Generated from the manufacturer’s U.S. facilities, First Solar expects to receive gross cash proceeds of approximately $819 million upon the transaction’s completion.
First Solar sold $857 million in Inflation Reduction Act (IRA) transferable tax credits generated from its U.S.-based manufacturing facilities.
The sale of 45X advanced manufacturing production tax credits was executed through two agreements at a price of $0.955 per $1.00 of tax credit. The agreements covered a fixed transaction of $645 million of tax credits, which were paid in two parts at the end of last year, and $212 million in additional tax credits, which is expected to be completed by Feb. 28, 2025, First Solar said.
Under a tax credit transfer transaction, renewable energy developers and owners are essentially able to sell tax credits for cash, making financing easier for new clean energy projects. The transferability option is generally open to the entities that are not covered by the direct pay option. While there’s uncertainty as to how the current administration will change U.S. energy policy, changing or rescinding the tax credits would require action by Congress.
(Read: “IRS issues final guidance for clean energy tax credit transferability” and “The rise of transferable tax credits in clean energy finance”)
First Solar said it expects to receive approximately $819 million in gross cash proceeds from the sale.
The tax credits are from the sale of solar modules produced in 2024 at First Solar’s U.S. manufacturing facilities, including three factories in Ohio and a new Alabama facility.
According to Mark Widmar, First Solar’s CEO, the tax credits’ value is directly tied to the volume of solar panels produced at the manufacturer’s facilities in Ohio and Alabama, which is the the highest volume First Solar produced in the US since it began manufacturing in 2002.
A recent report from Crux said transferable tax credits will catalyze $2 trillion in capital investments and $3.8 trillion in U.S. economic activity, leveraging $4 of private capital for every dollar of tax credits.
According to Alex Bradley, First Solar’s CFO, First Solar expects “a pre-tax impact to earnings of approximately $39 million and a post-tax impact to earnings of approximately $45 million,” he said. “This is expected to reduce our diluted earnings by approximately $0.42 per share for the year.”
The largest solar manufacturer in the Western Hemisphere, First Solar produces thin film solar modules in a single process that allows the company to transform a sheet of glass into a fully functional solar panel in what the company says is approximately four hours.
