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* Demand set to peak at 83 mln oz in 2016 -GFMS
* 500,000 solar panels a day installed last year -IEA
* GRAPHIC-Industrial silver demand 2016 reut.rs/2gYWOVv
* GRAPHIC-Solar demand for silver reut.rs/2gZ1MkX
By Jan Harvey
LONDON, Dec 9 (Reuters) - Scorching demand for silver used in solar cells is set to peak this year as technology advances slash the amount of metal required.
Solar power accounts for around 8 percent of overall silver consumption and has been a rare bright spot this year as falls in jewellery demand, industrial use and physical investment feed into a 9 percent fall in demand.
Silver demand for photovoltaic cells is expected to hit a record 83.3 million ounces in 2016, GFMS analysts at Thomson Reuters said, up from just 1 million ounces in 2002.
The sector has seen huge growth in recent years, with half a million solar panels a day installed last year.
Solar and wind energy generated globally are expected to double by 2020, according to the International Energy Agency (IEA).
Falling costs are helping spur growth in solar energy. Between 2010 and 2015, costs for new utility-scale solar photovoltaics fell by two-thirds, according to the IEA.
"We do expect photovoltaic installations to see stable growth in the coming years -- about 3-5 percent per annum -- but this does not necessarily cascade to silver demand growth," GFMS analyst Ling Wong said.
"We expect silver demand use in the photovoltaic sector to fall by 4.5 percent annually."
Photovoltaic demand for silver took off in 2011, but a jump in prices to nearly $50 an ounce that year encouraged the industry to move away from thick-film technology to thin-film systems that use less silver.
A typical photovoltaic cell generating up to 4 watts used 0.17 grams of silver in 2014, down from 0.3 grams in 2010.
"They're adding more busbars (metallic strips that conduct electricity) to the cell, which adds more lines but decreases the amount of silver per cell," said John Smirnow, secretary-general of the Global Solar Council.
"You're also seeing some investment in replacing silver with copper," he said.
German solar panel maker SolarWorld AG said it had been reducing silver use in its solar cells for years and would continue to do so.
"Less silver consumption reduces dependence on availability and price developments in the silver spot market," SolarWorld Vice-president Milan Nitzschke said.
Spot prices have risen by nearly a quarter this year.
Editing by Jason Neely