First Solar Inks Tax Credit Agreements, Aims for US Manufacturing Expansion

By Editor


First Solar has announced its two Tax Credit Transfer Agreements (TCTAs) on December 22, 2023, to vend $500 million and potentially up to $200 million of 2023 Inflation Reduction Act (IRA) Advanced Manufacturing Production tax credits to Fiserv, subject to specific conditions.

The agreements stipulate that Fiserv will pay First Solar $0.96 per $1 of tax credits during the first half of 2024, inclusive of fees and commissions paid to the placement agent.

Citigroup Global Markets assumes the role of placement agent for First Solar in this transaction, believed to mark the first substantial credit transfer within the solar manufacturing domain. These agreements materialized a mere eight days after the US Department of Treasury and Internal Revenue Service issued a notice of proposed rulemaking to implement Section 45X credits.

“This is the IRA delivering on its intent, which is to incentivize high-value domestic manufacturing by providing manufacturers with the liquidity they need to reinvest in growth and innovation,” Mark Widmar, First Solar’s CEO, said, in a news statement.

“The liquidity generated through this transaction is poised to expedite the enhancement of our US cash position by monetizing the Section 45X credits. This move further bolsters our balance sheet, facilitating continued investments in critical growth areas like research and development,” Alex Bradley, Chief Financial Officer at First Solar, said.

He indicated an estimated impact on the 2023 financial year of up to $28 million pre- and post-tax, translating to a potential reduction of up to $0.26 per diluted share for the year.

The tax credits stem from the sale of photovoltaic (PV) solar modules manufactured in 2023 across First Solar’s operational US manufacturing sites, including its newly commissioned third Ohio factory. The company’s fully integrated solar manufacturing facilities enable the production of thin film wafers, cells, and modules in a streamlined process converting glass sheets into functional solar panels within approximately four hours.

Benefiting from its vertical integration, First Solar qualifies for Advanced Manufacturing Production tax credits under Section 45X of the IRA, specifically tailored for PV wafer, cell, and module production.

Plans for over $2 billion investment in new manufacturing facilities in Alabama and Louisiana, along with expanding existing Ohio sites, project a fully integrated US solar manufacturing capacity of 14 gigawatts by 2026. Additionally, First Solar aims to complete a dedicated R&D innovation center in Perrysburg, Ohio, with an investment of up to $370 million, set for 2024 completion.

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