Historic Tax Credit Transactions
In a groundbreaking move, First Solar, Inc. (Nasdaq: FSLR) has finalized Tax Credit Transfer Agreements (TCTAs) totaling $700 million. These agreements represent a milestone in solar industry financing and follow the recent notice of proposed rulemaking by the US Department of Treasury and Internal Revenue Service for Section 45X credits.
Transaction Details
First Solar signed two separate TCTAs on December 22, 2023, selling $500 million and up to $200 million of 2023 Inflation Reduction Act (IRA) Advanced Manufacturing Production tax credits to Fiserv, Inc. The credits will be transferred at a rate of $0.96 per $1 during H1 2024.
Market Innovation
Citigroup Global Markets, Inc. facilitated this groundbreaking credit transfer, marking a significant shift in the solar manufacturing sector. The agreements were finalized within eight days of the proposed rulemaking issuance.
Financial Impact and Future Plans
CEO Mark Widmar highlighted the precedent-setting nature of this agreement, emphasizing its importance for the solar industry. The liquidity generated is expected to enhance First Solar’s cash position and strengthen its balance sheet. CFO Alex Bradley provided insights into the financial impact, expecting up to $28 million for the 2023 fiscal year.
Strategic Origin and Future Investments
The tax credits result from the sale of photovoltaic (PV) solar modules produced in 2023 by First Solar’s US manufacturing facilities. The company’s vertical integration positions it to benefit from Section 45X credits under the IRA. First Solar plans to invest over $2 billion in new manufacturing facilities, expanding its footprint and aiming for a 14 gigawatt fully integrated US solar manufacturing capacity by 2026.
Source：businesswire.com
