.

The company said it will begin large-scale production using base metals in the second quarter, a step it expects will “further lower the costs of solar modules,” according to a regulatory filing on Monday.

The decision comes as solar manufacturers — the largest industrial users of silver — face intense competition and oversupply, making the recent surge in silver prices especially painful.

Investor demand tied to geopolitical uncertainty and US interest-rate cuts has driven prices sharply higher, turning silver into the most expensive component of solar cell production.

Bloomberg notes that silver prices almost tripled last year and climbed above $84 an ounce in late May. At October’s roughly $50-per-ounce level, the metal made up more than 17% of the cost of solar modules, compared with just 3% in 2023, data from BloombergNEF show.

Longi is not alone.

Jinko Solar Co. expects to roll out base-metal panels at scale this year, while Shanghai Aiko Solar Energy Co. has already launched commercial production of silver-free cells with 6.5 gigawatts of initial capacity.

Longi’s use of back-contact solar cells gives it more flexibility to replace silver than producers using the dominant TOPCon technology, though the company has said the transition still brings challenges.

BloombergNEF notes that copper and other alternatives raise assembly costs and create reliability concerns, particularly for TOPCon cells, whose manufacturing process makes substitution difficult.

Even with those hurdles, demand for silver from the solar industry is forecast to drop 7% next year, even as global solar installations climb about 15%, according to BNEF.