Solair in the First Quarter: The Pipeline Advanced, Cash Still Depends on Financing and Asset Sales

Solair opened 2026 with a quarter that strengthens the execution story but does not solve the cash layer. Calasparra is connected to the grid, Sancho secured project finance and started drawing it, the Poland acquisition moved to a final and irrevocable offer, and ENAPAC received preferred government status in Chile alongside demand data that is getting closer to a first commercial stage. That is a real change from the end of 2025, because several points that were previously backlog, MOUs or regulatory optionality moved to a more mature stage. Still, the Q1 report shows that the company is not yet funding its growth from operating cash: revenue fell, the operating loss widened, operating cash flow stayed negative, and cash increased only because financing came in. The current read is therefore more positive on project progress, but still cautious on value accessible to public shareholders. In 2026 the company needs to show not only more MW, more storage and more announcements, but a conversion of part of the pipeline into binding agreements, actual financing, asset sales or owner-loan repayments flowing back up.

The pipeline advanced, but Q1 still did not fund it

Solair is not currently best read as a stable power producer with a broad cash-flow base. It is a developer of renewable-energy, storage and water-infrastructure projects across Israel, Spain, Italy, Poland and Chile. Value is created through permitting, power purchase agreements, project finance, construction and sometimes full or partial asset sales after risk has been reduced. In that model, a large pipeline, heavy investment and negative operating cash flow can be part of the normal business stage. They become critical only when the pipeline grows faster than accessible cash.

In the previous annual analysis, 2026 was framed as the year in which the company would need to prove that its large pipeline can turn into financing, grid connection, asset sales and cash flow. Q1 gives a mixed answer. Management presents a mature pipeline of 1,797 MW plus 4,565 MWh of storage, with expected annual revenue of NIS 932 million, expected EBITDA of NIS 756 million and expected FFO of NIS 558 million on a 100% ownership basis. Those figures show the scale of the platform, but they are not equivalent to profit and cash at the listed-company level. Part of the future cash-flow layer also runs through owner loans to partners, with a balance of about NIS 443 million at the end of March, so the key question is when cash actually moves back up.

The first-quarter income statement is not a report of operating improvement. Revenue totaled NIS 8.2 million, compared with NIS 18.1 million in the comparable quarter, a decline of about 55%. The loss before tax, finance, depreciation and amortization was NIS 10.7 million, compared with NIS 2.1 million in the comparable quarter, and the operating loss reached NIS 17.3 million. The bottom line was also hit by NIS 32.3 million of finance expenses, mainly about NIS 28 million of FX expenses on intra-group loans denominated in foreign functional currencies. Q1 therefore moved from net profit of NIS 29.6 million in the comparable quarter to a net loss of NIS 32.1 million.

The cash picture is sharper. The all-in cash movement after actual cash uses was built like this: operating activity consumed NIS 32.9 million, investing activity consumed NIS 201.2 million, and financing activity brought in NIS 307.1 million. Cash therefore rose to NIS 153.7 million at the end of March, but that increase was externally funded. It was not recurring portfolio cash flow. It was a quarter in which bonds, bank debt and partner loans covered operating cash use and investment.

After the balance-sheet date, an important liquidity layer was added: a private placement of shares and options brought in about NIS 162 million in cash, out of total consideration of about NIS 165 million. That reduces immediate pressure, especially alongside restricted deposits of NIS 132.1 million at the end of March. But new money gives the company working time. It does not prove that the projects are already returning cash.

ENAPAC is closer to a first stage, not to cash revenue

The most important development outside the income statement is ENAPAC. On May 25, 2026, the company received an official notice from Chile's Ministry of Economy, Development and Tourism stating that the project had been included in the government's large-projects register and classified as a project of strategic national importance. The practical meaning is not immediate revenue. It is dedicated government support, preferred status, inter-ministerial coordination, promotion of licensing and permit processes, and strategic monitoring of the project's progress.

This changes the read from the prior ENAPAC analysis. The question then was whether the project could move from a regulatory framework and MOUs to a partner, customer and financing. The current quarter does not close that question, but it improves the probability. In March 2026, approval was given to double water conveyance capacity to 3,500 liters per second, and the company's presentation frames that as about 106 million cubic meters per year. The Q1 presentation also presents validated demand of about 23 million cubic meters per year based on MOUs, compared with a 19 million cubic-meter minimum for the first stage.

That figure matters, but it needs to be read carefully. About 23 million cubic meters per year moves ENAPAC above the threshold management marked for beginning a first stage, but it still rests on MOUs and commercial negotiations, not on a binding water agreement, an equity partner and closed financing. Chile's desalination law, which regulates a 30-year concession with a 30-year extension option and infrastructure rights that can support financing, improves the execution environment. It does not replace a paying customer.

Spain and Poland moved forward, but still do not return cash up the chain

In Spain, Sancho secured up to EUR 35 million of project finance from Kommunalkredit Austria, at six-month EURIBOR plus about 4%, with final maturity at the end of 2027. By the end of March, about EUR 18.6 million had already been drawn. This is an important step because Sancho is no longer only a presentation project. It has financing that is being drawn, a PPA transferred to it, and a planned grid connection in 2026.

Calasparra moved into an early operating stage. On March 26, 2026, the required grid-connection approvals in Spain were completed, a technical connection agreement was signed, and the project began generating electricity revenue. But the read is not clean: the quarter included NIS 5.7 million of system impairments, of which NIS 2.6 million related to Calasparra and NIS 3.1 million to Alizarsun. Both assets are still classified as held for sale, and the company expects to sell them within the coming year after storage enhancement.

In Poland, the movement was more legal than cash-based. On April 20, 2026, the company and the seller signed a final and irrevocable offer to acquire a solar portfolio of about 271 MW, following the first stage of due diligence, with a 10-week exclusivity period. The presentation frames the portfolio as an operating asset with about 75% of revenue hedged through a 15-year CfD, expected annual revenue of EUR 27.6 million and expected FFO of EUR 15.7 million. But the transaction is still subject to a binding acquisition agreement, completion of due diligence and long-term project finance.

The table clarifies the difference between progress and cash. Most of these threads are no longer only ideas, but most have not yet reached the stage that returns money to the listed company. This is not unique weakness at Solair. It is a feature of a project developer. The edge in the quarter is that the company is advancing on several fronts at once, while the cash statement shows how expensive it is to move from there to accessible value.

2026 will be judged by actual financing and cash moving back up

The company is not currently facing an immediate liquidity problem according to its board. Working capital was positive by about NIS 263 million at the end of March, and bond covenants also show room. But covenant comfort is not the same as free cash: the company itself estimates that its business plan for the coming year will require about NIS 2.0-2.5 billion of external financing, alongside investor partnerships and partial or full project sales.

The first quarter makes Solair's story more measurable. Sancho has financing that is being drawn, Calasparra is connected, Poland has an advanced offer, ENAPAC has government backing, and new equity has entered the cash balance. For the read to improve, Poland must become a binding acquisition with financing, ENAPAC must secure a binding water agreement or strategic partner, Spain must produce an asset sale or visible FFO contribution, and operating cash flow must stop being a recurring cash use.

The strongest counter-thesis is that the market may be too harsh on a company at the point where a project developer must consume cash to turn backlog into assets. If Sancho, Poland and ENAPAC advance together and financing remains available, the 2026 raises may later look like capital raised before an inflection point. As of the end of Q1, that proof is still incomplete. Solair advanced execution, but it has not yet closed the conversion from large pipeline to accessible cash.