Zephyrus in the first quarter: grid rights expanded, but the cash test still sits at Potegowo
Zephyrus opened 2026 with an accounting loss, but the Potegowo quarter itself remained cash-generative. The real change was not net profit, but the move from optional pipeline to larger grid rights that require funding, guarantees, and execution.
Zephyrus enters 2026 with a picture that is very different from the accounting headline. The NIS 30.9 million net loss mainly came from financial instruments, including about NIS 34 million from the higher fair value of the listed warrants, not from a collapse in the main wind asset. Potegowo still generated NIS 20.4 million of FFO after debt service, almost unchanged from the comparable quarter, despite a 9% drop in production. The new part of the story is that the company is no longer only a yielding wind asset: it is becoming a platform of grid connections, project construction, and funding. The control transaction by Doral Energy closed and the new CEO will take office already on June 1, 2026, so part of the risk has moved from transaction closing to execution. The next few quarters will determine whether the new grid rights begin turning into cash, or remain another layer of optionality that consumes capital before returning it.
Company Orientation
Zephyrus is a renewable-energy company operating in Poland. Its anchor asset is the 257 MW Potegowo wind project, and around it the company is developing PV, storage, and grid connections. Its economic engine therefore has two layers: an existing asset that generates cash, and a project pipeline that can enlarge the company but still requires financing, permits, construction, and actual grid connection.
Potegowo sells electricity at a fixed, indexed tariff for about 68% of average expected production through 2037, with the remainder sold at market prices or through VPPA transactions. Remaining VPPA volumes for 2026 and 2027 are about 231 thousand and 123 thousand MWh, respectively, at an average price of about PLN 320 per MWh. That is a hedging layer, but not full insurance: production below the contracted volume can still require cash settlement of price differences.
This continues the previous coverage of Potegowo and grid connections. The earlier test was whether the company could move from Potegowo as a single anchor to a broader platform. The first quarter added meaningful grid rights, but Potegowo PV commercial operation and the move of Goliat and Reut into funding have not yet been completed.
Potegowo Holds Cash, Not Growth
The first and fourth quarters should be stronger for wind farms, so lower production now is a yellow flag. Potegowo produced about 140 GWh in the first quarter of 2026, compared with about 154 GWh in the comparable quarter. Project revenue fell to NIS 60.6 million, about 8% below the comparable quarter, as lower production and a weaker zloty against the shekel were partly offset by about a 5% increase in the average electricity price.
Still, the cash layer was not hit with the same force. Project EBITDA fell to NIS 39.7 million, but FFO rose slightly to NIS 32.6 million because net cash finance costs fell by about NIS 3 million. FFO after debt service was NIS 20.4 million, versus NIS 20.2 million in the comparable quarter. Potegowo did not deliver a strong quarter, but it is still funding the transition period.
| Potegowo Metric | Q1 2026 | Q1 2025 | Meaning |
|---|---|---|---|
| Electricity production | about 140 GWh | about 154 GWh | Weakness in a seasonally strong quarter |
| Project revenue | NIS 60.6 million | NIS 66.3 million | Higher prices did not erase production and FX weakness |
| Project EBITDA | NIS 39.7 million | NIS 41.8 million | Moderate operating erosion |
| FFO after debt service | NIS 20.4 million | NIS 20.2 million | Lower financing costs stabilized cash flow |
The consolidated loss therefore needs careful reading. Before taxes and the effect of financial instruments, the company still reported NIS 8.6 million of profit. The NIS 35.3 million loss from financial instruments, including about NIS 34 million from the listed warrants, matters for equity, but it is not the best measure of Potegowo’s quality.
Grid Rights Expanded Faster Than Operating Capacity
The strategic jump in the quarter sits in grid access. A draft amendment with PSE may allow about 338 MW of PV and about 200 MW of storage to connect to the group’s distribution network, versus the previous estimate of about 230 MW of PV and about 100 MW of storage. Within that framework, Goliat is expected to grow to about 178 MW, Reut to about 160 MW, and Ambar to about 200 MW of storage. The draft also includes approval to connect end customers, such as industrial customers or data centers, for up to 60 MW.
After the balance-sheet date, the company also received a connection right for about 500 MW of PV, which it plans to use to expand Maoz PV from 70 MW to 500 MW. The number is large, but the connection terms set a difficult timeline: PSE stated that connection to the receiving station in northern Poland would be possible no earlier than 2032, while the company estimates the date may be earlier.
The gap between stages is the article’s core. There are 257 MW in commercial operation. Potegowo PV, about 82 MW, is under construction, with expected commercial operation in the first half of 2026, expected construction cost of NIS 180 million, and expected FFO after debt service of NIS 6 million in a representative operating year. Goliat and Reut, together about 338 MW, are in advanced development, with expected construction costs of NIS 580 million and expected FFO after debt service of NIS 25 million. More than 1.1 GW is still in development, and a large part of it remains far from funding and operation.
Cash, New Control, And The 2026 Proof Test
The all-in cash picture is better than the accounting loss, but it is not clean free cash. Cash flow from operating activities was NIS 63.8 million, versus NIS 33.5 million in the comparable quarter. Investing activity used NIS 48.4 million, mainly NIS 34.8 million of property and equipment investment and NIS 9.5 million for derivative settlements. Financing activity added NIS 44.5 million net, mainly NIS 58.2 million of loans drawn for Potegowo PV construction, offset by loan, lease, and interest payments.
On an all-in cash basis, after actual cash uses, the improvement also came from project debt. Consolidated cash rose to NIS 191.7 million and net financial debt fell to about NIS 661 million from year-end 2025, but growth is already drawing resources. Potegowo and bond covenants are not under immediate stress: historical DSCR of 1.43 versus a 1.1 minimum, leverage of 67% versus a 75% cap, adjusted equity of NIS 458 million versus a NIS 260 million minimum, and net debt to adjusted EBITDA of 4.4 versus a 14 cap.
The new friction is regulatory and cash-related. Poland’s UC84 amendment raises advances for connection requests from PLN 30 to PLN 60 per kilowatt, sets handling fees and performance guarantees of up to PLN 12 million per project, and introduces milestones that can lead to guarantee forfeiture and cancellation of connection rights. The company views this as an advantage for established players, but for shareholders it also means larger grid rights require more locked cash and stronger execution discipline.
The control layer also moved forward. On April 23, 2026, Doral Energy acquired control through a dedicated vehicle, and after the transaction it holds about 55.87% of the company’s shares. The management agreement with the IIF group ended, and the company is advancing a business-separation agreement with the new controlling shareholder. Eran Saar will step down, and Arava Paz Sevilla will become CEO on June 1, 2026. That closes the uncertainty around the successor’s identity, but shortens the handover window at a time when the company needs to connect, fund, and integrate a new controlling shareholder.
The first-quarter conclusion is sharp: the operating business did not break, but the step-change has not yet been proven. Potegowo continues to fund the transition period, and the warrant loss should not hide that. At the same time, the new grid rights, UC84, and the change of control raise the execution bar. A positive surprise would come from on-time Potegowo PV connection, a signed PSE amendment, and funding decisions for Goliat and Reut. A disappointment would come from continued production weakness, grid rights staying far from cash, or integration with Doral Energy adding structure before it adds cash flow.
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