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Building solar and wind farms has started to become a cheaper proposition than running aging coal and nuclear generators in parts of the U.S., according to financial adviser Lazard Ltd.

Two years ago, “what was interesting to us was the lifetime cost of renewables on an energy basis reached parity with conventional resources in a bunch of geographies in the U.S.,” said Jonathan Mir, head of the North American power group at Lazard. “Now, what we are seeing is that renewable technologies on a fully loaded basis are beating” existing coal and nuclear plants in some regions.

The sudden swings in generation from wind and solar farms remain a challenge for power grid operators, he said. A modern system can handle renewables supplying about 30 percent of its power — and as much as 50 percent in some cases — but levels beyond that require storage technologies, he said.

Gas has helped, backstopping intermittent solar and wind generation. And their combined decline in costs is rapidly changing the U.S. power mix, Mir said. Globally, renewables are set to almost double from last year to make up 51 percent of the mix by 2040, according to Bloomberg New Energy Finance. The challenge of keeping open older plants has arrived faster than expected and more early retirements may ensue, he said.

These days, the most efficient gas-fired plants now cost about $700 a kilowatt to build, down from $1,000 to $1,100 five years ago, Mir said. Rooftop solar remains expensive in the U.S., costing four to five times as much as a utility-sized solar farm.

The drop in renewable energy costs is already changing how utilities operate, Mir said, using American Electric Power Co. as an example. Once the biggest burner of coal in the U.S., AEP is now planning to invest $4.5 billion in wind power and has said it could stop burning the fossil fuel altogether. “AEP is doing this because it is the cheapest way to provide energy,” he said.