Arizona — U.S. thin-film solar manufacturer First Solar said it is selling up to USD 700 million (EUR 635m) of 2023 Inflation Reduction Act (IRA) advanced manufacturing production tax credits in a deal considered to be the first significant Section 45X credit transfer in the solar industry.
The buyer is fintech company Fiserv Inc, which will pay USD 0.96 per USD 1 of tax credits during the first half of 2024, including fees and commissions to the placement agent, Citigroup Global Markets.
The tax credits come from the sale of solar modules produced in 2023 by First Solar in the U.S.
The transaction involves two separate tax credit transfer agreements for the sale of USD 500 million and up to USD 200 million of tax credits, respectively, and is subject to the satisfaction of certain conditions.
It was struck eight days after the U.S. Department of Treasury released proposed guidance on the Section 45X advanced manufacturing production tax credit.
Given its vertical integration, First Solar is eligible for advanced manufacturing production tax credits for the production of photovoltaic (PV) wafers, cells and modules under Section 45X of the IRA.
“This is the IRA delivering on its intent, which is to incentivise high value domestic manufacturing by providing manufacturers with the liquidity they need to reinvest in growth and innovation,” said First Solar chief executive Mark Widmar.
Chief financial officer Alex Bradley added that in connection with the 2023 financial year, the company expects a pre- and post-tax impact of up to USD 28 million, leading to a reduction of its diluted earnings of up to USD 0.26 per share.
First Solar expects its U.S. solar manufacturing capacity to reach 14 GW by 2026.
The company is investing more than USD 2 billion in new factories in Alabama and Louisiana, while also expanding its existing footprint in Ohio.
It is also investing up to USD 370 million in a research and development (R&D) innovation centre in Perrysburg, Ohio, scheduled for completion in 2024.