diff --git a/data/yam/agama/auto/lib/storage.libsonnet b/data/yam/agama/auto/lib/storage.libsonnet
index 2833799ba807..df04e6236ec7 100644
--- a/data/yam/agama/auto/lib/storage.libsonnet
+++ b/data/yam/agama/auto/lib/storage.libsonnet
@@ -12,8 +12,14 @@
       {
         name: 'system',
         physicalVolumes: [
-          { generate: ['pvs-disk'],
-            [if encryption == true then 'encryption']: { luks2: { password: "nots3cr3t" } }
+          {
+            [if encryption == true then 'generate']: {
+              targetDevices: ['pvs-disk'],
+              encryption: {
+                luks2: { password: "nots3cr3t" }
+              }
+            },
+            [if encryption == false then 'generate']: ['pvs-disk'],
           },
         ],
         logicalVolumes: [