It seemed that nothing could slow the global renewable-energy juggernaut. Nothing, that is, until COVID-19.

From the solar factory floors of China’s Jiangsu province to wind farm country in West Texas, the clean-energy industries are struggling to gauge the potential damage that lies ahead — and it’s not a pretty picture.

Just a few weeks ago, the biggest COVID-19 concern for renewable energy appeared to be the supply of equipment, reflecting the outbreak’s early impact in China. Would there be enough solar panels, wind turbines and batteries to meet demand and project deadlines, given the widespread factory shutdowns?

But after a wild few days of escalating infection numbers and increasingly frantic government responses in Europe and the U.S., the focus is quickly shifting to demand, as the reality dawns that a global economic slowdown may be inevitable.

Late last week, Bloomberg New Energy Finance lowered its 2020 global solar demand forecast to a range of 108 to 143 gigawatts — a drop of 9 percent at the low end compared to the market research firm's prior estimate. That could mean the first down year for global solar installations since the 1980s.

Jenny Chase, BNEF’s head of solar, said the issue of equipment supply seems to be sorting itself out as China's factories rumble back into production.

“You do hear screams of panic from developers and people who are not getting their shipments exactly when they wanted them, but we think that’s probably quite a temporary effect,” Chase told GTM.

“The factories — even the ones that shut down temporarily while workers self-isolated after they came back from their Chinese New Year travels — are coming back up. Companies are confirming they’re back in production.”

The bigger concern now, Chase said, is the demand side of the equation. An economic slowdown could dent the demand for energy or reduce the amount of finance available. Industry conferences are being canceled or postponed, hampering networking and deal-making. Workforce shortages could knock project timelines off course.

Meanwhile, the urgent and complex demands of the outbreak will leave lawmakers with little time for the finer points of energy policy. China has already pushed back its so-called solar mega-auction from May to June of this year, Chase said, and another flare-up of COVID-19 could mean further delays.

“We think there will be a recession,” Chase said on Friday, and the implications could spell trouble for solar manufacturers. “In general, this is a sector of companies that are heavily indebted and making slim margins."

For some companies, “this could be the straw that breaks the camel’s back.”

Special challenges for the U.S. wind market

In the U.S., the world’s second-largest renewables market after China, the biggest immediate threat from COVID-19 is to the wind industry, which was otherwise on track for a record year of installations.

2020 is critical because it’s the last year for developers to complete projects that qualified for the full Production Tax Credit (PTC), the industry’s main subsidy. As a result, the industry was already expected to be pushed beyond its limits this year. Wood Mackenzie previously warned of many U.S. wind projects being “at risk” of missing the 2020 deadline, threatening their underlying economics.

Even a small delay at a wind project can cause major knock-on effects, given the need for specialized construction machinery like cranes that are often rented far in advance.

Amish Shah, a partner at law firm Eversheds Sutherland who works with a range of developer clients in wind and solar, said he’d not heard of projects being delayed yet, but it may only be a matter of time. Construction companies may face labor shortages in the weeks and months ahead. Government agencies may need to slow down their approval processes.

“A lot of these projects didn’t have a lot of extra time built in,” Shah said of the wind market. “Even a delay of several weeks could be problematic.”

If the situation becomes dire enough, pressure will mount for U.S. tax authorities to postpone the end date for finishing wind construction beyond the current December 31 deadline, Shah said.

Worries over the availability of finance

Another potential problem if the economy takes a nosedive: a lack of finance for renewables projects. In the U.S. market, that could mean a shortage of tax equity.

The nature of the U.S. renewable energy tax credits — the wind PTC and solar ITC — makes developers reliant on a relatively limited number of investors willing to provide tax equity for projects. That pool of potential capital deepens as companies make more profits and have more tax liabilities to offset.

The availability of tax equity is a point of constant discussion and concern for U.S. renewables developers, though the market has been healthy in recent years. But that could change rapidly in a recession.

“We’ve seen quite a hit to the economy over the last week and a half,” Shah said, speaking on Friday. “The question is, are we going back to 2009, where there was limited tax equity?”