The plan for Pacific Gas and Electric (PG&E), the California utility, to enter bankruptcy to manage its $30 billion wildfire liabilities has sent shockwaves through the U.S. energy industry, raising concerns about the outlook for investment in renewable power in the state and beyond.

Credit ratings for several businesses that supply power to PG&E were cut sharply last week, potentially raising the cost of capital for the industry and creating additional difficulties for California’s plan to source 100% of its electricity from low-carbon technologies by 2045.

Projects that supply PG&E with electricity under long-term contracts at prices that are well above today’s rates face the threat that in bankruptcy the company will reject those contracts, or insist on renegotiating them at lower levels, hurting the projects’ cash flows and their ability to service their debts.

PG&E said last Jan. 14 that it intended to enter bankruptcy on or around Jan. 29. It argued that this would be the best way to address the liabilities, estimated at $30 billion-plus, which it faces as a result of its involvement in the devastating wildfires in northern California in 2017 and 2018.

Topaz Solar Farms, owned by Warren Buffett’s Berkshire Hathaway Energy, Genesis Solar, owned by NextEra Energy, and ExGen Renewables IV, owned by Exelon, are among the renewable energy businesses that have been downgraded by rating agencies, along with other suppliers to PG&E including the Panoche Energy Center, a gas-fired “peaker” plant used at times of high demand, and Kinder Morgan’s Ruby gas pipeline.

Some energy yieldcos, listed companies structured to pay dividends from regular cash flows, have also been hit. Shares in Clearway Energy, which earned 23% of its revenue from PG&E in 2017, fell sharply when the company announced its bankruptcy plan, although they recovered in subsequent days and ended the week down only 6%.

A bankruptcy of a U.S. regulated utility is a rare event, and companies that agreed to supply PG&E did so on the basis that it was unlikely to fail to meet its obligations. Until this month, PG&E was rated as investment grade by S&P Global, Moody’s and Fitch. Its decision to seek Chapter 11 bankruptcy protection has overturned the assumptions used by its suppliers to finance their projects.

PG&E said in its annual report for 2017 that its commitments under long-term power purchase agreements were about $3.1 billion for this year, about $2.2 billion in renewable energy, and analysts said it could make substantial savings if it rejected or renegotiated those contracts, which it may be able to do when in bankruptcy. The Genesis and Topaz solar projects were approved and started construction in 2010-2011, when solar power costs were much higher than they are today.

Clifford Kim of Moody’s said it was not certain that PG&E would reject its higher-cost long-term contracts, because the law was not fully settled, and California’s government and regulators might step in to support the state’s energy policy goals. But in economic terms the company had a clear incentive to try to reject or renegotiate them, he added.

Topaz Solar, which runs a large photovoltaic plant in central California that sells power only to PG&E, was last week downgraded by Moody’s from Baa2 to Caa2, a drop of nine steps from “moderate credit risk” to “very high credit risk”.

Gregory Remec of Fitch, which also downgraded Topaz sharply last week, said it was a basic principle that a project’s rating “will never exceed the rating of its counterparty”.

Fitch last week cut its rating for PG&E to CC/RR3, meaning that “default of some kind appears probable”, and unsecured creditors were likely to recover 51% to70% of their principal plus interest.

Michael Wara, a specialist in energy and climate policy at Stanford Law School, said bankruptcy for PG&E would “throw into doubt” the future of the developers that have been central to the development of renewable generation in California. The best solution, he argued, would be to fix the underlying problem with large-scale investment in rooftop solar and local battery storage, to reduce customers’ dependence on the grid.

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