Study says costs will rise as NE relies on natural gas despite shift toward green energy

A white paper by a Boston-based research group warns that New England consumers face higher electric costs and shrinking supply because of policy shifts toward renewables and away from natural gas, which remains the mainstay of the regional energy portfolio.

A study released this month by the Fiscal Alliance Foundation shows that, in spite of the billions of dollars spent in New England over the past 25 years on zero carbon energy programs, the region’s reliance on fossil fuels — notably natural gas — for electric generation within the six states has increased, to the current 55.4 percent from 54.6 percent in 2000..

In the report, “New England’s Energy Transition: Colliding With Reality,” author Lisa Linowes analyzes data compiled by ISO-New England, the independent nonprofit that operates New England’s power grid and wholesale energy markets.

“After 25 years, New England has nearly eliminated coal, sidelined oil, lost two nuclear plants and built thousands of megawatts of wind and solar,” the resort says. “Yet the region remains about as dependent on fossil generation as it was in 2000.

“The region is now driving up operating costs for its existing gas fleet while simultaneously discouraging investment in new natural gas capacity. Yet it is pursuing this policy shift without first proving that a dependable alternative system can be built at sufficient scale and at a price consumers can afford.”

Although the makeup of the New England power grid changed substantially over a quarter century, the report asserts that fossil fuel remains the principal source of generation.

What changed is the fossil mix. While coal and oil nearly vanished, by last year a decades-long shift to natural gas had accelerated to the point where gas output surpassed what had been the output of all fossil fuels combined in 2000. Pushing the gas expansion was the Great Recession in 2008, which slowed electric demand growth, and the boom in shale-gas. Gas was also considered environmentally acceptable compared to coal and oil, the report says.

Between 2015 and 18, the report says ISO-New England “expected the next stage of the transition to remain gas-centered.” Residential solar and energy efficiency programs were to reduce demand, and wind would add energy to the grid, but gas “would remain the backbone,” according to the report.

In January 2016, natural gas made up 63 percent of ISO New England ‘s proposed new capacity, meaning projects seeking to connect to the regional grid. But a decade later, in January of this year, natural gas generation had fallen off the chart entirely, replaced by solar (10%), wind (44%) and battery storage (46%), the study says.

What changed over the intervening decade was a region-wide policy shift toward renewables and the effect those policies had on energy investment, the report says.

“New England therefore arrived at a striking mismatch: the existing system remains heavily dependent on natural gas, while the development pipeline has almost completely moved away from it. That mismatch is becoming more consequential as ISO-NE projects electricity consumption and peak demand to begin rising again,” the report says.

Gas prices are expected to continue to rise and investment in gas projects weaken as a result of the region’s ground breaking carbon-reduction program the Regional Greenhouse Gas Initiative, according to the report.

What’s known as RGGI is a multi-state carbon pricing program. Connecticut and 10 other states limit carbon dioxide emissions by fossil fuel burning power generators by requiring the operators buy “allowances” to cover every short ton they emit. Each year, the number of available allowances decreases and their price increases. Operational and customer costs increase correspondingly.

The price of RGGI allowances averaged $13.49 in 2023 and had risen to $35 by June, according to the report. Because natural gas frequently sets the New England energy market price, the report says ISO New England estimates “that carbon-pricing programs increased average wholesale energy prices by about $9/MWh in 2025, adding roughly $1.1 billion to regional energy costs.”

Beyond increasing consumer costs, the report says RGGI “is reinforcing the broader policy signal against investment in a resource New England still relies on before a dependable replacement system has been shown to be feasible at a cost consumers can afford.”

The reports recommendations include permitting new high-efficiency natural gas generation and expansion of the pipelines to deliver relatively low cost gas from Pennsylvania, something that has so far been blocked by environmental challenges in New York.

It also recommends maintaining dependable energy resources until replacements are proven reliable, determining whether programs like RGGI are phasing out energy source before they can be replaced, studying whether programs like behind-the-meter residential solar unfairly allocate grid maintenance costs; and evaluating competing energy portfolios on the cost, emissions and reliability of the complete system required to support them, including transmission, storage, firming, fuel infrastructure and other supporting resources.