Increased demand for solar power is forecast to put significant upward pressure on silver prices in the years to come.

CNBC recently reported on the strong potential in the solar industry as governments continue a concerted drive to reduce global carbon dioxide emissions:

While the solar industry just accounts for just 6% of overall physical silver demand now, global solar capacity is growing at an average rate of 53% a year in the last decade, underscoring future growth potential, said London-based Capital Economics’s Simona Gambarini in a note Tuesday. About 2.8 million ounces of silver are needed to generate one gigawatt of electrical capacity from solar energy.”

Last week’s Interim Silver Market Review by Thomson Reuters supports this analysis. According to the report, silver demand by the photovoltaics industry will experience a projected 17% increase in 2015, falling just short of the record 75.8 million ounces in 2011. Solar will make up 13% of the industrial demand for silver in 2015, up from 11% last year and a meager 1% a mere decade ago.

According to MSNBC, there is still “considerable scope for more investment in emerging economies, particularly in China where the government is trying to cut down on pollution to quell social discontent.”

Gambarini said China will likely account for half of the growth in solar panel production over the next few years. The Chinese reportedly plan to increase their installed solar capacity more than five-fold by 2020.

Silver is the best metallic conductor of heat and electricity. Researchers have launched efforts to find an alternative for silver in solar panels, but Gambarini said these are in the early stages, and it will likely be years before it has any material effect on solar panel production.

The growth in demand for silver in the energy sector comes during a period of flagging supply. Analysts expect the total silver supply to decline by 1,014.4 million ounces in 2014. That represents a 3% decrease from 2014. Mine production remains flat, with an expected production increase of only 0.3% over last year’s.