New England's electric generation stack will increasingly rely on natural gas, with accompanying risks associated with access to firm supplies, and the region will likely say goodbye to coal-fired power by 2025, according to Morningstar Commodities Research.

"If the region is lucky, wind may save the day in both a literal and figurative sense," Morningstar analysts said Thursday. "Otherwise, planners will need to secure adequate natural gas supplies with the help of LNG [liquefied natural gas] imports to ensure reliability, or call on winter reliability programs in extreme winter conditions.

"This option may not be the cheapest, but a needed step to ensure adequate supply in winter when competing with gas heating demand."

New England's two-year load forecast shows low to moderate growth, the analysts said. The region leads the nation in energy efficiency adoption and is seeing growth in behind the meter photo-voltaic (PV) and demand response usage.

"We’ll have to wait and see if PV adoption forecasts are revised downward following the introduction of a 30% solar panel import tariff, recently announced by the Trump administration," analysts said. "Overall though, load should at most see a small increase in the coming years, which should help the region as its generation fleet transitions. This factor alone, however, is not enough to counteract the underlying fuel security issues [ISO New England (ISO-NE)] is expected to see in the future."

ISO-NE CEO Gordon van Welie has said New England’s natural gas infrastructure has not kept pace with the increasing demand for power generation. Earlier this month American Petroleum Institute (API) CEO Jack Gerard said this winter's bomb cyclone should prompt construction of more gas infrastructure in the region.

New England's current power plant queue contains 76 projects with 12,899 MW of additional capacity, comprised of 6,427 MW natural gas, 5,397 MW wind, and 77 MW battery storage, according to Morningstar. The remaining 1,000 MW is mostly renewable/solar.

A total of 3,000 MW of coal and oil generation has either retired or is set to retire between 2013 and 2019. The 604 MW Vermont Yankee nuclear plant closed in 2014, and the 1,300 MW Pilgrim nuclear plant is scheduled for retirement in 2019.

"The loss of all this fuel-secure baseload generation capacity (plants that have available fuel stored onsite) will expose the region to reliance on variable renewable generation and the risk of natural gas supply disruptions," the analysts said. "With another 5,000 MW of coal and oil capacity at risk of retirement and the uncertain future of 3,300 MW of remaining nuclear generation, the near- and mid-term outlook shows a heavy exposure to natural gas constraints."

ISO-NE's outlook "leaves them open to a big winter gamble each year and they are on track to increase the odds of price spikes as their reliance on natural gas grows," the analysts said. "While they self-acknowledge this reality, it could prove to be a dangerous line to walk. On the surface, ISO forward reserve capacity is maintained at around 15% on an annual forecast level, but the devil is in the details and those high-level assumptions do not align with a typical daily winter constraint profile -- leading to price spikes and emergency procedures."