Surging silver prices have cut demand from the solar power sector by a third this year from 2011's record highs, and the decline will continue next year as the industry that uses nearly 5 percent of global silver supplies scrambles to cut costs.

Silver paste is a key component in the photovoltaic panels that dot the roof tops of houses and buildings to trap the sun rays for electricity generation.

A nine percent increase in silver prices this year, on top of a tripling in prices since end-2008, has forced many panel manufacturers to reduce the amount of metal they use, even though sales of panels are rising.