First Solar, a U.S. thin-film solar module manufacturer, closed two separate tax credit transfer agreements to sell $500 million and $200 million of Inflation Reduction Act advanced manufacturing tax credits.
The deal, which was penned on Dec. 22, 2023, is one of the first major sales of 45x tax credits -- the advanced manufacturing production tax credit -- which provides tax credits for each clean energy component domestically produced.
The credits were created as a result of a sale of photovoltaic solar modules produced in 2023 by First Solar. Under terms of the deal, Fiserv, a global provider of payments and financial services technology systems, agreed to pay $0.96 per $1 of tax credits to First Solar during the first half of 2024, including fees and commissions paid by First Solar.
The Inflation Reduction Act has been one of the most significant pieces of legislation for the renewable energy sector thanks to the enormous allotment of incentives and tax credits for projects. Solar, wind, and hydrogen have seen a major boom in new projects since the act was signed into law in 2022.
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“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, CEO of First Solar, said in a statement. “This agreement establishes an important precedent for the solar industry, confirming the marketability and value of advanced manufacturing production tax credits.”
First Solar had the option to receive the funds as a tax benefit or a direct cash payment from the Department of Treasury and has opted for the tax credit transfer through the sale.
With the direct payment option, the company would receive funds as a refund in their annual tax returns, while the tax credit transfer allows the parties to negotiate payment timing on their own. First Solar expects a pre- and post-tax impact of up to $28 million in 2023.
The sale comes as no other U.S. manufacturers are currently eligible for the comprehensive suite of solar module manufacturing tax credits. However, the solar industry is expected to continue seeing major growth, and First Solar expects to invest over $2 billion in new manufacturing facilities in Alabama and Louisiana, expand its existing Ohio footprint, and have 14 gigawatts of fully vertically integrated U.S. solar manufacturing capacity by 2026.
The company’s investment of up to $370 million in a dedicated research and development innovation center in Perrysburg, Ohio, is expected to be completed in 2024.
