First Solar Sells $700 Million in 45X Manufacturing Credits for Cash

Only eight days after the Dept. of Treasury and IRS released its proposed rules for Section 45X manufacturing tax credits within the Inflation Reduction Act, First Solar signed two agreements to sell $700 million of its credits to Firserv, a financial services company. Under the terms of the agreements signed on Dec. 22, Fiserv will pay $0.96 per $1 of tax credits to First Solar during the first half of 2024, inclusive of fees and commissions paid by First Solar to the placement agent.

Citigroup Global Markets is the placement agent for First Solar on the transaction, which is believed to be the first significant credit transfer of its kind in the solar manufacturing industry.

“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,” said Mark Widmar, chief executive officer, First Solar. “This agreement establishes an important precedent for the solar industry, confirming the marketability and value of Advanced Manufacturing Production tax credits.”

The tax credits result from the sale of solar panels produced in 2023 by First Solar’s operational manufacturing footprint in the United States, which currently functions as 6.3 GW of annual production capacity at three factories in Ohio.

“The liquidity generated as a result of this transaction is expected to accelerate the timing of enhancing our cash position in the U.S. through the monetization of the Section 45X credits, further strengthening our balance sheet and allowing us to continue investing in key aspects of growth, such as research and development,” said Alex Bradley, chief financial officer, First Solar. “As it relates to the 2023 financial year, we expect a pre- and post-tax impact of up to $28 million, resulting in a reduction of our diluted earnings of up to $0.26 per share for the year.”

As a result of its thin-film solar vertical integration, First Solar is eligible for Advanced Manufacturing Production tax credits allowed for the production of PV wafers, cells and modules under Section 45X of the IRA. Modules have a 7¢/WDC credit; cells receive 4¢/WDC; wafers get $12/m2.

The company is investing over $2 billion in two new manufacturing facilities in Alabama and Louisiana while also expanding its second factory in Ohio. First Solar should reach 14 GW of U.S. solar manufacturing capacity by 2026. The company is also investing into a dedicated R&D facility in Perrysburg, Ohio, which should be completed next year.

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