TL/DR –
First Solar, a U.S. thin-film solar module manufacturer, has sold $700 million worth of Inflation Reduction Act advanced manufacturing tax credits in two separate deals. The credits, known as 45x tax credits, were created as a result of the sale of photovoltaic solar modules produced by First Solar in 2023. The company expects the deal to have a pre- and post-tax impact of up to $28 million in 2023, and plans to invest over $2 billion in new manufacturing facilities in Alabama and Louisiana, as well as a $370 million research and development innovation center in Ohio.
First Solar Tax Credit Transfer Deals Boost US Solar Component Production
US thin-film solar module manufacturer, First Solar, has recently completed two tax credit transfer agreements, selling $700 million of Advanced Manufacturing Tax Credits under the Inflation Reduction Act. These transactions are among the first major sales of 45x tax credits, which encourage the domestic production of clean energy components.
The tax credits were generated through the 2023 sale of photovoltaic solar modules by First Solar. Fiserv, global financial services tech provider, agreed to acquire these credits at $0.96 per $1 of tax credits from First Solar in the first half of 2024.
Thanks to the Inflation Reduction Act, the renewable energy sector has seen a surge in solar, wind, and hydrogen projects. The Act has provided an abundance of incentives and tax credits that have greatly benefited the sector since its 2022 enactment.
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Mark Widmar, CEO of First Solar, lauded the deal, stating, “This agreement establishes an important precedent for the solar industry, confirming the marketability and value of advanced manufacturing production tax credits.”
Solar Manufacturing Benefits from Diverse Tax Incentives
First Solar chose to sell the tax credits rather than receive funds as a direct cash payment or tax benefit from the Treasury Department. This allowed the company to negotiate the payment timing independently and is projecting a pre- and post-tax impact of up to $28 million in 2023.
While First Solar is currently the only US manufacturer eligible for these solar module manufacturing tax credits, the solar industry is expected to continue its growth. The company plans to invest over $2 billion in new manufacturing facilities in Alabama and Louisiana, expand its Ohio operations, and aims to achieve 14 GW of fully vertically integrated US solar manufacturing capacity by 2026.
The completion of a dedicated research and development innovation center in Perrysburg, Ohio, is anticipated in 2024, with up to $370 million of the company’s investment.
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