Value on Paper, Less in Cash: How Accessible the Storage Revaluation Really Is
The main article argued that PowerGen Solar I's assets are advancing faster than its financing layer. This follow-up shows why the storage revaluation is a real balance-sheet gain, but still not free cash: part of it is already absorbed by tax, part depends on a future tax shield, and all of it still has to pass through battery replacement and refinancing.
Value on Paper, Less in Cash
The main article made a simple argument: PowerGen Solar I's assets are advancing faster than its financing layer. This follow-up isolates the accounting item that lifted equity in 2025 and asks a narrower question: how much of the storage revaluation is genuinely accessible value, and how much of it still sits inside a discounted-cash-flow model.
The short answer is that the value is not fake, but it is not the same thing as free cash. The fair value of the operating solar-plus-storage projects measured under the revaluation model reached NIS 652.5 million at the end of 2025, and the revaluation of fixed assets generated NIS 115.2 million of other comprehensive income, net of tax. That is a real balance-sheet improvement. But the starting point already requires separating three layers: the gross revaluation before tax was NIS 149.7 million, the tax effect absorbed NIS 34.4 million, and the balance sheet still carries NIS 41.1 million of deferred-tax liability tied to the revaluation reserve.
So even before getting into debt service, covenants, or refinancing, almost a quarter of the accounting uplift is already spoken for by tax. What remains is still not cash in hand. It is the present value of long-duration future cash flow, conditioned on steady operations, battery replacement, and the company's ability to ease the financing pressure that still sits above the assets.
| Layer | Amount | What it means |
|---|---|---|
| Fair value of the projects measured under the revaluation model | NIS 652.5 million | Accounting value of operating assets, not free cash |
| Gross fixed-asset revaluation | NIS 149.7 million | The jump before tax |
| Other comprehensive income, net of tax | NIS 115.2 million | The contribution to comprehensive income, not to cash flow |
| Revaluation reserve at year-end 2025 | NIS 127.7 million | An accounting equity cushion built mainly in 2024 and 2025 |
| Deferred-tax liability tied to the revaluation reserve | NIS 41.1 million | Part of the value is already marked for future tax |
What the Number Actually Contains
Most of the attention naturally goes to the Bichora system, and for good reason. Its fair value alone stands at NIS 224.9 million against a carrying value of NIS 146.9 million, so it represents roughly one-third of the fair value of the revalued asset pool. But even here, it matters to understand what the number includes.
The Bichora model is built on long-duration cash flow, not on near-term liquidity. The discount rate during the licensed period is 6.75%, and after the licensed period it rises to 8.25%. The Bezeq-Gen agreement runs until June 30, 2045, and the model then assumes another 15 years of economic life, through June 30, 2060. EBITDA margin assumptions run at 80% to 85%. In other words, the NIS 224.9 million is not anchored in one or two years of cash generation. It is anchored in a long sequence of operating, pricing, and discounting assumptions.
There is also a TAB component inside that value. TAB is the discounted tax benefit from the depreciation base, and in Bichora it amounts to NIS 33.9 million. Without TAB, discounted cash flow before that tax shield is NIS 191.0 million. That is a critical detail, because it means not all of the value comes from operating cash flow itself. Roughly 15% of Bichora's value comes from a future tax benefit, not from pre-tax project cash.
| Key assumption in Bichora | Figure | Why it matters |
|---|---|---|
| Fair value | NIS 224.858 million | The base number used in the revaluation model |
| Carrying value | NIS 146.893 million | The book-value anchor that the uplift is measured against |
| Discount rate during the licensed period | 6.75% | The critical assumption for the better-protected part of the asset life |
| Discount rate after the licensed period | 8.25% | This is where the more uncertain and more sensitive part of value begins |
| Bezeq-Gen contract period | Through June 30, 2045 | The core contractual anchor in the model |
| Economic-life assumption | Through June 30, 2060 | Part of the value sits beyond the current contract |
| TAB | NIS 33.885 million | A discounted tax shield, not operating cash flow |
Where the Cash Gets Stuck Even Inside the Model
Anyone looking only at the final valuation could assume that Bichora is already a clean cash machine. The cash-flow model itself says something more cautious. In 2026, Bichora's projected revenue is NIS 17.4 million and projected EBITDA is NIS 14.5 million, but the discounted cash flow for that year is only NIS 0.65 million. The reason is visible in the same table: the first forecast year already includes NIS 10.4 million of investment.
The step-up into 2027 looks much better, with discounted cash flow of NIS 11.5 million, but even that is not a number that can be read as free cash without qualification. The valuation report explicitly says that follow-on investment mainly relates to battery replacement, planned every 5 to 6 years and then depreciated over 14 years. That is exactly the gap between fair value and accessible value. The model shows good profitability, but it also states clearly that storage requires periodic capital recycling to keep producing that future cash flow.
This is why the revaluation improves the balance sheet more than it improves immediate cash access. The number is built on many years of operation, on battery replacement, and on the continued validity of pricing and market assumptions. It does not land as cash in 2026, and it does not even land as immediately clean, stable cash flow right after connection.
How Fragile the Value Still Is
This is the main yellow flag. In note 11, the company gives a direct sensitivity to a 1% change in the discount rate. For Bichora, that changes value by NIS 28.1 million. For the other facilities, the effect is NIS 46.3 million. Together, that is NIS 74.4 million.
That is material. It is roughly two-thirds of the 2025 net other-comprehensive-income gain from fixed-asset revaluation. So anyone reading the NIS 115.2 million as if it were hard, immovable value is missing the fact that a large part of that cushion still rests on discount-rate assumptions. The attached Bichora valuation makes that visible too: the base case is NIS 224.9 million, but the sensitivity table shows that even moderate shifts in the discount rates push value down quickly.
Put simply, the value exists on paper, but it is not immune. If the market starts demanding a higher return on storage assets, or if the assumptions around economic life and replacement start looking less conservative, the accounting cushion can shrink relatively fast.
Why Refinancing Is Still Needed Even After the Revaluation
This matters because it connects the model to the financing reality. If the storage revaluation had already created enough accessible liquidity on its own, there would be much less urgency around improving asset-level cash flow through the liability stack. But in February 2026, the company placed NIS 82 million nominal of Series C bonds for roughly NIS 81 million gross, and explicitly said the proceeds were intended to repay project loans at the small-systems portfolio in order to improve cash flow and save interest expense.
That is probably the single most important sentence in the whole story. It does not invalidate the revaluation. It defines its limit. Even after the assets were revalued upward, the route from accounting value to real financial flexibility still runs first through better cash flow and a lighter interest burden, not through automatic cash release.
That leads to the real conclusion. The storage revaluation is a genuine strengthening of balance-sheet quality, and it probably does reflect real progress in the operating asset base. But it does not erase the accessibility problem. As long as part of the value sits in a future tax shield, part sits in distant years, and part still requires battery replacement and refinancing to become clean cash flow, this number should be read as accounting equity with potential, not as cash already unlocked.
Conclusion
The message of this continuation is sharper than the message of the main article. Yes, there is value. Yes, it is grounded in a structured model, explicit discount rates, and assets that are already operating. But there is still meaningful distance between NIS 652.5 million of fair value and cash that is truly accessible to the company's creditors, let alone to the value layer above the debt stack.
That gap comes from three things: tax already absorbs part of the uplift, TAB represents tax-shield value rather than operating cash, and the model itself admits that the money is spread over long years and requires follow-on investment. If the next reports show that post-debt-service cash flow is moving closer to what the valuation logic implies, and that lower project debt really saves interest and releases room, the 2025 revaluation will look much more accessible. If not, it will remain mainly an attractive balance-sheet cushion, but still far from cash.
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