First Solar To Transfer IRA Tax Credits To Fiserv

• First Solar has signed 2 contracts with Fiserv to sell its MPTCs under Section 45X of the IRA 
• Up to $700 million tax credits will be sold for $0.96 per $1.00 for $500 million and $200 million  
• It sees the liquidity to help strengthen its balance sheet and invest in key aspects of growth, such as research and development 

US-based cadmium telluride (CdTe) solar module manufacturer First Solar will sell its Advanced Manufacturing Production tax credits under the Inflation Reduction Act worth up to $700 million to Fiserv. The move is aimed at improving the company's liquidity. 

The sale will take place under 2 separate Tax Credit Transfer Agreements (TCTA) signed between the duo for a total of $500 million and up to $200 million, respectively. Payments firm Fiserv will pay $0.96 per $1.00 of tax credits to the US manufacturer. 

First Solar calls it the 1st significant credit transfer of its kind in the solar manufacturing industry. It was signed 8 days after the US Department of Treasury proposed guidelines to implement the Section 45X credits (see US Guidance On Clean Energy Manufacturing Credits). 

The IRA's 45X Advanced Manufacturing Production Tax Credit (MPTC) provides per unit tax credits for each clean energy component produced locally and sold by a manufacturer. 

According to the US Solar Energy Technologies Office, "Manufacturers may also elect to transfer all, or a portion, of the tax credits for a given year to an unrelated eligible taxpayer. Credits from a single property can be sold to multiple buyers in the same tax year."  

First Solar secured these tax credits for the production of thin-film wafers, cells and modules produced at its vertically integrated US facilities in 2023. Now, it has decided to sell up to $700 million to Fiserv. 

"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 monetization 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 First Solar CFO Alex Bradley. 

"As it relates to the 2023 financial year, we expect a pre- and post-tax impact of up to $28 million, resulting in a reduction of our diluted earnings of up to $0.26 per share for the year," added Bradley.  

The company plans to conduct a similar exercise in 2024 based on the factors as capacity ramp timing, transfer rates, interest rates, among other parameters being met. The management will share further details during its Q4/2023 earnings call in February 2024.