Thin film solar module manufacturer First Solar has entered into two separate tax credit transfer agreements (TCTAs) to sell US$500 million and up to US$200 million of advanced manufacturing production tax credits to finance tech company Fiserv.
Under the terms of the agreements, and subject to satisfaction of certain conditions, Fiserv will pay US$0.96 per US$1 of tax credits to the cadmium telluride (CdTe) module manufacturer during the first half of 2024, including fees and commissions paid by First Solar to the placement agent.
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The agreement was signed a few days after the US Department of Treasury and The Internal Revenue Service (IRS) released a proposed guidance for the Section 45X credits on advanced manufacturing production credit. This marks the first significant credit transfer of its kind in the solar manufacturing industry, according to the company.
“The liquidity generated as a result of this transaction is expected to accelerate the timing of enhancing our cash position in the US through the monetisation 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.
Mark Widmar, CEO of First Solar, added that this deal is evidence of the Inflation Reduction Act delivering on its intent, which was to incentivise domestic manufacturing while providing manufacturers with liquidity to reinvest in growth and innovation.
“This agreement establishes an important precedent for the solar industry, confirming the marketability and value of Advanced Manufacturing Production tax credits,” said Widmar.
The company expects to invest more than US$2 billion in new manufacturing facilities in the US states of Alabama and Louisiana, while expanding its Ohio footprint and investing up to US$370 million in a research and development facility which is expected to be completed in 2024. First Solar is aiming to expand its annual nameplate production capacity to 14GW of solar modules in the US by 2026.
During the third quarter of 2023, the CdTe module manufacturer reached a production capacity of 3.2GW, increasing by 14% from the previous quarter and raising its volume for the seventh quarter in a row.
