Tax Credits Boost Solar Manufacturing
Summary:
First Solar, Inc. has made waves in the solar industry with the announcement of two Tax Credit Transfer Agreements (TCTAs) with Fiserv, Inc., signifying a significant breakthrough in solar manufacturing. These agreements involve the sale of $500 million and up to $200 million of 2023 Inflation Reduction Act (IRA) Advanced Manufacturing Production tax credits. Notably, the speed of execution is remarkable, with the agreements signed just eight days after the issuance of a notice of proposed rulemaking by the US Department of Treasury and Internal Revenue Service for Section 45X credits. Under the terms, Fiserv will pay $0.96 per $1 of tax credits to First Solar in the first half of 2024, and Citigroup Global Markets, Inc. is acting as the placement agent, making this the first significant credit transfer in the solar manufacturing sector.
Mark Widmar, the CEO of First Solar, emphasized the alignment of these agreements with the IRA's intent to incentivize high-value domestic manufacturing. The liquidity provided by such transactions enables manufacturers to reinvest in growth and innovation. This deal is considered groundbreaking, establishing a crucial precedent in the solar industry and confirming the marketability and value of Advanced Manufacturing Production tax credits. Alex Bradley, CFO of First Solar, detailed the financial implications, anticipating a pre- and post-tax impact of up to $28 million for the 2023 financial year, potentially reducing diluted earnings by up to $0.26 per share.
Source: https://www.linkedin.com/in/mark-widmar-55828b32
The tax credits in question are a result of the sale of photovoltaic (PV) solar modules produced in 2023 by First Solar's fully vertically integrated manufacturing facilities in the United States. The company's operational footprint includes its third Ohio factory, commissioned earlier in the year, producing thin film wafers, cells, and modules in a streamlined process. Looking ahead, First Solar has ambitious plans, aiming to invest over $2 billion in new manufacturing facilities in Alabama and Louisiana, expand its existing Ohio footprint, and achieve 14 gigawatts of fully vertically integrated US solar manufacturing capacity by 2026. Additionally, the company is committing up to $370 million to establish a dedicated R&D innovation center in Perrysburg, Ohio, expected to be completed in 2024. This comprehensive strategy underscores First Solar's commitment to growth, innovation, and sustainability within the solar energy sector.
Source: https://esgnews.com/first-solar-inks-deal-for-700-million-in-tax-credits-to-boost-u-s-solar-manufacturing/
