First Solar Inks Agreements to Offload $700 Million in 2023 IRA Production Tax Credits

First Solar, Inc. (Nasdaq: FSLR), a prominent player in the solar energy sector, has made a significant move by entering into two Tax Credit Transfer Agreements (TCTAs) on December 22, 2023. These agreements, valued at $500 million and up to $200 million respectively, involve the sale of 2023 Inflation Reduction Act (IRA) Advanced Manufacturing Production tax credits to Fiserv, Inc., contingent upon certain conditions being met. As per the terms of these agreements, Fiserv will pay First Solar $0.96 for every $1 of tax credits during the first half of 2024, including fees and commissions paid to Citigroup Global Markets, Inc., the appointed placement agent for this transaction.

This transaction, facilitated by Citigroup Global Markets, Inc., is a pioneering move in the solar manufacturing industry, marking the first significant credit transfer of its kind. The agreements were finalized shortly after the US Department of Treasury and Internal Revenue Service issued a notice of proposed rulemaking to implement Section 45X credits.

Mark Widmar, CEO of First Solar, highlighted the significance of this development, stating, “This is the IRA delivering on its intent, which is to incentivize high-value domestic manufacturing by providing manufacturers with the liquidity they need to reinvest in growth and innovation.” He emphasized that this agreement sets a crucial precedent for the solar industry, validating the marketability and value of Advanced Manufacturing Production tax credits.

Alex Bradley, CFO of First Solar, elaborated on the financial implications of the transaction, noting its potential to accelerate the enhancement of the company’s cash position in the US through the monetization of Section 45X credits. This move is expected to strengthen First Solar’s balance sheet and support continued investment in key growth areas, such as research and development. The financial impact for the 2023 fiscal year is anticipated to be a pre- and post-tax impact of up to $28 million, resulting in a reduction of diluted earnings by up to $0.26 per share.

The tax credits in question arise from the sale of photovoltaic (PV) solar modules produced in 2023 by First Solar’s US manufacturing operations, including its third Ohio factory commissioned earlier in the year. The company’s fully integrated solar manufacturing facilities, which convert glass sheets into functional solar panels in about four hours, are eligible for Advanced Manufacturing Production tax credits under Section 45X of the IRA.

First Solar plans to invest over $2 billion in new manufacturing facilities in Alabama and Louisiana and expand its existing Ohio operations. By 2026, the company aims to achieve 14 gigawatts of fully integrated US solar manufacturing capacity. Additionally, an investment of up to $370 million is being made in a dedicated R&D innovation center in Perrysburg, Ohio, slated for completion in 2024.

For more detailed information on this transaction, interested parties can visit First Solar’s website at www.firstsolar.com/2023TCTA.

About First Solar, Inc. First Solar is a leading American solar technology company and a global provider of eco-efficient solar modules. With R&D labs in California and Ohio, First Solar’s advanced thin film PV modules represent the next generation of solar technologies. The company is committed to responsible production, from raw material sourcing and manufacturing to end-of-life module recycling, embodying sustainability and responsibility towards people and the planet. More information can be found at www.firstsolar.com.

For First Solar Investors This press release contains forward-looking statements under the Private Securities Litigation Reform Act of 1995. These statements include, but are not limited to, the sale of up to $700 million of 2023 IRA tax credits, the expected reduction in 2023 earnings, the projected US manufacturing capacity by 2026, the investment in new manufacturing facilities, and the R&D innovation center in Ohio. These forward-looking statements are based on current expectations and projections about future events and are subject to risks, uncertainties, and other factors that may cause actual results to differ materially. These factors include the timing and completion of the transaction, the satisfaction of conditions to the transaction, and other risks discussed in First Solar’s most recent Annual Report on Form 10-K and subsequent Quarterly Reports on Form 10-Q, supplemented by other filings with the Securities and Exchange Commission.